Prescription for housing? California wants Medicaid to cover 6 months of rent

by ANGELA HART Kaiser Health News

SACRAMENTO — Gov. Gavin Newsom, whose administration is struggling to contain a worsening homelessness crisis despite record spending, is trying something bold: tapping federal health care funding to cover rent for homeless people and those at risk of losing their housing.

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 would provide up to six months of rent or temporary housing for lowincome enrollees who rely on the state’s health care safety net — a new initiative in his arsenal of programs to fight and prevent homelessness.

“I’ve been talking to the president. We cannot do this alone,” Newsom told KHN.

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, and even higher in coastal regions, where most of California’s homeless people reside. Experts expect the Biden administration to scrutinize the plan to use health care money to pay rent; and also question its potential effectiveness in light of the state’s housing crisis.

“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. Yet, 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.

And Newsom has acknowledged that the numbers are likely far greater than official homeless tallies show. Top health officials say that, to contain soaring safetynet 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 lowincome adults to be admitted to the hospital, and a large majority of visits were covered by MediCal, 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 health care. “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 MediCal services delivered outside of traditional health care. 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. And while state officials say anyone who is homeless or at risk of becoming homeless would be eligible, not everyone who qualifies will receive new services due to capacity limits. Among those who stand to benefit are nearly 11,000 people already enrolled in MediCal housing services.

“The ongoing conversation is how do we convince the federal government that housing is a health care issue,” said Mari Cantwell, who served as MediCal director from 2015 to 2020. “You have to convince them that you’re going to save money because you’re not going to have as many people showing up at the emergency room and in longterm hospitalizations.”

Health care experiments in California and around the country that funded housing supports have demonstrated early success in reducing costs and making people healthier. But while some programs paid for housing security deposits or participants’ first month of rent, none directly covered rent for an extended period.

“Without that foundational support, we are playing in the margins,” Newsom said.

State health officials argue that paying for six months of rent will be even more successful at reducing health care costs and improving enrollees’ health, but experts say that, to work, the initiative must have strict accountability and be bundled with an array 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 concluding that local trials reduced emergency visits and hospitalizations, saving an average of $383 per Medi-Cal beneficiary per year — a meager amount compared with the program’s cost.

Over five years, the state spent $3.6 billion serving about 250,000 patients enrolled in local experiments, Pourat said.

And 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 the University of California-San Francisco’s Center for Vulnerable they are skeptical that spending health care money on housing will save the system money. And health care experts say that, while six months of rent can be a bridge while people wait for permanent housing, there’s a bigger obstacle: California’s affordable housing shortage.

Ms. Johnson has a wide circle of friends and a busy schedule. She walks with neighbors regularly, volunteers at a school twice a week, goes to church, and is in close touch with her children, who don’t live nearby. Three sets of social circumstances, three levels of risk should the women experience a fall, bout of pneumonia, or serious deterioration in health.

Of the women, Ms. Johnson would be most likely to get a ride to the doctor or a visit in the hospital, experts suggest. Several people may check on Ms. Green and arrange assistance while she recovers.

She’s what some experts would call “socially vulnerable” or “socially frail.”

Social frailty is a corollary to physical frailty, a set of vulnerabilities (including weakness, exhaustion, unintentional weight loss, slowness, and low physical activity) shown to increase the risk of falls, disability, hospitalization, poor surgical outcomes, admission to a nursing home, and earlier death in older adults.

Essentially, people who are physically frail have less physiological strength and a reduced biological ability to bounce back from illness or injury.

Those who are socially frail similarly have fewer resources to draw upon, but for different reasons — they don’t have close relationships, can’t rely on others for help, aren’t active in community groups or religious organizations, or live in neighborhoods that feel unsafe, among other circumstances. Also, social frailty can entail feeling a lack of control over one’s life or being devalued by others.

Many of these factors have been linked to poor health outcomes in later life, along with so-called social determinants of health — low socioeconomic status, poor nutrition, insecure housing, and inaccessible transportation.

Dr. Melissa Andrew, a professor of geriatric medicine at Dalhousie University in Halifax, Nova Scotia, who published one of the first social vulnerability indices for older adults in 2008.

This way of thinking about older adults’ social lives, and how they influence health outcomes, is getting new attention from experts in the U.S. and elsewhere. In February, researchers at Massachusetts General Hospital and the University of California-San Francisco published a 10-item “social frailty index” in the Proceedings of the National Academy of Sciences journal.

Using data from 8,250 adults 65 and older who participated in the national Health and Retirement Study from 2010 to 2016, the researchers found that the index helped predict an increased risk of death during the period studied in a significant number of older adults, complementing medical tools used for this purpose.

“Our goal is to help clinicians identify older patients who are socially frail and to prompt problem-solving designed to help them cope with various challenges,” said Dr. Sachin Shah, a co-author of the paper and a researcher at Massachusetts General Hospital.

But Ms. Smith would be unlikely to get much help and more likely than the others to fare poorly if her health became challenged.

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Social frailty assumes that each factor contributes to an older person’s vulnerability and that they interact with and build upon each other. “It’s a more complete picture of older adults’ circumstances than any one factor alone,” said

“We can design incredible Medicaid policies to alleviate 

“It adds dimensions of what a clinician should know about their patients beyond current screening instruments, which are focused on physical health,” said Dr. Linda Fried, an internationally known frailty researcher and dean of the