A prescription for housing? Use Medicaid for funding
For more than a decade, researchers and advocates have argued that housing is a fundamental part of health care. Beginning this fall, for the first time, federal Medicaid dollars will start going toward paying some people’s rent.
It’s a significant policy development. Congressional regulations have long barred Medicaid funds from being used to pay for rent for people staying outside of nursing homes or medical facilities like hospitals. Now, with rates of unsheltered homelessness reaching record highs in 2023, and rents growing to their most unaffordable levels ever, some states are preparing to use federal Medicaid dollars in the hopes that health will improve as housing stabilizes.
The Biden administration has made this possible through a longstanding Medicaid waiver program that allows states to test out new Medicaid ideas.
For nearly a decade, the federal agency that runs Medicare and Medicaid has been warming to the idea that housing could be health care. The “housing is health care” mantra got another major boost during the pandemic, when calls to stay at home to avoid catching and spreading disease grew louder and more urgent.
And in 2022, the Biden administration encouraged states to consider using Medicaid dollars for “health-related social needs” like housing, nutrition, and transportation — part of a broader White House effort to address social determinants of health.
Jeff Olivet, the executive director of the US Interagency Council on Homelessness, told me he sees the ability to use Medicaid dollars for purposes like rent as “a real potentially game-changing set of supports” to help people exit homelessness and then stay stably housed.
Not everyone thinks this is a good move for Medicaid. Sherry Glied, a dean and professor of public service at New York University, warned recently of “mission creep” in health systems, arguing that having hospitals and other medical institutions focus on the provision of social services could be a “dangerous distraction” from their core mission of serving patients, and one that policymakers should discourage.
The new pilot program authorizes Medicaid dollars for up to six months of rent and could herald much bigger shifts down the line if state results show improvements in health outcomes or cost-savings. It could also augur much larger shifts across state and federal governments to bring about more comprehensive visions of health care.
The federal government has approved a handful of states to use waivers to finance rental assistance for up to six months. The first states to put this into practice are Arizona starting this October, and Oregon this November.
Oregon’s Medicaid program currently provides coverage to roughly 1.5 million Oregonians, and the state estimates 125,000 of those people will soon be eligible to qualify for rental assistance under this new waiver. Oregon is opting to target beneficiaries at risk of becoming homeless.
Arizona, by contrast, is planning to target people designated as having a serious mental illness, building off a similar but much smaller state program that subsidizes rent for about 3,000 Medicaid beneficiaries each year.
That program, which is not time-limited, has been considered an extraordinary success: State data showed it led to a 31 percent reduction in ER visits, a 44 percent reduction in inpatient hospital stays, and savings overall to Arizona’s Medicaid program of more than $5,500 per member per month.
As Oregon and Arizona — as well as other states that have applied to use federal Medicaid dollars for rent — prepare for the opportunity, they are hoping to build collaboration between government agencies, private companies, and community nonprofits that historically have rarely worked together.