Debt Deal Spares Medicaid, But Brings Uncertainty For Other Disability Programs

Jul 24, 2023

Disability advocates are relieved that Congress approved a deal to raise the debt ceiling without imposing work requirements for Medicaid beneficiaries, but they say that spending caps could impact services. (Thinkstock)

While major changes to Medicaid were left out of a last-minute deal to address the nation's debt ceiling, the agreement includes spending caps that are likely to impact disability programs for years to come.

With virtually no time to spare, President Joe Biden signed a bipartisan bill over the weekend to suspend the debt limit — essentially the amount of money that the federal government is allowed to borrow — until January 2025, averting a first-ever default on the country's debt.

The legislation was the culmination of a months-long standoff between Biden and Republican leaders in Congress who had refused to raise the debt ceiling without reining in spending.

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The measure includes new limits on domestic spending over the next two years that will affect a wide range of federal programs for people with disabilities, but lawmakers left Medicaid unscathed.

"For people with disabilities, care workers and family caregivers the most important part of the debt ceiling deal is what was not included," said Nicole Jorwic, chief of advocacy and campaigns at Caring Across Generations, an organization advocating for caregivers and people who rely on them.

A bill approved by the U.S. House of Representatives in April would have instituted work requirements for many Medicaid beneficiaries. Disability advocates rallied against the proposal arguing that even with exemptions for people with disabilities and their parents and caregivers, the added red tape would likely mean that individuals would lose coverage even if they should still qualify.

"This is major because cuts that large would have destabilized services, particularly home and community-based services at a time when we need to be investing in those services. So that is a major victory," Jorwic said.

At the same time, however, the final agreement effectively cuts spending on special education, housing, vocational rehabilitation and many other programs by freezing funding at current levels until fiscal year 2025 when spending would rise just 1%, an increase that doesn't even account for inflation.

"The legislation effectively cuts discretionary spending for two years when accounting for inflation, creating a lot of concerns," said David Goldfarb, director of policy at The Arc. "Many of these programs have been underfunded for years, and this will continue to make providing these services more challenging. Unlike benefit cuts, these are likely to be felt in declining quality of services."

Zoe Gross, director of advocacy at the Autistic Self Advocacy Network, said it is "impossible to know" exactly how the debt ceiling agreement will impact disability programs since the caps will have to be implemented by Congress in the federal budget process over the coming years. However, she indicated that it never should have come to this.

"The debt ceiling isn't like the federal budget; it isn't a negotiation on how we spend money going forward, it's covering money we’ve already spent," Gross said. "Holding it hostage in order to force through harmful cuts was a political move that shouldn't have happened. We of course acknowledge that the deal could have been even worse for our community, but that isn't the same as it being a good thing."

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