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A homeless encampment in Los Angeles. The number of people experiencing homelessness in the U.S. increased 2% between 2019 and 2020, including a 7% increase in people staying outdoors as opposed to sheltered locations.

Safe, Affordable Housing Can Increase Health and Reduce State Costs

By Kelsie George | Aug. 11, 2021 | State Legislatures News | Print

Access to safe, quality and affordable housing is one of several social and environmental conditions that may influence an individual’s health, well-being and quality of life.

Increased housing safety, stability and access can result in fewer emergency department visits, inpatient psychiatric services and hospital readmissions, which may save money for state Medicaid programs. Studies in New York and Los Angeles County found that, upon entering stable housing environments, people who had been experiencing chronic homelessness obtained high-cost care less often, resulting in health cost savings.  

The number of people experiencing homelessness in the U.S. increased 2% between 2019 and 2020, including a 7% increase in people staying outdoors as opposed to sheltered locations. Throughout the COVID-19 pandemic, individuals experiencing homelessness or housing instability were at higher risk of contracting the virus and experiencing severe illness requiring hospitalization.

States are increasingly acting—through legislation, Medicaid waivers and state plan amendments—to increase access to affordable housing and provide integrated support and care to keep individuals and families housed.

State Legislation

Several states recently enacted legislation to provide housing services to specific populations, including people experiencing chronic homelessness or substance use disorders. New York created a medical respite program to provide short-term residential care for patients experiencing homelessness who no longer required inpatient hospital care. Tennessee passed a law requiring the department of health to maintain a list of certified or state and federally funded recovery residences, which provide peer support and connection services promoting long-term substance use disorder recovery. Maine created a pilot project to provide individuals experiencing homelessness and using opioids with stable supportive housing—a combination of affordable housing and intensive, coordinated community-based services—and access to medication assisted treatment and other supports. Research shows that medical respite, recovery residences and supportive housing programs may result in cost savings for high utilizers of Medicaid and other medical services.

Medicaid Waivers and Plan Amendments

While Medicaid programs generally cannot pay for ongoing rent or room and board, states can use various Medicaid state plan amendment and waiver authorities—1115, 1915(b), 1915(c), 1915(i), 1905(a), 1915(k)—to expand coverage and services, including housing supports.

State plan amendments provide flexibility for states to alter their Medicaid programs, including adjusting payment rates, adding or cutting optional services, transitioning to managed care, and changing benefit structures. North Dakota’s plan amendment, approved in January, allows the state Medicaid program to pay for care coordination, training and support for unpaid caregivers, peer support, medical respite, nonmedical transportation, benefits planning services, and employment and housing supports for individuals with certain behavioral health conditions. Employment and housing supports often include job searching, training and transportation, tenant rights education, mediation between landlords and tenants, and legal support.

Medicaid waivers allow states to change their Medicaid programs or expand services for beneficiaries. Through a Section 1115 wavier, North Carolina is testing housing-related interventions to improve care, increase efficiency and reduce costs, such as covering one-time payments for security deposits or first month’s rent and providing legal assistance to break leases due to unhealthy living conditions. Texas implemented a Section 1915(c), or home- and community-based services waiver, to provide medical, behavioral, employment, financial management and other services to people with intellectual or developmental disabilities, allowing them to continue living in their own homes or a family home.

Several states have passed legislation calling on their state Medicaid agency to apply for a waiver or plan amendment. Virginia directed the department of housing and community development to identify and implement strategies, including potential Medicaid financing, for housing individuals with serious mental illness. Utah passed a bill requiring the department of health to apply for a Medicaid waiver or plan amendment that would pilot reimbursements for facilities providing residential medical respite care for individuals experiencing homelessness.

State legislatures are increasingly considering affordable, safe and supportive housing initiatives to improve health outcomes and generate cost savings. To explore more examples of housing and health legislation, visit NCSL’s Housing and Homelessness Legislation Database.

Kelsie George is a policy analyst in NCSL’s Health Program.

This resource is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) as part of an award totaling $853,466 with 100% funded by HRSA/HHS. The contents are those of the author(s) and do not necessarily represent the official views of, nor an endorsement, by HRSA, HHS or the U.S. government.

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