96% of the Money That Keeps People Home Is Optional. Most of the Money That Institutionalizes Them Is Not.

For about three years I thought the reason our services kept getting trimmed was that somebody in Lansing did not care very much. Then I read a MACPAC table and understood I had been angry at the wrong thing the entire time.

Federal Medicaid law divides benefits into two categories. Mandatory benefits are the ones every state must cover to participate in the program at all. Optional benefits are the ones a state may cover, and may stop covering, and may cap or waitlist or narrow at will.

Nursing facility services for adults are mandatory. Home and community based services, delivered through Section 1915(c) waivers, are optional. Personal care is optional. Self-direction is optional. ICF/IID services are optional. Prescription drugs, for that matter, are optional. Nearly the entire apparatus that lets a person with high support needs live in a house instead of a facility sits in the optional column.

Once you know that, every frustrating conversation you have ever had with a state agency reorganizes itself.

What the numbers actually look like

MACPAC, the Medicaid and CHIP Payment and Access Commission, is the nonpartisan body that advises Congress on this program. In March 2026 it presented an analysis of mandatory and optional enrollment and spending using FY 2023 data. The findings are not subtle.

Optional enrollees or optional services accounted for 38.8% of total Medicaid spending, about $319.4 billion out of $823 billion. That is the pool that every deficit conversation in Washington and every difficult state budget year starts from, because it is the part that can legally be reduced.

Then look at where long term services and supports fall inside that pool. Non-institutional long term services and supports were 96.0% optional, about $159.7 billion of $166.4 billion. Institutional long term services and supports were 33.0% optional, about $34.0 billion of $102.9 billion.

Read those two lines next to each other one more time. Almost all of the money that keeps people in their homes is legally unprotected. Two thirds of the money that puts them in institutions is legally protected.

Why this hits disabled people hardest

The same MACPAC analysis shows that of the $237.9 billion spent on blind or disabled enrollees in FY 2023, 55.6% was optional. For aged enrollees, 60.2% was optional. Both figures sit above the 38.8% program average.

So the population with the highest support needs, the longest service duration, and the least ability to absorb a disruption is disproportionately concentrated in the least protected part of the budget. When a state needs savings, it does not go looking for disabled people. It goes looking for optional spending, and disabled people are already standing there.

That is why the same services get cut over and over. Not because anyone targets them. Because the search function returns them first.

The part that makes fiscal conservatives allies

I want to make this argument in a way that works in rooms where I am not the majority, because those are the rooms where the votes are.

Institutional care is generally the most expensive way to support a person with a disability. Community based services generally cost less per person and produce outcomes people actually want. When a state trims waiver services, it does not remove the need. The need shows up somewhere else, in emergency rooms, in police calls, in crisis placements, in institutional admissions that federal law then requires the state to pay for.

So the structure produces a genuinely perverse result. A state saves money on paper by cutting the optional service, and then pays more in the mandatory one. This is not a progressive argument or a conservative argument. It is an accounting argument, and it should be the easiest sell in the building.

What to do with this fact

Put the word optional in front of a legislator. Most of them do not know. That is not an insult; nobody memorizes Title XIX. When you tell a state representative that the nursing home is mandatory and your daughter’s community living supports are optional, you have handed them a frame they did not have, and frames are what people repeat in caucus.

Cite MACPAC, not an advocacy group. I say this with affection for advocacy groups, including the ones I rely on. But MACPAC advises Congress and has no dog in the fight, and a staffer who dismisses a disability organization’s number will not dismiss the commission’s.

Ask for the state’s own cost comparison. Every state Medicaid agency knows what it pays per person for institutional placement and what it pays for waiver services. Ask for both figures. Ask in writing. That comparison is the strongest exhibit in this entire argument and it is sitting in a spreadsheet somebody already built.

Stop apologizing for asking. The optional classification has a way of getting inside families’ heads, until we start describing our children’s daily support as though it were a benefit somebody extended out of kindness. It is not. It is the cheaper half of a choice federal law forces the state to make. We are asking the state to take the deal that costs less and works better.

I was angry at the wrong thing for three years. Be angry at the right thing faster than I was, and then go tell somebody who can change it.