The American Government’s Expenditures for Disability & Waiver Dollars: Is it Sustainable?
Friday, October 25th, 2013
Lately, the staff of M&L Special Needs Planning, LLC has been paying close attention to the way that the government approaches disability spending in the United States. This attention is partially prompted by our close examination of various housing and independent living programs across the country. The operators of these programs share a common view: the government simply cannot support the financial burden of providing housing nor continue (at the present pace) the payout of waiver dollars for the supports for individuals with disabilities. Also, as financial and life planners we are in the business of examining the financial health and growth potential of our clients – we have turned our focus to the financial health and growth of government disability and waiver spending, and what we have discovered is alarming.
According to recent statistics, 54 million Americans have a disability. As many of these Americans age into adulthood – 500,000 to 800,000 individuals with Autism Spectrum Disorder (ASD) and other developmental disabilities will enter adulthood in the next decade alone – there will be an increased demand for government spending in this sector. Consider that the government programs aimed towards disability support are already overburdened, and have increasingly lengthy wait times, and this figure certainly becomes cause of concern.
We are not alone in questioning how the government will support disability spending in the long term – there have been a number of papers published that examine the trends in disability spending over the last few decades. The majority of these papers reveal that disability spending is on an upswing.
David Braddock, of the University of Colorado, published one such study. In the paper, titled Public Spending for Disability in the United States: 1997-2006, Braddock examined trends in public-sector disability spending for that time period. His results revealed the increasing size and growth rate of the disability market, and, as a result, government disability spending. According to his data, in the fiscal year of 2006 total government disability spending totaled $519.2 billion – 11% of total government spending. This is a 35% increase from the total disability spending in 1997, which totaled $381.6 billion. (These figures have been adjusted for inflation). As Braddock writes, “spending grew 3.5 percent per year above the rate of inflation during this decade.[i]”
Braddock attributes the increased spending to the growth in the number of individuals receiving long-term care and income maintenance, as well as an increase in Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) recipients. He also states that special education enrollment increased by 19% during this time period, from 5.9 to 7 million students. Of these 7 million students, 44% were children and youth with developmental disabilities, such as intellectual disability, ASD, traumatic brain injury, and developmental delay.
Another study, published by Richard Hemp also of the University of Colorado, extended the work done by Braddock. Hemp examined government disability spending for the fiscal year of 2008, and found that it totaled $619.5 billion. In 2008, total disability spending accounted for 12% of total government spending – an increase of 1% in total government spending from the fiscal year of 2006.
Why Should We be Concerned about Long Term Disability Spending?
The long-term sustainability of this type of spending is questionable. Critics currently predict that Social Security will be bankrupt as early as 2016 if government spending isn’t curtailed – or if tax hikes to replace the funds aren’t put into place. Despite the possible bankruptcy of the Social Security program, which is difficult to confirm as sources are conflicted, it is the funding of the Medicaid waivers, specifically the Home and Community waiver that is of the utmost concern to us.
If you are not familiar with the “waiver” program, here is a brief explanation:
Individuals who qualify for SSI, in most states automatically qualify for Medicaid. In some states the individual who qualifies for SSI needs to go through a separate eligibility process for the Medicaid piece. Individuals who receive Medicaid are eligible for Medicaid waivers, and one of them is the 1915(c) Home & Community-Based Waiver. This waiver is available to states to allow the provision of long term care services in home and community based settings, under the Medicaid program[ii]. This waiver is either paid outright to parents/guardians, or directly to a service provider. Individuals, particularly children, rely on this waiver to access these vital home and community based supports.
As the population of Americans with disabilities increases, more and more individuals will become recipients of SSI, therefore receiving Medicaid and the associated waivers. Considering that the program is already strained, the increase in recipients raises questions as to how the government will support the increased spending necessary to keep the program afloat. Added to this, the Affordable Care Act sees an increase in Medicaid dollars – under this new legislation, programs such as the Money Follows the Person (MFP) will be enhanced (the MFP is extended until 2016, and will receive greatly expanded funding). There will also be an increased effort to move supports away from institutional settings towards community-based providers. These initiatives are undoubtedly great for individuals with disabilities, but are scary considering that they may not be financially feasible in the long term.
How Can this Issue Affect your Family Member with Special Needs?
Here at M&L Special Needs Planning, we have always advocated that planning for the future is the best way to ensure the stability and security of your family’s financial health. Our Comprehensive Special Needs Financial Life Plan can help you figure out where you are in terms of your current financial resources. It can also help you to figure out the approximate cost of care for your child for his or her entire life. Here at M&L Special Needs Planning, we think that the SSI and Medicaid programs will continue to exist, but feel that all individuals looking to secure long-term stability for their family member with special needs should be aware of the financial issues surrounding these benefit programs. We can help you plan for the life of your child with these benefits, as well as without. We can also help you figure out a way to provide for your family member with special needs in the worst-case scenario: the benefits are decreased, or cease to exist. With this, you can have the peace of mind of knowing that your family member is protected, regardless of the outcome of government benefit programs.
If you have any questions, concerns, or wish to discuss how you can plan for the financial future of your family and your family member with special needs, please do not hesitate to contact us. We have years of experience, professional and personal, and are able to provide you with a plan of action to secure financial security – and, we love hearing from you!
Thanks for stopping by our blog today – we hope you will visit again next week!
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