Guest Column: Business as (Un)Usual 2:0 – What’s Next?

By Kathy Carmody, CEO of The Institute on Public Policy for People with Disabilities

A few years ago, I was asked to deliver a keynote address to a national audience at the height of the pandemic. I shared my perspective on how IDD community agencies could navigate the uncertainty we were facing amid unprecedented circumstances, threatening our ability to continue to provide the daily services and support that are a lifeline to people who depend upon us. At the time, the external forces impacting organizations were formidable, unrelenting, and like nothing most of us had ever experienced. And yet, through fortitude, collaboration, persistence and resiliency, our organizations and the community service system prevailed.

Here we go again…2025 has ushered in a fresh set of challenges, scenarios and uncertainties that community organizations must prepare for to continue delivering our mission-based services in an unfamiliar and threatening landscape. While there’s no map to guide us in this new journey, we can draw upon trusted sources, past experiences and reliable guideposts to help navigate the road ahead. Below are a few thought nuggets to consider as you’re trying to filter the multiple information sources informing us all and position your organization for what lies ahead.

Medicaid

The overwhelming majority of IDD community services are funded through the Medicaid program, a state/federal partnership that benefits from strong support and reliance in both parties. The bedrock of the program – health care and alternatives to long-term institutional care – remains an irreplaceable resource for both the people who rely upon them and the states that administer them. Indeed, when comparing the 2024 presidential election map to the federal matching percentage of the Medicaid program, states where the current administration won corresponds closely with those states with higher (50%+) federal matching formulas. Whatever political leanings those elected to represent their constituents in Washington or serve as state governors may have, they are not going to support policies that will implode their state budgets by forgoing federal Medicaid dollars in the name of principle or politics. his is not to say we don’t have to fight hard to preserve and protect the critical Medicaid infrastructure that supports the IDD community system, but that our efforts must continually educate and inform both policymakers and the general public on the role Medicaid funding plays in lives of people with intellectual and developmental disabilities and the community agencies that support them.

Medicaid Block Grants

Conversations surrounding transforming the Medicaid payment structure from its current federal matching formula to a “block grant” scheme have been circulating (most often under Republican administrations) since the early 1980’s. And yet, the transformation has not materialized. Why? The premise of a block-grant arrangement is that states receive a set amount of money to pay for Medicaid expenditures with no commitment from the federal government to match expenditures beyond that amount; if states spend less money, they keep the savings, and if they spend more money, they absorb the additional expense. Given the continued growth trajectory of the Medicaid budget over the past two decades with no bending of the cost curve in sight, states are generally disinclined to bet the house that they can beat the odds and come out on top in this scenario. While we can expect conversation around this topic, including front-end enticements to “sweeten the pot,” I expect the final outcome to be that the Medicaid system remains firmly entrenched in a state-federal partnership arrangement, albeit likely with a few more strings attached.

The Cascading Effect

Perhaps the greatest threat to state IDD services is posed not by a direct cut from the federal administration but rather the cascading effect of other Medicaid cuts that will impose significant stress on state budgets, leading to an inevitable constriction on all Medicaid populations. There has been a lot of conversation surrounding reducing the enhanced federal match to the ACA Expansion population, which, according to the Kaiser Family Foundation, could reduce total Medicaid spending by up to $1.9 trillion over 10 years and end coverage for as many as 20 million people. While the federal obligation to these people may disappear, their healthcare needs and costs will not. They’ll simply be shifted directly to already stretched state budgets, which will need to look elsewhere to absorb the now unmatched healthcare costs.

FMAP Formula Changes

Just as the 2024 presidential election map shows a correlation between higher state FMAP percentages and the election outcome, those states at the minimum level of FMAP (50%) tend to be the states that did not vote in favor of the current administration as well as those often highlighted as examples of poor governance by the current administration. Early details of possible changes to Medicaid include savings generated by lowering the FMAP floor, resulting in lower federal matching dollars coming into “wealthier” states. Illinois is among the states with the lowest FMAP at 51.8%. This would be a policy shift to watch and mobilize our supporters around should we see a substantive initiative develop around this topic.

Action Steps

The most impactful action stakeholders can take is to amplify the message that Medicaid provides critical support that enables people to live in community settings as a less costly alternative to institutional services.

We must thread the advocacy needle to ensure that those who don’t depend upon Medicaid funding for their daily existence understand the critical role it plays for those who do and present a “whole picture” of the entire Medicaid landscape and the disruption that any seemingly disconnected change could have on the entire ecosystem.

Kathy Carmody serves as CEO of The Institute on Public Policy for People with Disabilities, a statewide association of community organizations providing direct services to 30,000+ people with intellectual and developmental disabilities across Illinois. All opinions expressed in this article are solely attributed to the author.