The Disability Squeeze: What Happens When Rights Shrink and Medicaid Funding Tightens?
Part 3 of The States Behind Texas v. Kennedy
For months, disability advocates have focused on Texas v. Kennedy as a legal battle over federal disability protections. The lawsuit, brought by Texas and a coalition of states, challenges portions of updated Section 504 regulations and has raised concerns about the future of disability rights in the United States.
But for many families, the larger question extends beyond the courtroom.
What happens if states succeed in reducing their obligations under federal disability law while simultaneously facing pressure from changes to Medicaid funding and administration?
Advocates warn that the answer could reshape how disability services are delivered across the country, creating new challenges for families already struggling to access supports.
Beyond the Lawsuit
Much of the public discussion surrounding Texas v. Kennedy has focused on legal language, federal regulations and the relationship between states and Washington.
Yet disability policy experts say rights and services cannot be separated.
Federal disability laws such as Section 504 of the Rehabilitation Act and the Americans with Disabilities Act establish protections against discrimination and help ensure equal access to education, transportation, employment and public services. Those laws define what governments and institutions must provide.
Medicaid, however, often pays for the services that make those rights meaningful.
A student may have the right to attend school in the least restrictive environment. An adult with intellectual disabilities may have the right to live in the community rather than an institution. A person with significant support needs may have the right to participate in public life.
In many cases, Medicaid-funded services are what make those outcomes possible. Without those supports, advocates argue, legal protections alone may not be enough.
The Hidden Role of Medicaid
Many Americans think of Medicaid primarily as health insurance for low-income individuals. For disability communities, however, Medicaid functions as much more than a health coverage program.
Across the country, Medicaid funds home and community-based services, personal care attendants, residential supports, nursing services, employment assistance, transportation programs and respite care for families.
These services allow millions of disabled Americans to remain in their homes and communities rather than entering institutional settings.
For families raising children with significant disabilities, Medicaid-funded supports often fill gaps that private insurance does not cover. For adults with intellectual and developmental disabilities, Medicaid waivers frequently provide the foundation for independent living.
The result is a system in which disability rights and disability services are deeply intertwined. When one changes, the effects are often felt throughout the other.
A Period of Uncertainty
States are entering a period of significant uncertainty regarding Medicaid administration and spending.
Federal policymakers have proposed and implemented a variety of changes aimed at increasing oversight, reducing improper payments and requiring more frequent eligibility reviews.
Supporters argue these measures are necessary to ensure Medicaid remains financially sustainable and focused on eligible recipients.
Critics contend that increased paperwork requirements and administrative hurdles often lead eligible individuals to lose coverage despite continuing to qualify for benefits.
Historically, disability advocates have expressed concern that bureaucratic complexity can disproportionately affect people with disabilities, particularly those who rely on caregivers to navigate enrollment systems or who face challenges completing documentation requirements.
While many individuals with significant disabilities may qualify for exemptions from work requirements or other eligibility provisions, advocates note that administrative systems do not always operate flawlessly.
The concern is not necessarily that people become ineligible. It is that they may struggle to remain enrolled.
The Budget Pressure Facing States
At the same time, states continue to face growing demands on their budgets. Healthcare costs are rising. Long-term care needs are increasing as the population ages. Demand for disability services continues to grow.
Many states already maintain lengthy waiting lists for home and community-based services. In some areas, families wait years for waiver slots that provide access to critical supports.
When state budgets become constrained, policymakers often face difficult decisions about which programs to prioritize. Unlike certain Medicaid benefits that states are required to provide, many home and community-based services operate through optional waiver programs. That distinction has become increasingly important.
Disability advocates worry that if states face financial pressure, optional services may become vulnerable to reductions, freezes or slower expansion.
Such changes could take many forms, including longer waiting lists, fewer service hours, lower reimbursement rates for providers or reduced availability of family support programs.
For families already struggling to obtain services, even modest reductions can have significant consequences.
The Direct Support Workforce Challenge
The disability service system was facing challenges long before Texas v. Kennedy reached federal court.
One of the most significant is the nationwide shortage of direct support professionals.
Direct support professionals assist individuals with disabilities in daily activities, employment, transportation, community participation and independent living. Many disability providers report persistent staffing shortages, making it difficult to meet growing demand.
Organizations across the country have reported turning away referrals, reducing program capacity or limiting service availability because they cannot recruit or retain workers.
Advocates say reimbursement rates play a major role in the crisis.
When funding fails to keep pace with labor costs, providers struggle to offer competitive wages. The result is a workforce shortage that affects families regardless of what rights exist under federal law. Even when services are technically available, finding someone to provide them can be another challenge entirely.
A Growing Divide Between States
One consequence of current policy debates may be an increasing difference in disability services depending on geography. States have historically taken different approaches to Medicaid and disability programs.
Some have invested heavily in home and community-based services and worked to reduce waiting lists. Others have maintained more limited systems with fewer available resources.
If financial pressures increase, those differences may become even more pronounced.
Families in one state could have access to robust community supports, employment programs and residential options. Families in another state may encounter longer waits and fewer available services.
Advocates describe this possibility as a “zip code lottery” for disability services.
The concern is not that disability rights disappear entirely. Rather, it is that access to meaningful support becomes increasingly dependent on where a person lives.
The Question at the Center of the Debate
Disability advocates often return to a single question when discussing Texas v. Kennedy and broader Medicaid changes.
What happens when rights and resources begin moving in opposite directions?
For decades, disability policy has focused on helping individuals live, learn and work in their communities. Landmark legal decisions and federal protections have reinforced the principle that disability should not automatically lead to segregation or institutionalization.
Maintaining that vision requires more than legal protections. It requires transportation, caregivers, residential supports, employment services, educational accommodations and community-based programs. Those services cost money.
As courts weigh the future of disability regulations and policymakers debate the future of Medicaid, families are watching closely.
For them, the conversation is not merely about legal theory or federal authority.
It is about whether their child will receive services, whether their adult son or daughter can remain in the community and whether support systems that took years to build will remain available in the future.
The outcome of Texas v. Kennedy may ultimately be decided in court. The broader debate it represents, however, is likely to shape disability policy for years to come.