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The Gift of the Medicaid Waiver*

“One dollar and eighty-seven cents…that was all…and the next day would be Christmas.”

Nearly 2 years since my wife applied for a Medicaid waiver, we finally received a letter confirming that we were moving up in the queue. Maybe if we moved quicker, we could’ve gotten it sooner. We didn’t get the paperwork done until 9 months after our daughter was born but it was hard to make it top priority after her disability diagnosis, open heart surgery, frequent therapies and the mundane challenges that new parents have to face.

As a physician, I am fairly familiar with Medicaid but I never imagined having to need it. Our daughter’s extra chromosome changed all that. Although we did not miss any of her medical needs while waiting for the waiver, I was surprised to find out what it could do for a child like her.

Now we see the light at the end of the tunnel. And getting the good news at Christmas time evoked the timeless story of one of my favorite authors. In “The Gift of the Magi”, O. Henry gave us a tale about generosity borne out of sacrifice. It is, rather ironically, the same theme that pervaded the origins of the Medicaid waiver.

Brief History: Who was Katie Beckett?

Mention Medicaid and most people identify it as the insurance program for low-income families. Over time, its coverage expanded to include children with disabilities particularly after a breakthrough happened to a young girl from Iowa named Katie Beckett. At 4 months of age, she was diagnosed with viral encephalitis that left her paralyzed and dependent on a ventilator to breathe. Her parents wanted to take care of her at home but their income exceeded Medicaid eligibility. Back in the late 70s, Medicaid would only cover costs for a child with severe disabilities for institutional care—but not home-based care—and only after a child spent >30 days in an institution (with the parents paying for the first 30 days). Katie’s parents lobbied against additional requirements for Medicaid coverage such as financial hardship from medical expenses and giving up child custody to the state. They fought to change the system that prevented her from obtaining home care despite it being cheaper than hospital care. A day after President Ronald Reagan publicly empathized with Katie’s plight, the health secretary waived the traditional Medicaid rules to let Katie go home while continuing to receive federal coverage.

Since Congress added the Katie Beckett Waiver to Medicaid in 1981, other programs expanded on its objective. The Tax Equity and Fiscal Responsibility Act option permitted states to extend Medicaid eligibility to children with significant disabilities by ignoring parental income and the 1915(c) Home- and Community-Based Services (HCBS) waivers were formed to assist populations with different disabilities.

Indiana Medicaid Waiver programs

Medicaid waiver programs vary from state to state. For additional reading on your state’s programs, please see:

To keep it simple, let’s take a look at our home state. Indiana has 4 waiver programs that serve children; 2 of them provide services specifically to children (and adults) with intellectual or developmental disabilities (IDD):

· Family Supports waiver program

The Family Supports HCBS waiver supports children who live with their families.

· Community Integration and Habilitation waiver program

The Community Integration and Habilitation HCBS waiver provides services that enable children to remain in their homes or community-based settings. Additionally, it assists those who are transitioning from state institutions back into their community.

Both programs aim to help children with IDD (including autism) and waive parental income for eligibility. Children should meet other eligibility criteria: IDD must be diagnosed before the age of 22; non-institutionalized; disability is expected to continue indefinitely, and; disability significantly limits the ability to function normally in 3 of 6 major life areas namely self-care, receptive and expressive language, learning, mobility, self-direction, and capacity for independent living.

As the name implies, the main goals of the numerous services available through HCBS are to help individuals live at home and to encourage community integration rather than being segregated in an institution. Among many available waiver services are different types of therapy such as music, occupational, physical, psychological, recreational and speech.

The Good, the Bad and the Merry

A scoping review of the impact of HCBS waivers on individuals with IDD revealed that they help improve independent living skills and quality of life. Specific to those with autism, the waivers reduced racial disparities to accessing care and the risk of psychiatric hospitalizations. Over 10 million people were estimated to qualify for Medicaid on the basis of disability.

Despite the many benefits of Medicaid waivers, it is plagued by dreadfully long waiting lists. The COVID-19 pandemic only made it worse where the wait has sometimes stretched beyond 3 years.


Katie Beckett was discharged from hospital to home a week before Christmas in 1981. In an interesting coincidence, the letter from Medicaid was delivered to our mail just days before Christmas. The timing is at once uncanny and amusing, certainly not out of foolishness but for the disguised wisdom of it all. I was once oblivious to what waivers are and do. Yet through my daughter’s disability, I have come to embrace them. Together with many families who believe in what it stands for—better lives for children with disabilities in their homes and communities—I have also come to celebrate the gift it brings.

Merry Christmas to one and all!

*with apologies to William Sydney Porter


1. Semansky RM, Koyanagi C. The TEFRA medicaid eligibility option for children with severe disabilities: a national study. J Behav Health Serv Res. 2004;31:334-42.

2. Hevesi, Dennis (May 22, 2012). Katie Beckett, Who Inspired Health Reform, Dies at 34. The New York Times. Accessed. December 24, 2022.

3. Indiana Medicaid


5. McLean KJ, Hoekstra AM, Bishop L. United States Medicaid home and community-based services for people with intellectual and developmental disabilities: A scoping review. J Appl Res Intellect Disabil. 2021;34:684-694.


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