A federal right with a state-level bottleneck

The 1999 Supreme Court ruling in Olmstead v. L.C. established that unjustified institutionalization of people with disabilities is a form of discrimination under Title II of the Americans with Disabilities Act. The principle: states are required to provide services to people with disabilities in the most integrated setting appropriate to their needs.

In practice, the integrated setting for most disabled Americans is their own home and community. The federal-state Medicaid program that provides those services is called Home and Community-Based Services (HCBS). HCBS includes personal care attendants, home health aides, supported-employment services, day programs, respite care, adaptive equipment, and other services that allow people to live in their own homes rather than nursing homes or institutional settings.

The federal right to HCBS exists. The capacity to provide it has not kept up. Across 38 states with HCBS waiting lists, more than 700,000 people are waiting. In many states, the wait is five to ten years or more. People die on these waiting lists. Family caregivers burn out and become ill themselves. The federal-right-to-services architecture functions, in practice, as a federal-right-to-be-on-a-list.

How the waiting lists got this long

The structural cause is the Medicaid funding architecture. Medicaid coverage of nursing-home care is mandatory under federal law — every state that participates in Medicaid must cover nursing-home services for eligible beneficiaries, and federal matching dollars flow accordingly. HCBS coverage, by contrast, is largely optional under federal law. States provide HCBS through “waivers” — Section 1915(c) waivers, Section 1115 demonstration waivers, and others — that allow states to deviate from federal default rules to provide community-based services.

The resulting pattern: states have an institutional bias built into Medicaid. Nursing home care is mandatory; HCBS is optional. State budgets respond accordingly. When state Medicaid budgets face pressure, HCBS expansions are deferred while nursing-home obligations are funded. When state budgets have surplus, HCBS expansions are sometimes added — but the political pressure to expand is weaker than the budgetary pressure to constrain.

The waiting lists are the visible consequence. They reflect not a lack of demand or a lack of service-provider willingness, but a structural underfunding decision states have made — within a federal architecture that permits and in some respects encourages that decision.

The workforce constraint

Beyond the funding question, HCBS is constrained by the direct-care workforce. Personal care attendants, home health aides, and similar workers are among the lowest-paid major occupations in the United States. Median wages for direct-care workers in many states are well below livable-wage thresholds. Turnover rates are high; recruitment is difficult; many positions remain unfilled even where state funding would support them.

The workforce constraint is a labor-policy issue intersecting the disability-services issue. Direct-care workers are disproportionately women, immigrants, and people of color. Their labor is underpaid because Medicaid reimbursement rates for HCBS services are set well below the actual cost of paying competitive wages. The state-level pattern compounds: states that suppress reimbursement rates produce workforce shortages that constrain service availability that produces waiting lists.

Reform requires both ends. Higher reimbursement rates that allow direct-care workers to be paid competitive wages. Federal direct-care worker wage floors that prevent state-level race-to-the-bottom dynamics. Investment in direct-care workforce training and retention.

The federal lever

The federal government has substantial tools available to address the waiting list crisis:

Federal HCBS funding expansion. The Build Back Better framework included roughly $400 billion in HCBS funding — a substantial expansion that would have meaningfully reduced waiting lists, expanded direct-care worker wages, and supported states in restructuring their long-term services architecture. The HCBS provisions did not survive the Senate negotiations that produced the Inflation Reduction Act. Reintroducing some version of the framework remains an active priority.

HCBS-as-mandatory. Making HCBS coverage mandatory under federal Medicaid law (with corresponding federal matching dollars) would address the structural bias toward institutional care. The Better Care Better Jobs Act includes versions of this approach.

Federal direct-care worker wage standards. Federal floors on direct-care worker wages, conditioned on federal HCBS funding, would address the workforce constraint that limits service capacity.

Olmstead enforcement. DOJ Civil Rights Division enforcement of Olmstead has been chronically underfunded relative to the scale of the problem. Substantial increases in DOJ enforcement capacity could move state systems toward compliance.

Demonstration projects. Federal Innovation Center pilots, demonstration waivers, and other federal-state partnerships have produced operational lessons about HCBS systems that work. Scaling those lessons depends on broader federal commitment.

The political dimension

HCBS reform has had bipartisan support in principle for decades. The political dimension is complicated by the fiscal scale. Substantial HCBS expansion is expensive — the Build Back Better proposal was hundreds of billions of dollars over a decade. Congressional bipartisanship on disability-services policy holds at the rhetorical level and breaks down when fiscal commitments are required.

The political case for HCBS expansion has shifted somewhat in recent years. The aging of the baby boomer population is producing rapid growth in demand for home-and-community-based long-term care, and the demand is concentrated in voters who are increasingly attentive to whether the services are available. The political coalition for HCBS has expanded beyond the disability-rights community to include senior advocacy organizations and family-caregiver coalitions.

What’s working

State-level innovations that may scale federally:

Self-directed care models that allow disabled people to hire and manage their own attendants, including family members. These have produced higher satisfaction and better outcomes than agency-mediated models in several states.

Worker cooperatives for direct-care services have produced higher wages, lower turnover, and better service in pilot programs in Massachusetts, New York, and elsewhere.

Integrated transitions programs that help people leave nursing homes and return to community settings have produced measurable reductions in nursing-home occupancy in several states.

Money Follows the Person — a federal program providing enhanced funding to states for transitioning Medicaid beneficiaries from institutions to community settings — has been periodically reauthorized and has produced thousands of transitions.

What to watch

• Better Care Better Jobs Act and successor proposals.
• State HCBS waiver applications and approvals.
• Direct-care worker wage policies.
• DOJ Civil Rights Division Olmstead enforcement.
• Money Follows the Person reauthorization.
• Aging-population-related HCBS demand growth and political response.

Bottom line

The HCBS waiting list crisis is a federal-state architecture problem that has produced a 700,000-person backlog of disabled Americans waiting for services they have a federal right to receive. The reforms required are well understood. The fiscal scale is substantial. The political coalition for action has been growing. The crisis is not stable; the aging population will continue to expand demand whether or not the federal government chooses to expand capacity. The choice is between systematic reform and continuing crisis.