What Maine’s billion dollar hole teaches Michigan

Here is a question I have asked in three legislative offices and never once received an answer to. If community based support for a person with intellectual and developmental disabilities costs about $48,000 a year, and an institutional placement for the same person costs about $140,000 a year, why is the $140,000 option the one federal law guarantees? Nobody argues with the numbers. Nobody defends the design. The room goes quiet and then somebody says something about mandatory versus optional benefits, which is a description of the problem being offered as an explanation of it.

Maine put a number on the other half of this equation, the half nobody scores. When the direct care workforce collapses, the people who absorb the work leave paid employment. Maine’s economists added that up. It comes to somewhere between $844 million and $1.3 billion in lost state GDP every year. In a state of 1.4 million people.

The ratio, sourced

The University of Minnesota’s Residential Information Systems Project tracks long term services and supports spending across decades, and their per person figures are the cleanest comparison available. In 2019, average annual spending per person in an ICF/IID institutional setting was $140,210. Average annual spending per person receiving HCBS waiver services was $48,458.

GAO’s 2023 report on Medicaid expenditures for adults with intellectual or developmental disabilities found average HCBS program expenditures ranging from about $51,000 to $70,000 across six selected states in 2019, and stated plainly that HCBS expenditures were generally lower than states’ estimated costs for serving the same beneficiaries in institutional settings.

So the ratio is roughly three to one, and depending on which state and which year you pick, it lands between two and a half and four. I use three because it is defensible everywhere and because a legislator can hold it in their head after you leave.

What Maine actually measured

The Maine Center for Economic Policy did something most states have never bothered to do, which is count the cost of the shortage rather than the cost of fixing it.

They found Maine needed more than 2,300 additional full time direct care workers to close the gap between approved and delivered care, including roughly 1,600 for intellectual and developmental disability services. They found 23,500 weekly hours of approved home care simply not being delivered. They found more than $90 million a year in turnover costs, which is money providers spend hiring replacements for people who left, producing no service for anyone.

Then they measured the workforce effect. Roughly 8,000 Mainers outside the labor force because they were providing unpaid care. Estimated cost to state GDP: $844 million to $1.3 billion annually. Estimated reduction in state and federal revenue: about $70 million.

Sixty five percent of employed caregivers reported that care responsibilities interfered with work. Seventeen percent left jobs entirely. Those are not soft findings about caregiver stress. Those are labor force participation statistics, and labor force participation is a thing every legislator in America claims to care about.

The New York number, which is the one to lead with

The Rockefeller Institute of Government studied what nonprofit disability service providers actually do to a state economy. New York providers reported $9.0 billion in revenue in 2023 and generated $15.6 billion in economic output, supporting 194,186 full time jobs and contributing $2.4 billion in federal and state taxes.

That is roughly $1.73 of economic activity per dollar of provider revenue, and it is the least surprising finding in this entire post once you think about where the money goes. Direct care wages are spent locally within days of being earned. Nobody offshores a community living supports hour. Nobody buys a second home in another state with a direct support professional’s paycheck. The money lands in a grocery store six miles from the person it served.

Rate increases for direct care are, in economic terms, about as efficient a local stimulus as a state can execute. That is an argument the disability community almost never makes, and it is the one most likely to work in a room where the phrase “moral obligation” has already stopped landing.

Dale, and the way this actually plays out

Dale’s community living supports went unstaffed for eleven consecutive weeks. His sister took unpaid leave, then reduced hours, then left the job entirely because the eleven weeks became seven months.

Two years later, after a behavioral crisis nobody was positioned to prevent, Dale entered a licensed facility. The state now spends roughly three times per year what his home supports would have cost. His sister is 58, has no pension, and has a two year gap on her resume that will follow her for the rest of her working life.

Count the ledger honestly. The state saved nothing. It shifted cost from a cheaper line to an expensive one, subtracted a full time taxpayer from the labor force in the interval, and produced an outcome that no person in this story wanted. Somewhere in a budget document that entire sequence appears as a period in which community services were underspent.

What Michigan should take from all of this

Michigan has never published a Maine style analysis of what its own workforce shortage costs the state economy. It should. The data exists in fragments: unfilled authorized hours sit in PIHP encounter data, crisis utilization sits in CMH records, labor force exits sit in survey data nobody has cross referenced.

Somebody with subpoena power or a research grant could produce Michigan’s version of that billion dollar figure inside a year, and it would change budget conversations more than a decade of testimony has. Ask your legislator to request it from the House Fiscal Agency. That is a small, specific, achievable ask, and it is the kind of thing an individual constituent can actually get done.

In the meantime, carry the ratio. Three to one. Community versus institutional. Cheaper option optional, expensive option mandatory. When somebody tells you the state cannot afford to invest in home and community based services, you now know that the state is currently choosing to spend three times as much to get a worse result, and you can say so with a citation. Show your work. Explain how this equation is supposed to balance.