Not a Cliff: The Slow Squeeze on NJ Group Homes

The Medicaid cuts are real.

But the sky isn’t falling—at least not yet.

Let’s talk about what’s happening, what isn’t, and why the fear feels bigger than the facts right now—but also why it’s not wrong to feel on edge.

Because you’re probably hearing things.

People getting laid off. Rumors flying.

“Medicaid’s collapsing,” someone says.

Or: “They’re gutting everything.”

Or: “It’s already started.”

And yeah, I’ve seen people get scared—and honestly, some of that fear makes sense.

But we have to separate what’s true from what’s loud.

Because the changes are real. But they’re not all happening at once—and they’re not all happening to us. Not yet.

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So here’s what did happen:

Congress passed a massive tax and spending law on July 4th, 2025—one that includes nearly a trillion dollars in Medicaid reductions over the next decade. That number isn’t a scare tactic. It’s in the bill. The biggest pieces are things like new work requirements for Medicaid expansion adults (which, to be clear, does not include people on the DDD waivers), caps on how states can generate funding through provider taxes, and new restrictions on how hospitals and nursing homes get extra payments.

All of that affects states. Which means it affects state Medicaid budgets. Which means eventually, it affects us.

But the key word is eventually.

Most of these cuts don’t start biting until 2027 or later. And the pieces that are in effect now? They’re mostly about how states move money around—not about slashing services for people in group homes.

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So if that’s true, then why are people getting laid off?

Because panic moves faster than policy.

Because providers—especially ones already running thin—start tightening up at the first sign that funding might dry up.

And because when the top of the budget gets squeezed, the pressure trickles down before anyone officially says, “make cuts.”

But to be clear: there has not been a DDD-ordered rate cut for residential programs.

There is no memo from the state telling group homes to reduce services.

In fact, the FY26 New Jersey budget actually added funding for a DSP wage bump that kicks in January 1st, 2026. That’s not something you do when you’re preparing to slash.

So if someone says they were terminated because of Medicaid cuts, what that usually means is:

> “Our agency is nervous, and they’re trying to save money before the hard part starts.”

Or:

“We’ve had vacant beds, and the funding per house doesn’t stretch the way it used to.”

Or, sometimes?

“We needed someone to blame.”

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And yet… it’s not wrong to worry.

Because the structure’s under strain.

New Jersey’s Medicaid system relies heavily on the kind of financing that’s being capped. And if the state can’t make up the difference once the federal match rate drops, there will be consequences. Probably not in the form of immediate service cuts, but in the quiet things:

A rate freeze here.

A delayed placement there.

A training hour that disappears, or a float shift that never gets covered.

It’s not that the support plans will change overnight. But the reality behind those plans might.

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Let’s say you’ve got a 4-person Tier D group home.

That home brings in around $686,000 a year for residential support.

If there’s a 3% funding drop? That’s about $20,000 less for the year—roughly 13 staff hours a week if you're budgeting around $30 an hour.

Maybe that doesn’t sound like much.

But that’s one fewer backup shift. That’s training coverage going thin. That’s someone having to cover two people’s work for a while—over and over—until burnout kicks in and the spiral starts.

Multiply that across a network. You start to feel it long before the state ever says “cut.”

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What’s coming next?

No one really knows.

That’s the honest answer.

What we do know is that DDD is watching the federal law and has already modeled the worst-case scenarios. We know that FY26 is funded. We know that the phase-in of the law starts in 2027 and gets heavier in 2028 and beyond.

And we know that state decisions over the next two years are going to matter a lot—because if New Jersey can’t find a way to cover the gap left by shrinking federal support, something will have to give.

That’s why it’s not about what’s written down yet—it’s about what we’re already feeling.

The risk isn’t some sudden cliff where everything collapses.

It’s slower. Quieter.

Like the floor shifting under your feet while you’re still trying to carry someone else.

So no—this isn’t the moment to panic.

But it is the moment to pay attention.

To track the changes.

To read the memos.

To ask harder questions when the budget starts to stretch thinner than it should.

To remember that “nothing changed on paper” doesn’t mean the care stayed the same.

Because we are not immune.

Not yet.

And not for long.

🕊