Proposed federal budget cuts threaten housing and health care partnerships
Americans spend more on health care, but have lower life expectancies and worse health outcomes than any other developed country. This disparity arises partly from a lack of attention to social determinants of health, which include income, education, and housing.
States, localities, and organizations throughout the country have taken advantage of opportunities created by the Affordable Care Act (ACA) and other health system delivery and payment reforms to improve health outcomes by integrating housing and health care.
But the Trump administration’s proposed budget for fiscal year 2018 threatens to reverse recent progress in collaborations between housing and health care providers. Deep cuts to the US Department of Housing and Urban Development (HUD) and Medicaid could make it harder for states to provide basic care to low-income people and leave fewer resources to improve outcomes through integrated health care and housing.
How can housing support health?
Lack of housing makes it hard for vulnerable people (such as the elderly and those with disabilities or experiencing homelessness) to manage chronic health conditions, leads to reliance on emergency rooms for health care and emergency shelter, and contributes to poor health outcomes and reduced life expectancy.
Supportive housing combines a rental subsidy with case management and has been shown to reduce health care spending and improve health outcomes for people experiencing chronic homelessness. In subsidized housing, health care and social services available on-site can help people stay healthy enough to remain at home and avoid hospitalizations and nursing home admissions.
How can housing and health care providers collaborate?
Several ACA provisions aimed to improve care coordination and shift the health care system to value-based payments, where providers have more flexibility in the services they provide, but also are more accountable for improving patient outcomes. Value-based payments are intended to motivate health care providers to take a “whole-person” approach that includes addressing social determinants of health.
The Urban Institute conducted a review of nearly 40 state and local health and housing initiatives. By encouraging cross-sector collaboration, using community resources strategically, and taking advantage of health reform opportunities, many states and communities integrated health care with housing and other services to improve vulnerable populations’ health and well-being.
Three initiatives were particularly promising:
- New York State’s Medicaid Redesign Team used state savings generated by Medicaid system reforms to pay for housing for high-needs populations, including construction of new affordable housing units, rental assistance, and supportive services to residents. The state recently committed an additional $1 billion to develop 6,000 new units of supportive housing in the next five years as part of a larger commitment to build 20,000 supportive units over the next 15 years.
- Houston’s Integrated Care for the Chronically Homeless initiative paired housing vouchers from HUD with health care and case management services funded by the Medicaid Delivery System Reform Incentive Payment program to serve people experiencing homelessness who have chronic physical and mental health conditions and are high users of costly medical services. Early program results show reductions in participants’ preventable emergency department use, improved mental health functioning, and reduced depression rates.
- Housing with Services in Portland, Oregon, brought together several organizations, from nonprofit service providers to Portland’s housing authority to the largest Medicaid health insurer, to coordinate health care and social services for low-income seniors and people with disabilities living in federally subsidized housing. Evaluation results indicate that program participants were more likely than those not connected to the program to use preventive and mental health services, had better access to long-term services and supports, and experienced less food insecurity.
What are barriers to these collaborations?
While many health and housing partnerships have developed or been strengthened since the ACA’s passage, a variety of obstacles continue to limit the reach of such partnerships, a problem that budget cuts will only exacerbate. In interviews, local leaders and national experts frequently cited the widespread shortage of affordable housing as an obstacle to creating and sustaining housing and health care collaborations. Federal Medicaid funds can sometimes be used for housing-related services, but cannot pay for room and board. Some state Medicaid agencies, hospital networks, and health insurance plans have invested in rental assistance and affordable housing development, but they remain the exceptions.
Competing priorities, restrictions on the use of health care funding for nonclinical services, and lack of housing-related expertise make it unlikely that the health care sector will become a significant funder of new affordable housing. One policy expert said advocates have been overly focused on “trying to find ways that Medicare and Medicaid should fund housing that we eliminated at the HUD level.”
Proposed budget cuts would hamper efforts to integrate housing and health care
The administration’s proposed budget aims to cut HUD by $7.4 billion and eliminate the Housing Production Trust Fund and Community Development Block Grants. In addition, the administration’s tax reform outline proposal to cut the corporate tax rate from 35 percent to 15 percent has already made affordable housing development more difficult. The proposed cut has reduced investment in Low-Income Housing Tax Credits the primary funding source for affordable housing, because investors are less motivated to buy the credits to offset their income taxes .
In this environment, housing providers may focus on stemming losses rather than supporting new collaborations. The vulnerability of housing and health partnerships to changes in federal funding was demonstrated recently, when HUD advised the Houston Housing Authority to stop issuing new vouchers for the remainder of the year because of an anticipated budget shortfall.
The budget also calls for reductions in federal Medicaid spending, that, coupled with reductions proposed in the House-passed Republican health plan, would cut Medicaid spending 47 percent over 10 years.
These proposals could slow or reverse the momentum for housing and health care integration. Given the promise of housing and health collaboration for the nation’s most vulnerable populations, further reducing the stock of affordable housing and supportive services could thwart progress in improving their health care outcomes and quality of life.
Illustration by Brittney Spinner/Urban Institute