Demonstration Of New Housing Subsidy Might Yield Results

Recently, the Department of Health and Human Services (DHHS) approved a plan to expand health-related social needs (HRSN) covered by Medicaid to include housing. The rationale is that lack of housing, “may create physical, social or emotional conditions that are counterproductive to the otherwise positive effects of the health care services an individual does receive, including through Medicaid.” I’ve made the point that people struggling with an array of health issues, especially mental health and addiction, housing can be a part of health and sustainable recovery. Does it make sense to add in the complexities of Medicaid into a housing subsidy solution? It might. It’s worth looking at demonstration project approved in Massachusetts and Oregon.

As with most things done by government, the expansion of HRSN coverage is exquisitely complicated and a challenge to comprehend. Time magazine billed the approval as the first time Medicaid would be used to cover the impacts of climate change since it would allow payment for things like air conditioning. Ok, that is certainly one way of looking at the vast set of documents accompanying the announcement for the two states involved, Massachusetts and Oregon.

But without getting bogged down in the minutiae, what about the idea? First, it’s important to make a rough sketch of how Medicaid works. The program is governed by federal mandates, but it is implemented at the state level and general operates on a reimbursement model. States are allocated funding and then schedules are developed for which sorts of things are “covered” by the program much like any other health insurance program. There are elements like capitation, “a contracted rate based on the total number of eligible people in a service area. Funding is supplied in advance, creating a pool of funds from which to provide services.” You can dig deeper into the financing of Medicaid at the Centers for Medicare and Medicaid Services (CMS).

Based on my own experience in Washington state working in a Federal Qualified Health Center (FQHC), many states have created rules that support a community clinic model of Medicaid service delivery. Clinics enroll their eligible clients on income and other factors then manage their care to the rate of capitation; the fewer health problems, the less use, and thus some value capture from the prepaid rate. It’s a model that has inspired non-profit clinics to become entrepreneurial about keeping their clients healthy with prevention and capturing the savings. Success of the system depends on the level of reimbursement and effective management.

The new rules would essentially add some housing costs to eligible clients as one of the “covered” items like an annual checkup or treatment for high blood pressure. The new directive would include “transitional housing supports for individuals with a clinical need or transitioning out of institutional care, congregate settings, out of homelessness or a homeless shelter, or the child welfare system. They also include case management, outreach, and education, as well as infrastructure investments, to support those services.”

More specifically the housing elements cover include,

1. Rent or temporary housing for up to 6 months,

2. Utilities;

3. Pre-tenancy and tenancy sustaining services, including tenant rights education and eviction prevention;

4. Housing transition navigation services;

5. One-time transition and moving costs;

6. Housing deposits, and application and inspection fees;

7. Medically necessary air conditioners, heaters, humidifiers, air filtration devices, generators, and refrigeration units; and

8. Medically necessary ventilation system repairs and improvements, and mold and pest remediation

I am completely opposed to item number 3 since it simply adds to the foment of a truly rare thing, eviction. In fact, if HHS wanted to deal with eviction, they’d rewrite the regulation to allow reimbursement to prevent eviction by paying the amount in dispute. It wouldn’t cost that much since there are few evictions as a percentage of rental units.

Generally, however, I think all these things make sense. Yes, this is more money flushing into an already inflationary economy. But this is better than billions on buying land, building, and then managing housing forever. Plus, the temporary housing is aimed at,

“Individuals transitioning out of institutional care or congregate settings such as nursing facilities, large group homes, congregate residential settings, Institutions for Mental Diseases (IMDs), correctional facilities, and acute care hospitals; individuals who are homeless, at risk of homelessness, or transitioning out of an emergency shelter.”

Today, elected officials are being goaded into pointless and unhelpful legislation to do things like ban credits checks, criminal background checks, and sealing evictions. Those don’t help pay the rent. This use of Medicaid would help pay the rent in the context of broader treatment, helping shoulder recovery and health rather than erroneously assuming that people struggling are one apartment key away from being perfectly healthy and sustainable.

In Ohio, discussions are already underway about how to tie housing to health. But the wise thing to do isn’t to mandate that housing providers become health care providers with more requirements and limits on housing operations, but to support overall health and wellness for people eligible for Medicaid.

It makes sense for a person coming out of drug treatment, for example, to be enrolled in a Medicaid program anyway. It would be added value if upon exiting treatment, the person could also access help getting housing; and this help wouldn’t be a brochure and an application to get on a waiting list, but actual funds to pay a deposit, application fee, and the first six months of rent. That is a sustainable way to address housing issues for people with health issues, not mandates to ban credit checks or other mandates. Finally, mold can be a seriously and costly issue. States like Ohio are starting to demolish homes with mold problems. This makes no sense if there is there is a way to fix those homes for use. These funds could help.

In the end, I am skeptical but hopeful that maybe in Oregon and Massachusetts some smart people will find a way to use this demonstration project to promote some creativity and innovation, channeling funds in way that shows how more direct subsidies rather than building housing can truly address serious housing challenges in a compassionate and efficient way. There is a significant evaluation component written into the new rules, so let’s hope we see lots of data soon.