Commentary: Housing homeless could reduce Medicaid costs

By Bloomberg View editors

In a growing number of states, Medicaid directors have come to believe they could save money by housing the homeless. The federal government is providing money to find out if they’re right. There’s good reason to think this is an experiment worth trying.

The idea arose from two developments. First, President Barack Obama’s health-care law’s drastic expansion of eligibility for Medicaid coverage has raised the number of homeless people who sign up. These beneficiaries often suffer from unmanaged illnesses, which lead to higher health-care costs and put a strain on Medicaid budgets.

Second, in recent years, policymakers have come to better understand how the way people live affects their medical needs. Research has shown that people’s health improves when they have jobs, stable housing and access to healthy food. Governments now want to use this new appreciation for the so-called social determinants of health to improve policy.

Last year, the federal agency that runs Medicaid provided a way, by authorizing states to use federal Medicaid money to help ill and chronically homeless beneficiaries get housing. The idea is not to cover their rent but to help them apply for existing local housing programs, then work with their landlords to keep them from getting evicted. Washington state is just the latest in a string of half a dozen states that have gotten permission to create pilot programs to see whether this approach can lower Medicaid costs.

Savings are theoretically possible — if states limit their efforts to the minority of homeless enrollees who have the most costly medical needs. If housing services are made available to any beneficiary who needs a place to sleep, they will be more likely to push up costs than lower them.

A too-broad approach would also risk duplicating the services of local, state and federal programs that are already in place to combat homelessness, as well as private and nonprofit efforts.

For the states now experimenting with housing their homeless Medicaid beneficiaries, the challenge will be to tailor their efforts carefully enough to both improve patients’ health and lessen the pressure on state budgets.

The above editorial appears on Bloomberg View, www.bloomberg.com/view.

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