ABSTRACT: Among the countries in the Organization for Economic Cooperation and Development, the United States ranks first in health care spending but 25th in spending on social services. High spending on health care may result from low spending on social services. Safe housing, healthful food, and opportunities for education and employment have critical impacts on health. Lack of investment in social determinants of health probably contributes to the high spending on medical care in the United States, which is well behind other countries on basic indicators of population health. This is especially true for homelessness and housing.
If homeless people can be provided supportive housing, that is, affordable housing coupled with supportive services, such as on-site case management and referrals to community-based services, health can be improved, hospital use can be reduced, and health care costs can be lowered. New York State is testing an innovation that provides investment in supportive housing for high-risk homeless and unstably housed Medicaid recipients. These recipients include people living on the streets or in shelters and thousands residing in nursing facilities because they have no homes in the community to which they can return.
Supportive housing is part of a larger Medicaid Redesign effort initiated in 2011. A working group of representatives from more than 20 organizations discussed barriers to implementing supportive housing and identified solutions. The group’s final recommendations included providing integrated funds for capital, operating expenses, rent subsidies, and services in new supportive housing units, targeting high-need, high-cost Medicaid recipients. The 2013–2014 Medicaid budget includes $86 million for supportive housing. Current federal Medicaid rules do not allow capital funding for supportive housing, and to date, New York has been unable to advance a request that the Centers for Medicare and Medicaid Services allow capital funding for supportive housing, so this funding has come entirely from the state budget.
The costs of supportive housing are largely offset by savings in services used, mostly within the health care system. The degree of cost offsets or savings depends on how effective programs are targeting patients with high and modifiable costs. Such targeting is challenging because of the transient nature of homeless people, who often are not high-cost health care users. Targeting interventions to patients identified by predictive modeling as high risk or long-term homeless patients or those in institutional settings with consistent patterns of high use is more likely to create savings.
This New York innovation will become even more relevant in 2014, when nearly all homeless people will become Medicaid eligible in states that expand eligibility. Many of these people will become part of the 5% of Medicaid recipients who account for 50% of Medicaid costs. The hope is that the New York effort will be a model for other states seeking to provide better, more cost-efficient care for Medicaid recipients who are homeless, unstably housed, or institutionalized.