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News Release

PRESIDENT WILL PROPOSE $1.75 BILLION PROGRAM
TO HELP TRANSITION AMERICANS WITH DISABILITIES
FROM INSTITUTIONS TO COMMUNITY LIVING

In his budget next month, President Bush will propose a new $1.75 billion, five-year program to help Americans with disabilities transition from nursing homes or other institutions to living in the community.

The proposal is one of several new efforts to be included in the FY 2004 budget for the President's New Freedom Initiative, a nationwide effort to integrate people with disabilities more fully into society. Altogether, the President's New Freedom budget proposals will represent $2.1 billion in planned new spending over five years, with $417 million in new spending proposed for FY 2004.

The proposals build on recommendations made to the President last year in "Delivering on the Promise," a comprehensive survey of federal policies and rules that may impede community living for those with disabilities.

"The New Freedom Initiative was one of the earliest actions announced by the President in his first days in office," said HHS Secretary Tommy G. Thompson. "The President and I are committed to changing policies that unnecessarily confine people with disabilities in institutional settings. We want to work with the states and the disability community to change old programs and develop new ones that will serve people with disabilities in the settings that work best for them."

Proposals in the FY 2004 budget will include:

• "Money Follows the Individual" Rebalancing Demonstration -- $1.75 billion over five years, with $350 million proposed for FY 2004. This five-year demonstration would assist states in developing and implementing a strategy to "re-balance" their long term care systems so that there are more cost-effective choices between institutional and community options, including financing Medicaid services for individuals who transition from institutions to the community. Federal grant funds would pay the full cost of home and community-based waiver services for one year, after which the participating states would agree to continue care at the regular Medicaid matching rate. This significant demonstration would build upon existing state success stories in Texas, Wisconsin, Michigan and Washington. It also provides incentives to states for increased use of home and community-based services and would help provide information on costs of different approaches.
  
  
• New Freedom Initiative Demonstrations -- $220 million over five years, with $11 million proposed for FY 2004. This initiative would fund four demonstrations that promote home and community-based care alternatives. Two of the demonstrations provide respite care services for caregivers of adults with disabilities or long-term illness and children with substantial disabilities. Another demonstration provides community-based care alternatives for children who are currently residing in psychiatric residential treatment facilities. The President proposed these demonstrations for FY 2003, but it is not expected that Congress will include this in its final FY 2003 appropriations.
  
  
• Spousal Exemption -- $95 million over five years, with $16 million proposed for FY 2004. This proposal would continue Medicaid eligibility for spouses of disabled individuals who return to work. Under current law, individuals with disabilities might be discouraged from returning to work because the income they earn could jeopardize their spouse's Medicaid eligibility. This proposal would extend to the spouse the same Medicaid coverage protection now offered to the disabled worker.
  
  

The budget will also propose to establish a new state option enabling Medicaid presumptive eligibility for institutionally qualified individuals who are discharged from hospitals into the community. This would make it more feasible to discharge a person who has been hospitalized to the community, rather than to an alternative institutional setting, or to ensure that the institutional placement is of short duration.

Expanding on an existing effort, the FY 2004 budget will also include $40 million for "Systems Change Grants" to support states in their planning to create new systems to support people with disabilities in the community instead of in institutions.

In addition to the "Systems Change Grants," HHS has worked with 40 states and the District of Columbia to design and implement Ticket-to-Work provisions. And last year HHS offered an "Independence Plus" waiver template to help states develop consumer directed services.

Last year, the President named his New Freedom Commission on Mental Health, and charged it with conducting a comprehensive study of the United States mental health service delivery system, including both private and public sector providers, and advising him on methods of improving the system. Secretary Thompson also created a new Office on Disability within HHS in 2002 to coordinate activities across the Department and serve as a focused contact point for disability issues.

"Improving our programs for people with disabilities, including the need to tackle the institutional bias in some programs, is a daunting task," Secretary Thompson said. "It will require sustained effort over many years. We've made a start with the most comprehensive survey ever taken of problems and opportunities in federal programs, as well as new structures to support our efforts. The President's budget proposals will take us to the next level, with substantial demonstration activities and more help for Americans with disabilities to enter and stay in the workforce."

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Last Revised: January 23, 2003