Reconsidering Makin v. Hawaii: the Right of Medicaid Beneficiaries to Home-based Services as an Alternative to Instutionalization

• Publication year: 2010

Georgia State University Law Review

Volume 26 . , „

t •jc ■ Article ¹⁰

Issue 3 Spring 2010

3-21-2012

Reconsidering Makin v. Hawaii: The Right of Medicaid Beneficiaries to Home-Based Services as an Alternative to Instutionalization

Elliott Schwalb

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Recommended Citation

Schwalb, Elliott (2009) "Reconsid ering Makin v. Hawaii: The Right of Medicaid Beneficiaries to Home-Based Services as an Alternative to Instutionalization," Georgia State University Law Review: Vol. 26: Iss. 3, Article 10. Available at: http://digitalarchive.gsu.edu/gsulr/vol26/iss3/10

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RECONSIDERING MAKIN V. HAWAII: THE RIGHT OF MEDICAID BENEFICIARIES TO HOME-BASED SERVICES AS AN ALTERNATIVE TO INSTITUTIONALIZATION

Elliott Schwalb*

Introduction

When states restrict health services for disabled residents to institutional settings instead of providing equally effective community-based services, they run afoul of the Americans with Disabilities Act (ADA).¹ This was the essential holding of the 1999 case of Olmstead v. L.C.² Considered a landmark civil rights decision for residents who have disabilities,³ Olmstead held that restrictive treatment regimes that confine the disabled to institutional settings without medical justification constitute a form of segregation that the ADA prohibits.⁴ Under the ADA, states have a general obligation to provide services in the "most integrated setting" appropriate to disabled individuals, and to avoid reliance upon excessive institutionalization policies in their health programs.⁵

Olmstead has been heralded as the Brown v. Board of Education for people with disabilities residing in state psychiatric hospitals, institutions for mental retardation,⁶ and nursing homes.⁷ The analogy

* Elliott Schwalb, J.D. graduated from New York University School of Law, J.D. 1992 and is a member of the New York and Georgia Bar. The views expressed in this article are the author's alone, and do not necessarily represent the views of any other entity or agency. This article is dedicated to Celeste Saul Jenks, Georgia State University College of Law (Class of 2003), who, through her personal example, inspired her many friends and colleagues throughout her brief life; and to Meg. This article was greatly enhanced by the generous efforts and insightful comments of the following individuals: Therese M. Day, Elisa Roberts, Professor Randall Hughes, Steven Schwartz and John Bayne.

1. Pub. L. No. 101-336, 104 Stat. 327 (1990) (codified at 42 U.S.C. § 12101, et seq. (2006)).

2. Olmstead v. L.C, 527 U.S. 581 (1999).

3. See, e.g., Mary C. Cereto, Olmstead: The Brown v. Board of Education for Disability Rights: Promises, Limits, and Issues, 3 LOY. J. PUB. INT. L. 47 (2001); Melody Kubo, Case Note, Implementing Olmstead v. L.C: Defining "Effectively Working" Plans for Reasonably Paced Wait Lists for Medicaid Home and Community-Based Services Waiver Programs, 23 U. HAW. L. REV. 731 (2001).

4. Olmstead, 527 U.S. at 600-01.

5. Id. at 581,607.

6. Often denoted as "ICF-MRs" [Intermediate Care Facilities for the Mentally Retarded].

803

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to Brown may be particularly apt in that, like Brown, the actual progress in deinstitutionalization of health facilities has fallen far short of its initial promise. One primary reason that progress in deinstitutionalization has stalled arises from outside the ADA itself and relates to Medicaid's community-based waiver program, a primary mode of health care relied upon by disabled individuals. Medicaid's community-based waiver program is a service that allows individuals qualifying for institutional care under Medicaid to receive their care in their homes or in the community as an alternative. The current state of the law has largely been shaped by a case that arose in the Federal District Court in Hawaii,⁹ Makin v. Hawaii, the subject of this article. Makin has had a substantial persuasive impact that has limited the growth of services under Medicaid's community-based waiver program and stymied the nation's deinstitutionalization efforts. The analysis and holding of Makin has received strong support from a number of subsequent decisions from across the country, including federal appellate decisions in four circuits, without any explicitly contrary decisions.¹⁰ This article seeks to show that, despite reflecting the current state of the law, Makings analysis is ultimately unpersuasive and its analysis and holding should be rejected.

I. The Makin v. Hawaii Decision

A. Background and Factual Context

In terms of complexity and cost, Medicaid stands apart from the other programs that made up President Johnson's "Great Society"

7. Cereto, supra note 3; Samuel R. Bagenstos, Justice Ginsberg and the Judicial Role in Expanding "We the People": The Disability Rights Cases, 104 COLUM. L. REV. 49 (2004).

8. K. Charlie Lakin, Robert Pouty, Barbara Pollster & Kathryn Coucouvanis, States' Initial Response to the President's New Freedom Initiative: Slowest Rates of Deinstitutionalization in 30 Years, 42 Mental Retardation 241 (2004). The New Freedom Initiative, promulgated under Executive Order 13217, directed the Executive branch to undertake "swift implementation of the Olmstead decision." Id:, Mark S. Salzer, Kat Kaplan & Joanne Atay, State Psychiatric Hospital Census After the 1999 Olmstead Decision: Evidence of Decelerating Deinstitutionalization, 57 psychiatric services 1501 (2006).

9. Makin v. Hawaii, 114 F. Supp. 2d 1017 (D. Haw. 1999). 10. See infra notes 42-44.

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program. Conceived as an "anti-poverty" program, today Medicaid is a key pillar of the nation's health infrastructure, where access to health insurance is often tantamount to access to any health care at all. In a country where 20 percent of the population lacks any insurance, many health institutions are vitally dependent on Medicaid as a funding source for their services.¹¹ Medicaid is jointly financed by state and federal governments, with the federal share ranging from 50 to 83 percent, depending on the particular state's per capita income relative to the national average. There are basic federal rules and requirements under Medicaid law, but states have great discretion as to the specific services that will be covered, what population groups will be covered, and most of the operating details of the program. Medicaid is an entitlement program, requiring states to provide care to all who meet its terms of eligibility as a condition for the receipt of federal funds. The operating language for this entitlement, like other entitlement programs of the Social Security Act, is the statute's requirement that such services must be furnished

1 "\

with "reasonable promptness."

Medicaid funding is a crucial component to realizing the deinstitutionalization objectives of the ADA, as interpreted by Olmstead, because it provides the lion's share of the state's health expenditures for individuals who have permanent disabilities (as defined by the Social Security Act). Justice Ginsburg's plurality opinion in Olmstead recognized that state health resources "are not boundless."¹⁴ Under Olmstead, states have some latitude in how they structure their health care infrastructure to meet the ADA's requirements. Taking into account issues of cost, fairness, and the overall health needs of their populations, states are permitted to defer

11. Audra Wenzlow, Dan Finkelstein, Ben Le Cook, Kathy Shepperson, Christine Yip & David Baugh, The Medicaid Analytic Extract Chartbook 13 (2007), available at http://www.cms.hhs.gov/MedicaidDataSource^^ (finding in 2002 that eighteen percent of the U.S. population was covered by Medicaid and that Medicaid accounted for fifteen percent of health expenditures).

12. 42 U.S.C. § 1396d(b) (2006).

13. 42 U.S.C. § 1396a(8) (2006); see, e.g., Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17-18 (1981) (distinguishing a general federal grant program from an entitlement program such as the former AFDC [Aid to Families with Dependent Children] program.).

14. See Olmstead v. L.C., 527 U.S. 581,603-07 (1999).

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immediate access to community-based services.¹⁵ Approximately 64 percent of individuals with disabilities that are severe enough to prevent them from working rely on Medicaid for their health care.¹⁶ The principal Medicaid program that finances community-based care is the Medicaid home and community-based waiver program (the "waiver program").¹⁷ However, not everyone who qualifies for these services gets them, which is in part the result of the Makin decision, its analysis, and other courts that have followed it.

Established in 1981, the waiver program authorizes individuals qualifying for institutional care to receive, as an alternative, a panoply of medical and personal services in their homes or other residential settings in the community. Waiver services are generally cheaper and more individually focused than services provided in institutions or nursing facilities. The program represents a "waiver" of the general federal requirement that federal Medicaid funds be limited to services provided for "medical assistance," as defined in the statute.¹⁹ Congress recognized that such non-medical assistance could be the key to avoiding more costly medical institutional care.²⁰ In what has been somewhat confusing, the legislation providing for the waiver program also "waived" specific statutory provisions of the Medicaid Act, a key part of the analysis below.

Typically, when states seek federal approval for a waiver...