State wants Medicaid to cover 6 months of rent
States are barred from using federal Medicaid dollars to pay directly for rent, but California’s governor is asking the administration of President Biden, a fellow Democrat, to authorize a new program called “transitional rent,” which would provide up to six months of rent or temporary housing for low-income enrollees who rely on the state’s healthcare safety net.
“I’ve been talking to the president. We cannot do this alone,” Newsom told Kaiser Health News.
The governor is pushing California’s version of Medicaid, called Medi-Cal, to fund experimental housing subsidies for homeless people, betting that it’s cheaper for taxpayers to cover rent than to allow people to fall into crisis or costly institutional care in hospitals, nursing homes and jails. Early in his tenure, Newsom proclaimed that “doctors should be able to write prescriptions for housing the same way they do for insulin or antibiotics.”
But it’s a risky endeavor in a high-cost state where median rent is nearly $3,000 a month. Experts expect the Biden administration to scrutinize the plan and question its potential effectiveness.
“Part of the question is whether this is really Medicaid’s job,” said Vikki Wachino, who served as national Medicaid director in the Obama administration. “But there is a recognition that social factors like inadequate housing are driving health outcomes, and I think the federal government is open to developing approaches to try and address that.”
Bruce Alexander, a spokesperson for the Centers for Medicare & Medicaid Services, declined to say whether the federal government would approve California’s request. Biden’s Medicaid officials have approved similar experimental programs in Oregon and Arizona, and California is modeling its program after them.
California is home to an estimated 30% of the homeless people in the U.S., despite representing just 12% of the country’s overall population. Top health officials say that, to contain soaring safety-net spending and help homeless people get healthy, Medi-Cal has no choice but to combine social services with housing.
Statewide, 5% of Medi-Cal patients account for a staggering 44% of the program’s spending, according to state data. And many of the costliest patients lack stable housing: Nearly half of patients experiencing homelessness visited the emergency room four times or more in 2019 and were more likely than other low-income adults to be admitted to the hospital, and a large majority of visits were covered by Medi-Cal, according to the Public Policy Institute of California.
“What we have today doesn’t work,” said Dr. Mark Ghaly, secretary of the California Health and Human Services Agency, explaining his argument that housing is a critical component of healthcare. “Why do we have to wait so long for people to be so sick?”
The federal government has already approved a massive social experiment in California, known as CalAIM, which is transforming Medi-Cal. Over five years, the initiative is expected to pour $12 billion into new Medi-Cal services delivered outside of traditional healthcare. In communities across the state, it is already funding services for some low-income patients, including paying rental security deposits for homeless people and those facing eviction; delivering prepared healthy meals for people with diabetes; and helping formerly incarcerated people find jobs.
The transitional rent program would add another service to those already available, though only a sliver of the 15.4 million Medi-Cal enrollees actually receive those new and expensive social services.
Rent payments could begin as soon as 2025 and cost roughly $117 million per year once fully implemented.
Healthcare experiments in California and around the country that funded housing supports have demonstrated early success in reducing costs and making people healthier. But although some programs paid for security deposits or participants’ first month of rent, none directly covered rent for an extended period.
In a precursor to the state’s current initiative, California experimented with a mix of housing assistance programs and social services through its “Whole Person Care” pilot program. Nadereh Pourat, of the UCLA Center for Health Policy Research, evaluated the program for the state, concluding that local trials reduced emergency visits and hospitalizations, saving an average of $383 per Medi-Cal beneficiary per year.
A randomized control trial in Santa Clara County that provided supportive housing for homeless people showed reductions in psychiatric emergency room visits and improvements in care. “Lives stabilized and we saw a huge uptick in substance use care and mental health care, the things that everybody wants people to use to get healthier,” said Dr. Margot Kushel, director of UC San Francisco’s Center for Vulnerable Populations, who worked on the study.
But healthcare experts say that, although six months of rent can be a bridge while people wait for permanent housing, there’s a bigger obstacle: California’s affordable housing shortage.
“We can design incredible Medicaid policies to alleviate homelessness and pay for all the necessary supportive services, but without the adequate housing, frankly, it’s not going to work,” Kushel said.
Newsom acknowledges that criticism. “The crisis of homelessness will never be solved without first solving the crisis of housing,” he said this month, arguing California should plow more money into housing for homeless people with severe mental health conditions or addiction disorders.
He announced last week that he would ask the Legislature to put before voters a 2024 ballot initiative that would infuse California’s mental health system with new treatment beds and supportive housing for people with mental illness and addiction disorders, many of them homeless.
For transitional rent, six months of payments would be available for select high-need residents enrolled in Medi-Cal, particularly those who are homeless or at risk of becoming homeless. Medi-Cal patients at risk of inpatient hospitalization or who frequent the emergency room would also be eligible.
For Stephen Morton, who lives in Laguna Woods, the journey from homelessness into permanent housing illustrates the amount of public spending it can take for the effort to pay off.
Morton, 60, bounced between shelters and his car for nearly two years and racked up extraordinary Medi-Cal costs due to prolonged hospitalizations and repeated ER trips to treat chronic heart disease, asthma and diabetes.
He landed temporary housing through Project Roomkey before getting permanent housing through a federal low-income voucher, an ongoing benefit that covers all but $50 of his rent.
Since getting his apartment, Morton said, he’s been able to stop taking one diabetes medication and lose weight. He attributes improvements in his blood sugar levels to his housing and the healthy meals he receives via Medi-Cal.
“I’m so grateful and so much healthier,” Morton said.
