Insights

Most Medicaid proposals on long-term services and supports (LTSS) carry an unstated assumption that the primary users of LTSS are older adults aging in place. In reality, many others use LTSS including individuals with Intellectual and Developmental Disabilities (IDD), Serious Mental Illness (SMI), Traumatic Brain Injury (TBI), and children with complex medical needs.

The people who rely on LTSS don’t fit neatly into one box. Each group has unique needs and policymakers face distinct challenges in meeting those needs, and are all navigating a Medicaid system under significant pressure. This blog looks at four of these subpopulations, what they need, and what’s standing in the way.

Background on LTSS

LTSS care is largely provided through Medicaid coverage that is a mix of institutionalization and home- and community-based services (HCBS). HCBS was not originally written into Medicaid policy, which has led to gaps across states and policies centered around only older adults, primarily people aged 65 and older who need help with daily activities due to age-related decline.

People with Intellectual and Developmental Disabilities (IDD)

People with IDD require a lifetime of support and face waiver waitlists that can last more than a decade, the longest delays of any LTSS subpopulation.

The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, created a new 1915(c) waiver category allowing states to serve individuals before they hit the institutional level-of-care (LOC) threshold, with $50M for FY26 and $100M for FY27. It sounds meaningful, but the math is less encouraging. According to an analysis using 2020 average per-capita HCBS spending, that $50M divided across 50 states covers roughly 27 people per state. The authority also doesn’t kick in until July 2028, and per-capita spending is capped at state institutional care rates, which limits how far states can go.

The real test of this new waiver authority is whether states use the next two years to build it into something impactful, a decision is being made in state budget offices right now.

People with Serious Mental Illness (SMI)

SMI impairments are episodic and cognitive, manifesting in the inability to consistently manage medications, maintain housing, or navigate a crisis. Standard LOC assessments were not built to capture that, so those who genuinely need support get turned away from care and cycle through ERs, jails, and shelters instead.

This is primarily a state-level problem as each state designs its own assessment instrument. Any state can adopt a more comprehensive tool that accounts for cognitive and episodic limitations, though budget neutrality requirements create a real constraint. On the federal side, H.R. 3320, the Strengthening Medicaid for SMI Act would increase the federal match for intensive community-based SMI services. It likely won’t pass this Congress, as there is only one cosponsor, there is no Senate bill, and the sponsor (Rep. Goldman (D-NY-10)) lost his re-election bid. However, it’s a clear marker of where reform is headed.

Children with Complex Medical Needs

Children with complex medical needs don’t automatically age out of their conditions at 19, but they can age out of the Medicaid coverage keeping them stable.

Many qualify for coverage through the Katie Beckett Program, created under the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982, which allows children with significant disabilities to access Medicaid regardless of family income. But the transitions out of pediatric coverage are a gauntlet and lead to a potential break in coverage due to the long waiver waitlists and inconsistent requirements.

The Medicaid and CHIP Payment and Access Commission’s (MACPAC) June 2026 report to Congress includes a chapter on this problem. The Commission provided recommendations, including requiring states to send advance notice of aging and implementing a 12-month continuous eligibility to account for waiting time. The chapter provides a solid baseline for advocates to influence congressional action.

People with Traumatic Brain Injury (TBI)

Around 5.3 million Americans live with a lifelong disability as a result of a brain injury; however, TBI-specific HCBS waivers exist in only about 20 states. In the rest, individuals are misclassified under other waiver categories or fall through the gaps entirely, ending up in shelters, jails, or ERs that aren’t equipped to help them.

CMS recognized TBI as a chronic condition in the Contract Year 2025 (CY25) Medicare Advantage and Part D Final Rule, a federal precedent advocates can point to when making the Medicaid parity argument. However, the more immediate action is at the state level as North Carolina, Maryland, and Nebraska are actively expanding TBI-specific waivers. For advocates in states without them, these are the types of models to bring to your state Medicaid director.

The Common Thread

Each of the subpopulations experiences the same blind spot: Medicaid HCBS was designed around, and for, older adults aging in place and then extended to other populations through inconsistent waivers and state amendments.

The direct care workforce shortage reflects the mismatch there are not enough caregivers to serve every population in need. Providers turn away over 25% of referrals due to staffing shortages. When formal care is unavailable, family members become caregivers and often leave the workforce to do so.

The fragmentation has confined each population to its own waiver structure, agency contact, and advocacy community. As a result, the four subpopulations are fighting the same underlying fight in isolation.

Most pressing of all, HCBS remains an optional Medicaid benefit rather than a guaranteed one, making it a prime target when states cut budgets. This means each of these subpopulations’ care is first to go if money gets tight.

Where to Go from Here

Just as these programs were built state by state, the policy levers to change them rest primarily with the states. IDD waiver implementation, SMI assessment redesign, and TBI waiver expansion are each determined at the state level. Only the children’s transition issue is squarely a federal ask, addressed through MACPAC recommendations and congressional action.

That means the most consequential near-term decisions are happening in state budget negotiations, as states absorb the fiscal pressure from OBBBA and decide what to implement with the new authorities it created.

That does not mean the federal level is quiet. On May 20, 2026, Senate Finance Committee ranking member Ron Wyden (D-OR) and 16 Senate Democrats issued a dear colleague letter signaling interest in policies to make long-term care more affordable and accessible for seniors and people with disabilities. Requests for Information comment periods, and staff briefings are all on the table as avenues to raise these populations’ visibility with congressional staff before legislative text is drafted.

These four populations are not fighting different battles. They are fighting one battle, alone, inside a system that was never built to hold them together. The workforce shortage, the optional status of HCBS, and the fragmentation of policy levers across fifty states are not separate problems. They are the same exclusion, appearing in different forms. As Congress and state legislatures shape the next round of Medicaid decisions, the populations with the most at stake have the least shared voice in the room. That imbalance needs to change before the decisions do.