Medicaid Doesn’t Pay For Housing. Here’s What It Can Do To Help Meet Enrollees’ Social Needs

Access to safe, affordable housing supports people’s physical and mental health, research shows. This connection has led some health care stakeholders to conclude that Medicaid programs or health plans should pay directly for housing. We disagree: Diverting Medicaid funding from health care to housing is the wrong approach to addressing the housing crisis. Medicaid can’t fill the vast unmet need for affordable housing without shortchanging health care. In addition, it lacks the expertise to run housing programs, and tying housing assistance to Medicaid eligibility could jeopardize housing stability for people whose incomes frequently fluctuate above and below Medicaid eligibility levels but are too low to afford the full costs of their housing.

However, Medicaid and other health plans and providers can take important steps. First, while Medicaid can’t and shouldn’t pay for housing, it can pay for a range of services that help enrollees find or maintain stable housing. Likewise, health plans and providers should continue to invest in affordable housing development projects while recognizing the need for a communitywide investment in the social determinants of health. Second, health care stakeholders have a critical role to play in advocating for adequate resources for chronically underfunded affordable housing programs.

Affordable Housing Programs Are Severely Underfunded

Programs designed and targeted to meet housing needs have a proven track record in achieving their goals—but they need much more funding to be able serve all of the individuals and families who struggle to keep a roof over their heads. Unlike Medicaid, which is available to everyone who meets its eligibility requirements and for which funding expands to meet demand, affordable housing programs aren’t available to all who qualify and need assistance, and they are grossly underfunded. As a result, three in four households eligible for federal rental assistance don’t receive it. In 2017, almost 11 million low-income renter households paid more than half their income for housing, and millions more paid between 30 percent and 50 percent of their income on rent. Families may wait years to receive housing assistance, and overwhelming demand has prompted most housing agencies to stop taking applications entirely. The unmet housing need is largest among vulnerable groups such as low-income families with children, seniors, and people with disabilities.

Medicaid Can’t Make Up For Inadequate Affordable Housing Funding

While Medicaid can play an important role in coordinating medical and non-medical services, it can’t—nor should it—pay for housing itself. That’s because:

• Medicaid can’t fill the vast funding gaps for affordable housing. Due to insufficient funding, only 25 percent of low-income households in need receive federal housing assistance. Filling that gap would require a major investment of resources.
• Medicaid programs need to continue working to improve health care access. While Medicaid can provide a bridge to social services, core health care services such as dental care, vision care, and behavioral health care are too often missing or inadequately available to Medicaid beneficiaries. In addition, provider payments for traditional health services, specialty care, and other intensive services such as case management and care coordination are frequently too low. Using Medicaid to fill funding gaps in other sectors would erode Medicaid’s core mission as a health care program, making it more difficult to improve access to needed health care services.
• Medicaid isn’t equipped to run affordable housing programs. Medicaid programs don’t have the capacity or expertise to manage housing stock, inspect units for safety, or pay people’s rent, and there’s no reason to duplicate the housing sector’s expertise.
• Housing stability could be jeopardized if housing supports are linked to Medicaid eligibility. People’s health often improves once they’re stably housed, but they may still need rental assistance. They may also earn enough to make them ineligible for Medicaid but too little to afford their housing. If states or managed care providers used Medicaid to pay for their housing, beneficiaries would likely lose their rental assistance if they were no longer eligible for Medicaid.

State Medicaid Programs Can Build Partnerships Across Sectors

State Medicaid programs and managed care organizations can support enrollees by providing housing-related services such as housing location services, eviction prevention, and tenant rights and responsibilities training. Medicaid can also help build the infrastructure to facilitate partnerships and data sharing between medical and other service providers that are necessary to improve coordination across programs and connect enrollees to the services they need. For example, Louisiana’s Medicaid agency uses home- and community-based services waivers to offer supportive housing services to reduce homelessness and unnecessary institutionalization among people with disabilities. The state housing authority identifies and recruits housing providers and serves as the rental subsidy administrator, using a number of federal housing funding streams to make new and existing housing available for the program. These efforts can’t fill the unmet need for affordable housing and other services. But they can make Medicaid more efficient and improve health outcomes by bridging the gap between health care and other services where they are available.

Large Payers And Providers Can Make Limited Investments In Housing Developments

To keep their tax-exempt status, nonprofit hospitals must contribute to improving their communities. A growing number of hospitals are investing in housing capital costs with the expectation that increasing available affordable housing for people who are homeless or at risk of homelessness and high-cost users of health care will help stabilize the person and reduce the need for high-cost hospital or health system use. Examples of hospital and health systems working to address housing include: Denver Health in Denver, Colorado; AdventHealth in Orlando, Florida; Bon Secours hospital in Baltimore, Maryland; Dignity Health System in several locations; Nationwide Children’s Hospital in Columbus, Ohio; and five hospital partners in Portland, Oregon. 

Some managed care organizations have also invested in affordable housing development. Kaiser Permanente and Enterprise Community Partners, an organization that brings together affordable housing development investors, have partnered in Oakland, California, on a $50 million fund that will help create and preserve affordable housing to help people with chronic illnesses. They also have created a $250 million housing equity fund directed at preserving and improving affordable housing that supports healthy communities. Kaiser Permanente recognizes that more housing improves its members’ health, along with that of the broader community; reduces health expenditures; and allows Kaiser Permanente to potentially realize a return through tax savings. 

Health Stakeholders Can Play A Critical Role As Advocates For Affordable Housing

Health care stakeholders have an important role to play in the debate around improving access to affordable housing. The health care system has the data and experience needed to illustrate the impact that better access to affordable housing can have and to show that investing in affordable housing has lasting benefits that more than justify the costs.

First and foremost, health advocates should support a major increase to the Housing Choice Voucher (HCV) program. The HCV program is the nation’s largest rental assistance program, serving more than five million people in 2.2 million low-income households. Vouchers make housing affordable, reduce housing instability, and help children grow up healthier. While some communities need additional housing units to meet demand for housing, most people who struggle to afford housing have a place to live—but the gap between their income and housing costs is too great, so they can’t always meet other basic needs or they teeter on the brink of eviction. 

In addition to HCV funding, health advocates should also support strengthening the Low-Income Housing Tax Credit (LIHTC) program, which is the largest source of funds incentivizing developers to build units affordable for people at the lowest income levels; increasing funding for the National Housing Trust Fund, which gives states resources to rehabilitate, preserve, and build affordable housing, often complementing LIHTC investments; and creating new programs such as a federal renters’ tax credit, which would incentivize housing owners to rent to people at the lowest income levels by supplementing their operating costs.

The idea of cross-sector advocacy is picking up energy. Two years ago, the Center on Budget and Policy Priorities, the National Low Income Housing Coalition, the National Alliance to End Homelessness, and Children’s HealthWatch began a collaboration that has become the Opportunity Starts at Home Campaign. Organizations such as Community Catalyst, the National Association of Community Health Centers, and the National Alliance on Mental Illness have joined this multisector campaign focused on increasing the availability of housing assistance for low-income people. Through the campaign and other efforts, the housing and health sectors can draw on their collective resources and expertise to make the case for more adequate federal investment in housing.

The health care system can’t significantly improve health outcomes, widen access, and control costs if policy makers don’t prioritize funding for the programs that address the social determinants of health. Until then, health care payers and providers will continue nibbling at the margins of improved health for their Medicaid beneficiaries.