Medicaid funding is the backbone of services to people with developmental disabilities across the nation, and particularly in New York State. Medicaid comprises approximately 90 percent of the funding to The Arc New York and other developmental disabilities providers in our state. Cuts to Medicaid funding would prove devastating to the families we support and services we provide.

The Medicaid program assists people with intellectual and other developmental disabilities to live full lives in the community, experience a high quality of life, and achieve economic security and personal independence to the extent possible for the person.

However, Medicaid supports remain at constant risk. Advocates across the nation and state are working tirelessly to keep people with intellectual and developmental disabilities (IDD) at the forefront of policy decisions. Any effort to change or otherwise reform the Medicaid program must take into account the impact of such change upon people with intellectual and other developmental disabilities, in order to prevent unintended harmful consequences.

Medicaid provides:

• Home and community-based services (HCBS) that help 4.5 million people nationally with disabilities live, learn, work, and participate in their communities.
• Early intervention for young children, school-based therapies, and equipment and technologies often excluded by private insurance.
• Job skills training, placement, and coaching that enable people with disabilities to find meaningful, integrated employment opportunities.
• $1 of every $6 spent on health care in the U.S., making it the nation’s largest single source of health coverage.
• Support for schools, hospitals, and local economies.

Yet Medicaid is already stretched thin:

• 711,000 people nationally are waiting for HCBS, 73% of which are people with intellectual and developmental disabilities.
• 40% turnover among care workers due to low reimbursement rates leave families without critical support, which negatively impacts their careers and finances.
• Approximately 5,000 people who are enrolled in the OPWDD waiver do not have access to all the supports and services they are eligible for due to a systemic lack of opportunities for residential placement, day programs and other services. This is fundamentally exacerbated by workforce shortages and funding availability leading to a population that remains underserved.
• As the IDD population grows, the system struggles to meet changing needs, such as a refined medical understanding diagnoses of people with co-occurring mental health conditions. Providers are challenged to respond appropriately to these needs with limited resources and options.
• 25+ million Americans lost Medicaid coverage. While those who have been cut from coverage might not have IDD, it remains to be seen how the downstream impacts of budget conversations affect overall funding.

The Stakes for the Disability Community

Medicaid is the cornerstone of daily life for over 10 million children and adults with disabilities, funding 77% of essential services for people with intellectual and developmental disabilities. Without it:

• Many would lose their independence and forced into nursing homes or institutions, which comes at higher personal and financial costs.
• States would face severe constraints on eligibility and funding, leaving families across the country without options for vital services.

The 2025 federal budget reconciliation (H.R. 1/PL 119-21) decided Medicaid’s future for the short and long term unless it is repealed. Changes to current supports could deepen waiting lists, worsen the care workforce crisis, and destabilize our health care system. Reducing federal funding for Medicaid could also cost states billions annually, leading to an unprecedented rise in uninsured rates and health inequities.

Federal Medicaid Assistance Percentage (FMAP) for New York state remains at 50% for HCBS programs, which is the minimum for any state. In order to provide vital supports and services, HCBS must be appropriately funded via a permanent increase to the FMAP and certainly not a reduction to the FMAP floor as was proposed in 2025.

Defending dedicated funding for HCBS, providing paid leave for caregivers, and increasing the Supplemental Security Income (SSI) resource and asset limits continues to be part of our federal priorities. As the need for HCBS continues to grow, the funding and increased investments is more important now than ever.

New York State Focus

Every day, New Yorkers with IDD rely on nonprofit HCBS providers in the voluntary sector for programs and supports to lead a fuller, more inclusive life. A trained and dedicated workforce, along with consistent financial investments, are needed to provide these services, which are funded through the 1915c Medicaid waiver. If programs are unable to operate due to insufficient funding, these critical supports and services will become the responsibility of state agencies, at a higher cost to taxpayers.

For decades, New York state has not made adequate and consistent investments to sustain the programs and services people with IDD rely on. For context, from FY2012 to FY2022 non-profit providers received a paltry 1.2% rate increase while inflation during that time totaled 21%. This lack of investment drove severe staffing shortages, inequity for direct care staff, and reduced access to critical services and support for New Yorkers with disabilities.

Since 2020, basic costs have increased more than 25% due to inflation alone. Despite recent investments through modest rate increases and rate rebasing, overall provider rates still lag behind inflation. Providers remain unable to cover rising costs, appropriately adjust wages, and deliver the full array of supports people with IDD are entitled to. If our inflationary and external costs outside our control are not covered, providers must absorb them and make difficult decisions that directly impact the lives of people with disabilities. Effectively, it amounts to a cut to the system.

If Medicaid reimbursement does not cover actual costs, providers cannot sustain services, pay fair wages, or maintain the facilities where people with disabilities live, work, and receive essential supports and services.

The proposed 2.7% rate increase for the FY2026-27 state budget is derived from NYS statute, which states the annual cost of living adjustment (COLA) will be calculated based on the Consumer Price Index (CPI-U) from July of the previous year. Whether we call it a COLA or a Targeted Inflationary Increase (TII), the investment should have appropropriate flexibility to support the increased cost of delivering quality services above and beyond DSP wages, such as food, fuel, transportation, and additional frontline staff.

Simply put, it is absolutely critical that we secure adequate government funding to invest in our workforce and our programs to provide supports for the people we serve. Without this, our programs could be reduced or eliminated due to lack of staffing, and many years of progress toward community integration, choice, and deinstitutionalization will be lost.