Consider a scenario replicated thousands of times a year in Massachusetts: an 80-year-old woman needs help bathing and managing her medications, but she can carry on a conversation, share a meal with neighbors, and walk to the dining room with a cane.
While she is fully capable of living in a shared housing community or an assisted living facility, she’s on Medicaid, and in Massachusetts and in many other states, Medicaid doesn’t help pay for those types of living arrangements. So, she goes to a nursing home instead—a more restrictive setting than her clinical needs require.
That institutional logic—born of policy architecture, not clinical necessity—is what a growing coalition of state advocates is working to dismantle.
Proposed legislation in Massachusetts, House Bill 791/Senate Bill 474, An Act Relative to Assisted Living and the Frail Elder Waiver, would direct MassHealth—Massachusetts’s public health insurance program—to create a Medicaid-funded assisted living option priced at no more than 80 percent of “substantially similar” nursing home care. The proposal builds on a federal waiver mechanism that has been available for decades.
The Waiver Nobody Required States to Use
The legal authority for Medicaid-funded assisted living dates to 1981, when Congress created Section 1915(c) Home and Community-Based Services waivers. States can use these waivers to pay for care services in assisted living facilities rather than nursing homes—as long as the arrangement costs no more than institutional care would for the same person. That cost-neutrality test is easy to satisfy. A semi-private room in a nursing home now runs roughly $115,000 annually; assisted living averages about $74,000—around 35 percent less.
Forty-six states and Washington, D.C., already offer some level of Medicaid assistance for individuals in assisted living or other non-nursing home care. The holdouts—Alabama, Kentucky, Louisiana, and Pennsylvania—illustrate that inaction is a choice, not a mandate.
California’s Assisted Living Waiver has a waiting list exceeding 18,300 people as of December 2025. That’s not evidence of failure; it’s evidence that demand is dramatically outpacing political will. Medicaid in these programs pays for care services, including personal assistance, medication management, skilled nursing visits, and homemaker support.
States can use these waivers to pay for care services in assisted living facilities rather than nursing homes—as long as the arrangement costs no more than institutional care would for the same person.”
What Medicaid won’t cover—in virtually any state—is room and board in assisted living facilities without the waiver. That gap is where housing finance enters the picture.
This Is a Housing Issue
Across the country, the room-and-board gap falls hardest on those who most need Medicaid-funded assisted living: overwhelmingly low- and moderate-income elders—the primary residents of affordable senior housing financed by Low-Income Housing Tax Credits (LIHTC) and Section 202 programs. The buildings community development corporations and nonprofit developers have spent decades building are already home to exactly the population at the center of this policy debate.
When Medicaid-funded care services are layered onto affordable senior housing, the math works.
Washington, D.C., has moved deliberately in this direction. Its 1915(c) waiver covers assisted living and related services, while its LIHTC Qualified Allocation Plan prioritizes assisted living and senior housing developments. Together, they illustrate how Medicaid-funded care services and affordable housing finance can work together to support lower-income older adults.
Massachusetts has more than 40 congregate housing sites with capacity for approximately 500 residents, and a far larger Section 202 and LIHTC senior portfolio.
Minnesota, Oregon, and Washington state use 1915(c) waivers to pay for supportive housing programs, often partnering with nonprofit housing providers and community-based supports to help Medicaid beneficiaries remain in community settings rather than in institutions.
The policy gap is national; the housing stock to fill it already exists.
One Holdout State: Massachusetts
Massachusetts is a useful case study precisely because its failure is so hard to explain on its merits. The state ranks second nationally in life expectancy and first in health insurance coverage. Yet it remains, as one advocate put it, “an outlier among states in failing to offer a robust Medicaid-funded assisted living option.”
The state’s Frail Elder Waiver covers some congregate settings but is capped at roughly 20,000 slots and doesn’t support a full assisted living benefit.
Advocates at the coalition Dignity Alliance Massachusetts, where I serve on the coordinating committee, argue that MassHealth’s posture has been deferential to the nursing home lobby for decades. The numbers support that reading.
Medicaid is the primary payer for nearly 63 percent of nursing home residents. A policy that diverts even a fraction of low-acuity residents to Medicaid-funded assisted living poses a direct financial threat to an industry that has organized effectively against that outcome.
Gov. Maura Healey’s landmark long-term care law—Chapter 197 of the Acts of 2024—took a first step by requiring the Massachusetts Executive Office of Health and Human Services to report on the availability and potential savings of a federal waiver that would allow nursing-home-eligible residents to live in certified assisted living. The proposed House and Senate bills would go further, requiring MassHealth to act on that analysis.
The Fiscal Case—and the Deeper One
The Department of Veterans Affairs has estimated that for each veteran placed in assisted living instead of a nursing home, the VA could save approximately $69,101 per year.
AARP research found that at least 9 percent of nursing home residents nationwide—and up to 20 percent in five states—have care needs that don’t warrant skilled nursing placement. They are there because Medicaid won’t pay for anything else.
In Massachusetts, where daily Medicaid nursing home rates exceed $200 a day, even modest diversion of low-acuity residents could generate substantial savings. The fiscal argument has become even more urgent after the passage of the 2025 reconciliation bill (H.R. 1), which officials say will cut $1.75 billion in federal health care support for Massachusetts. If the state doesn’t build the assisted living alternative, more elders will be channeled into nursing homes—at higher cost, with worse outcomes and greater exposure to the private equity extraction that Dignity Alliance has documented for years.
Seventy-three percent of adults aged 50 and older say they want to remain in their own homes for as long as possible. For those who need congregate care, assisted living offers a meaningfully different quality of life: a private apartment rather than a shared hospital-style room, communal dining rather than institutional trays, and, above all, greater control over the days that remain.
What Advocates Want
The advocacy agenda taking shape in Massachusetts reflects a framework applicable to any of the four holdout states—and to the many states that have underfunded or capped their active waivers.
Advocates press for three things in sequence. First, enact HB 791/SB 474 and direct MassHealth to create a Medicaid-funded assisted living benefit priced at no more than 80 percent of nursing home care.
Second, expand housing subsidies—through the Massachusetts Rental Voucher Program and increased production of affordable senior housing—so that room-and-board costs don’t remain a structural barrier.
For CDCs and nonprofit developers, the implication is direct: the housing stock you’ve spent decades building is the infrastructure this policy depends on. The financing model exists. The residents are already there. What’s needed is the political decision to connect the two.”
Third, build community-first gatekeeping into Medicaid’s admissions process: a systematic review of nursing home placements that prioritize community settings for those who can safely live there.
None of this is novel. Forty-six states already do some version of it. The waiver authority has existed since 1981. What’s been missing—in Massachusetts and in the remaining holdout states—is the willingness to act despite the objections of an industry that profits from the current default. For CDCs and nonprofit developers, the implication is direct: the housing stock you’ve spent decades building is the infrastructure this policy depends on. The financing model exists. The residents are already there. What’s needed is the political decision to connect the two.
The woman in Worcester likely doesn’t know what a 1915(c) waiver is. Neither does her counterpart in Birmingham or Baton Rouge or Louisville. They know they don’t want to go to a nursing home. They know there’s a place down the street with people their age, three meals a day, and someone to help them in the morning. They know they can’t afford it. The only question left is whether their states will decide they deserve a choice.
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