Medicaid Spending Cuts to Impact People with Intellectual and Developmental Disabilities

The recent budget reconciliation package signed into law by the U.S. President includes significant reductions in federal Medicaid spending, estimated to cut $911 billion over the next decade according to the Congressional Budget Office. This reduction is projected to increase the uninsured population by 10 million, primarily due to Medicaid cuts. People with intellectual and developmental disabilities (I/DD) are particularly impacted, as they disproportionately rely on Medicaid for health services.

I/DD encompasses conditions such as intellectual disabilities, autism, developmental delays, and learning disabilities, affecting physical, intellectual, and emotional development from childhood. Medicaid serves as a critical coverage source for this population, especially because many with I/DD have high healthcare needs and face challenges accessing private insurance due to employment and income limitations.

Medicaid coverage for individuals with I/DD includes comprehensive benefits under the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) program, particularly for children under 21. These benefits often exceed those available through private insurance, including specialized therapies, home and vehicle modifications, and private nursing services offered through Medicaid waivers.

In 2021, approximately 3.4 million Medicaid enrollees under 65 had I/DD, with children representing 82% of this group. Children with I/DD mainly qualify for Medicaid based on low income, whereas adults with I/DD often qualify through disability criteria, which involve more complex eligibility requirements and renewal processes.

Income eligibility limits for children with I/DD are generally higher, reflecting broader eligibility pathways compared to adults. The Affordable Care Act expansion has aided some nonelderly adults with I/DD by providing Medicaid coverage based on income, yet the recent budget adjustments threaten this access.

Transition from child to adult Medicaid eligibility creates challenges as adult income limits are lower and benefits like EPSDT are not available post-21 years. Families report a lack of clear information and preparation for this transition, potentially affecting continuity of care.

Long-term care needs among those with I/DD are substantial, with a majority receiving home-based care funded by Medicaid through waivers that include diverse supportive services. Institutional long-term care utilization among this group remains low, with most institutional care provided in intermediate care facilities tailored for I/DD populations.

States maintain waiting lists for Medicaid home care waivers due to limited slots, highlighting unmet service needs. People with I/DD compose the majority of those waiting, particularly in states without pre-enrollment eligibility screening.

Medicaid expenditures for people with I/DD are significantly higher than for those without; children with I/DD incur approximately four times and adults seven times greater annual Medicaid spending. This reflects both high long-term care utilization and elevated prevalence of chronic and behavioral health conditions in this population.

The budget reconciliation's cuts may drive states to consider eligibility restrictions or benefit reductions, disproportionately impacting individuals with I/DD and their access to necessary services. Given Medicaid's central role in supporting this vulnerable group, these financial and policy shifts warrant careful monitoring.

Data for this analysis were sourced from Medicaid claims and enrollment records, utilizing diagnosis codes to identify I/DD conditions and categorize healthcare usage, as well as examining eligibility pathways and demographic profiles. These methods provide insight into the Medicaid landscape for people with I/DD and highlight the potential consequences of federal spending changes.