Health insurers are investing billions of dollars in building new apartments and homes, the authors write. In addition, 19 states, with Washington’s permission, are using Medicaid funds to provide temporary housing assistance. (AP Photo/Nam Y. Huh)
Medicaid is suffering from a serious case of mission creep: The long-standing goal of the joint federal and state program is to provide health insurance to low-income and disabled Americans.
But now Medicaid funds a host of extra benefits, from food delivery to rent, all under the pretext of improving health outcomes. And the next item on that list may be affordable housing, as health insurers invest billions of dollars in building new apartments and homes.
Nineteen states already use Medicaid funds for temporary housing assistance, with Washington’s blessing, and insurers know it. Why not use federal tax credits to build low-income housing themselves, then use that goodwill to win contracts to administer state Medicaid programs and fill them with recipients who might need help paying rent?
Big mistake. Medicaid is already struggling to meet its health care mandate. Policymakers need to limit the scope of the program, rather than divert scarce funds to paying people’s rent.
This month, Centene, the nation’s largest Medicaid insurer, announced it would work with affordable housing developers to invest about $900 million in new housing in eight states.
UnitedHealth Group says on its website that it has already committed more than $1 billion to affordable housing projects and “helped build more than 25,000 homes for housing-insecure individuals and families.” Other insurers are following suit.
Companies have the right to invest wherever they want, but that doesn’t mean taxpayers should foot the bill for the profits.
Unfortunately, Medicaid has a history of paying for things it shouldn’t, states have broad discretion to adjust their Medicaid programs to cover additional benefits, and now “social determinants of health” are all the rage.
The Biden administration has given these efforts a major boost: In 2021, the Centers for Medicare and Medicaid Services issued guidance encouraging state Medicaid programs to address social determinants of health, which the center defines as “a set of social, environmental, and economic factors that may affect health status.”
States will address a range of challenges, including access to nutritious food, affordable housing, quality education and meaningful employment opportunities.
Food, jobs, housing, education. Apparently, all of progressives’ favorite social welfare programs count as “health care” for purposes of drawing funds from Medicaid.
States have a financial incentive to address social determinants of health through Medicaid: For every dollar they spend on the program, each state draws at least $1 from federal coffers, and by squeezing an extra project or two into Medicaid, they can qualify for additional matching funds.
For example, Massachusetts, New Jersey, New York, Oregon and Washington cover up to six months’ worth of home-delivered meals and grocery stockpiles through Medicaid, and at least seven states, including Colorado, Maryland and Illinois, fund gun violence prevention programs through Medicaid.
Arizona, New York, Washington, and Oregon are each federally authorized to pay up to six months of rent and temporary housing costs (including utilities), and some states offer medically necessary home modifications and one-time relocation expenses.
Currently, Medicaid isn’t allowed to build housing. Federal guidelines allow the program to “fund investments in infrastructure” ranging from technology to education and workforce development. Construction and capital costs are excluded.
But this guidance is subject to change. CMS cites “overcrowded housing units” as one symptom of “long-recognized disparities in health outcomes.” The agency has pledged to address disparities and promote “health equity.” By the agency’s logic, funding health equity could include having taxpayers foot the bill for new affordable housing units.
Medicaid is already a big spender: the program’s share of GDP increased more than sixfold between 1970 and 2020. Medicaid is expected to spend more than $800 billion in 2022, more than 70% of which will come from the federal government. Medicaid and the Children’s Health Insurance Program combined will cover about 94 million people at their peak in March 2023.
Doing away with the grocery carts, moving trucks, and nail guns would allow Medicaid to return to its original function of providing health care to low-income and disabled Americans.
Sally C. Pipes is president, CEO, and the Thomas W. Smith Fellow in Health Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disasterous Reality of Medicare for All” (Encounter 2020). X, follow her at @sallypipes.