Sacramento, Calif. — Gov. Gavin Newsom, whose administration is struggling to contain the worsening homelessness crisis despite record spending, is trying something bold: federal health care funding to cover rent for people who are homeless and at risk of losing their housing exploitation of.
States are barred from using federal Medicaid dollars to pay directly for rent, but California’s governor is asking the administration of President Joe Biden, a fellow Democrat, to authorize a new program called “transitional rent.” which will provide up to six months’ rent. Or temporary housing for low-income enrollees who rely on the state’s health care safety net — a new initiative in its arsenal of programs to fight and prevent homelessness.
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“I’m talking to the president. We can’t do this alone,” Newsom told KHN.
The governor is pushing California’s version of Medicaid, called Medi-Cal, to finance an experimental housing subsidy for the homeless, betting it’s cheaper for taxpayers to cover rent than to put people in crisis. Or allow expensive institutional care in hospitals, nursing homes. Jail. Early in his term, Newsom declared that “doctors should be able to write prescriptions for accommodation the same way they do for insulin or antibiotics.”
But it’s a risky endeavor in a high-cost state where average rent is nearly $3,000 a month, and even higher in coastal areas, where most of California’s homeless live. Experts expect the Biden administration to scrutinize the plan to use healthcare money to pay rent and also question its potential effectiveness in light of the state’s housing crisis.
part of the question is it really the job of medicaidsaid Vicky Vacchino, who served as national Medicaid director in the Obama administration. “But there is a recognition that social factors such as 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 spokesman for the Centers for Medicare and Medicaid Services, declined to say whether the federal government would approve California’s request. Still, Biden’s Medicaid officials have approved similar pilot programs in Oregon and Arizona, and California is modeling its own program after them.
Despite representing only 12% of the nation’s total population, California is home to an estimated 30% of homeless people in the US. And Newsom has acknowledged that the number is likely far higher than the official homelessness. To control rising safety-net spending and help homeless people recover, Medi-Cal has no choice but to combine social services with housing, top health officials say.
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 had four or more emergency room visits and hospitalizations in 2019, compared with other low-income adults. were more likely to occur, and a large number 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 Ghali, secretary of the California Health and Human Services Agency, explaining his argument that housing is a critical component of health care. “Why do we have to wait so long for people to get sick?”
The federal government has already approved a large-scale social pilot in California, known as CalAIM, which is replacing Medi-Cal. Over five years, the initiative is expected to inject $12 billion into new Medi-Cal services provided outside traditional health care. In communities across the state, it is already funding services for some low-income patients, including paying rental security deposits for the homeless and those facing eviction; Delivering prepared healthy meals to people with diabetes, and helping formerly incarcerated people find jobs.
The transitional rental program would add another service to those already available, although only a few of the 15.4 million Medi-Cal enrollees actually receive those new and costly social services.
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Rent payments could begin as early as 2025 and once fully implemented would cost approximately $117 million per year. And while state officials say anyone who is homeless or at risk of becoming homeless will be eligible, not everyone who qualifies will receive the new services because of eligibility limits. About 11,000 of the beneficiaries are already enrolled in Medi-Cal housing services.
Mari Cantwell, who served as director of Medi-Cal from 2015 to 2020, said, “The conversation is on how do we convince the federal government that housing is a health care issue. money because you’re not going to the emergency room and being hospitalized for as long as people do.
Health care experiments in California and across the country have demonstrated early success in reducing costs and getting people healthier. But while some programs paid for a housing security deposit or the first month of rent for participants, none directly covered rent for an extended period.
“Without that foundational support, we’re playing on the fringes,” Newsom said.
State health officials argue that paying six months’ rent would be even more successful in reducing health care costs and improving the health of those enrolled, but experts say the initiative will take years to work. There should be accountability and should be bundled with a range of social services. ,
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 and concluded that local tests reduced emergency visits and hospitalizations, saving an average of $383 per Medi-Cal beneficiary per year. A very small amount compared to the cost of the programme.
Pourat said that over five years, the state spent $3.6 billion to serve about 250,000 patients enrolled in local experiments.
And a randomized control trial in Santa Clara County that provided supportive housing for homeless people showed a reduction in psychiatric emergency room visits and an improvement in care. “Life has stabilized and we’ve seen a huge increase in substance use care and mental health care, things that everyone wants people to have access to in order to be healthy,” said Dr. Margot Kuchel at Zuckerberg San Francisco General Hospital and Trauma Center, who worked on the study.
But insurers implementing the broader Medi-Cal initiative say they doubt that spending health care money on housing will save the system money. And health care experts say that, while six months’ rent can be a bridge while people wait for permanent housing, there’s a major obstacle: California’s lack of affordable housing.
“We can create incredible Medicaid policies to reduce homelessness and pay for all necessary ancillary services, but without adequate housing, it won’t work,” Kushell said.
Newsom accepts that criticism. “Without solving the housing crisis the homelessness crisis will never be solved,” he said last week, adding that California should invest more money in housing for homeless people with serious mental health conditions or addiction disorders.
He will ask the legislature to place before voters a 2024 ballot initiative that would infuse California’s mental health system with at least 6,000 new treatment beds and supportive housing units for people struggling with mental health and addiction disorders, among which Many are homeless. The proposed bond measure would generate $3 billion to $5 billion for psychiatric housing and treatment villages that aim to serve more than 10,000 additional people a year. The initiative would ask voters to set aside at least $1 billion per year for supportive housing from an existing tax on California millionaires that finances local mental health programs.
“People who are struggling with these issues, especially those who are on the streets or in other vulnerable circumstances, will have more resources to get the help they need,” Newsom said.
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For transitional rent, six months of payment will be available to select high-need residents enrolled in Medi-Cal, especially those who are homeless or at risk of homelessness – and those in more expensive settings such as mental health crisis centers, prisons There are transitions from institutions and prison, and foster care. Medi-Cal patients at risk of hospitalization or frequent emergency room visits will also be eligible.
“It is a huge challenge; I won’t lie,” said Jesse Cooper, director of Medi-Cal. “But we know there are people in and out of emergency rooms experiencing cycles of homelessness, so we have a real role to play in preventing and ending homelessness.”
Public health experts say the problem will continue to explode without creative thinking about how to fund housing in health care, but they caution that the state must be wary of potential abuses of the program.
“It has to be carefully designed because, unfortunately, there are always people who want to rig the system,” said public health expert Dr. Tony Eaton, now senior vice president at the California Endowment. “Decisions should be made by practitioners – not by housing organizations simply looking for another source of revenue.”
For Stephen Morton, who lives in the Orange County community of Laguna Woods, the journey from homelessness to permanent housing reflects 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 frequent emergency room visits to treat chronic heart disease, asthma and diabetes .
Medi-Cal covered Morton’s open-heart surgery and hospital stay, which lasted for weeks. They obtained temporary housing through a state-sponsored program called Project Roomkey before receiving permanent housing through a federal low-income housing voucher—an ongoing benefit that covers all but $50 of their rent.
Since getting her own apartment, Morton said, she’s been able to stop taking a diabetes drug and lose weight. He credits the improvement in his blood sugar levels to the healthy, home-delivered meals he received through his housing and Medi-Cal.
“It’s usually a menu of scrambled eggs for breakfast and fish for dinner. I’m shocked it’s so good,” Morton said. “Now I have a microwave and I’m indoors. Grateful and so healthy.
This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.
Kaiser Health News is a national health policy news service. This is Henry J. is an editorially independent program of the Kaiser Family Foundation that is not affiliated with Kaiser Permanente.