Episode 6 of The 80 Million Podcast: America Is Getting Older. Its Long-Term Care System Is Getting Weaker.
Our fragile HCBS infrastructure that keeps people out of nursing homes is cracking — at exactly the wrong moment.
This blog is based on a recent The 80 Million Podcast conversation with the authors — Manatt Health Partner Melinda Dutton, Manatt Health Senior Advisor Stephanie Anthony and Alison Barkoff, Harold and Jane Hirsh Associate Professor of Health Law and Policy at the Milken Institute School of Public Health at the George Washington University — exploring the mounting pressure on home and community-based services (HCBS) in Medicaid. The discussion examines the structural flaws that have always constrained HCBS, the new forces colliding to make the crisis more acute and the bold reforms that could finally fix it.
Authors: Melinda Dutton, Stephanie Anthony and Alison Barkoff
Editor: Patti Boozang and Amanda Eisenberg
tl;dr
Americans are rapidly aging, which is accelerating the demand for the long-term services and supports (LTSS) necessary to their care, as well as the care of a diverse range of children and adults with disabilities. Medicaid is the primary payer for LTSS. Since the early 1980s, that coverage has included home and community-based services (HCBS), which have proven better for health, less expensive and what most people prefer over institutional care. HCBS now make up almost two-thirds of long-term services and support spending, double the rate in 2001.
Because HCBS are an optional benefit under Medicaid, states facing fiscal crises can limit access, including through enrollment caps and waiting lists. Today more than 600,000 people are waiting for care across 41 states.
With states facing nearly $1 trillion in federal Medicaid funding cuts over the next decade from H.R. 1 and a drumbeat of recent statements from federal leaders questioning the integrity and purpose of HCBS, the fragile infrastructure that keeps people out of nursing homes is at risk — bringing greater urgency to the imperative for change.
The 80 Million Impact
Since its inception, Medicaid has played a crucial role in providing LTSS, and over the past 40 years those services have migrated away from nursing homes and other institutional providers and toward care provided in home and community-based settings. This shift reflects a longstanding, bipartisan consensus that HCBS are cost effective, produce better health outcomes and are preferred by the individuals who rely on them to safely manage daily life.
The 1999 watershed Supreme Court decision, Olmstead v. L.C. which held that unnecessary institutionalization of people with disabilities violates the American Disabilities Act and Section 504 of the Rehabilitation Act, accelerated this trend. Since then, federal leaders across successive administrations have advanced incremental reforms to expand HCBS access — from the New Freedom Initiative under President George W. Bush and the Year of Community Living under Barack Obama to the LTSS rebalancing toolkit in the first Trump administration and the 2021 American Rescue Plan Act (ARPA) under President Joe Biden. Today, HCBS accounts for nearly two-thirds of LTSS, with Medicaid covering roughly 70% of these services nationally.
Yet most HCBS remain optional benefits under federal Medicaid law, while institutional services like nursing homes are mandatory. This creates a structural “institutional bias” in the program that, when budgets tighten, put HCBS on the chopping block.
Today, HCBS face a perfect storm. ARPA provided a historic $37 billion infusion to strengthen the care workforce and clear waiting lists during the pandemic. That federal funding largely expired in 2025, leaving states to carry those ongoing costs alone — just as they prepare to face nearly $1 trillion in federal Medicaid cuts over the next decade. There are early signs of stress: In 2025, most states reported an increase in the number of people waiting for HCBS, with a notable rise in states implementing provider rate restrictions compared to prior years. And the George Washington University HCBS Impacts Tracker has documented signs of deeper cuts to come.
Compounding this crisis are signs of retrenchment in HCBS among federal leaders responsible for oversight of the program. HCBS have been at the center of what federal officials are calling an effort to address fraud, waste and abuse. The Centers for Medicare & Medicaid Services (CMS) recently issued a historic $1.3 billion funding deferral against California, citing spending that outpaced other states but no actual evidence of fraud. If fraud can be defined as spending above a national mean, that is bad news for half of all states in the country — and truly bad news for people who depend on high-cost services for their safety and their care. At the same time, both CMS Administrator Dr. Oz and Department of Health and Human Services Secretary Robert F. Kennedy Jr. have made comments that seem to question the value and purpose of home and community-based services.
Despite these headwinds — or perhaps because of them — the imperative for a structural solution has never been more compelling. Proposals that have stalled in the past are garnering new attention, like making HCBS a mandatory service under Medicaid, including home care benefits in Medicare and/or social insurance reform, like Washington State’s innovative public long-term care benefit. Ultimately, the perfect storm looming on the HCBS horizon may very well turn what has for too long been the politically impossible into the politically inevitable.
The Bottom Line
Listen to the full conversation of The 80 Million Podcast on Spotify, Apple Podcasts or wherever you get your podcasts to hear why HCBS are at an inflection point, what the fraud framing really means and what bold reforms could finally address the structural flaws at the heart of America’s long-term care system.
And don’t forget to subscribe to The 80 Million Podcast.