Medicaid is for health care, not housing

Medicaid is developing a bad case of mission creep. The long-term goal of the joint federal-state program is to provide health coverage to low-income Americans with disabilities.

Now, however, Medicaid is funding a variety of supplemental benefits—from meal deliveries to rent—under the pretense that they “affect health status” for the better. And next on that list of benefits can be affordable housing. Health insurers are investing billions in building new apartments and houses.

Already, 19 states have received Washington’s blessing to use Medicaid funds for temporary housing assistance. Insurers know this. Why not use federal tax credits to build low-income housing yourself, use goodwill to win a contract that administers a state’s Medicaid plan, and then potentially fill the building with beneficiaries whose benefits could help cover the rent?

Big mistake. Medicaid already struggles to meet its original health care mandate. Policymakers need to limit the program’s purpose—not to divert scarce dollars into paying people’s rent.

This month, Centene — America’s largest Medicaid insurer — announced it would invest about $900 million in new housing in eight states in partnership with an affordable housing developer.

UnitedHealth Group has already injected more than $1 billion into affordable housing projects and “helped create more than 25,000 homes for individuals and families facing housing insecurity,” according to its website. Other insurers are following suit.

Companies have every right to invest where they want. But that doesn’t mean taxpayers have to fund their returns.

Unfortunately, Medicaid has a history of paying for things it shouldn’t. States enjoy broad discretion to tailor their Medicaid programs to cover additional benefits. And “social determinants of health” are all the rage right now.

The Biden administration has been a major driver of these efforts. In 2021, the Centers for Medicare and Medicaid Services published guidelines urging state Medicaid programs to address the social determinants of health, which they defined as “the range of social, environmental, and economic factors that can influence health status.”

States would target “challenges . . . including but not limited to access to nutritious food, affordable and accessible housing, quality education and opportunities for meaningful employment.”

Food, work, housing, education. Apparently, the full range of progressives’ favorite social programs now count as “health care” for Medicaid defunding purposes.

States have a financial incentive to address the social determinants of health through Medicaid. They withdraw at least one dollar from federal coffers for every dollar they spend on the program. Closing one or two additional Medicaid projects may allow them to qualify for additional matching funds.

Massachusetts, New Jersey, New York, Oregon and Washington, for example, cover Medicaid home-delivered meals or pantry socks for up to six months. At least seven states — including Colorado, Maryland and Illinois — fund gun violence prevention programs through Medicaid.

Arizona, New York, Washington and Oregon each have federal approval to pay rent or temporary housing — including utilities — for up to six months. Some states offer medically necessary home remodeling and one-time moving expenses.

Currently, Medicaid is not allowed to build housing. Federal guidance allows the program to “fund infrastructure investments” ranging from technology to education and workforce development. Excludes construction or capital costs.

But this instruction may change. CMS lists “crowded housing units” as a symptom of “long-understood disparities in health outcomes.” The agency is vocally committed to addressing disparities and promoting “health equity.” By its own logic, health equity funding could plausibly involve taxpayers handing over the tab for new affordable housing units.

Medicaid already costs a lot of money. Program spending as a share of GDP increased more than sixfold over the period 1970-2020. Medicaid spent more than $800 billion in 2022. More than seven in ten of those dollars came from the federal government. Together, Medicaid and the Children’s Health Insurance Program covered nearly 94 million people at their peak in March 2023.

Abandoning grocery carts, moving trucks and nail guns would help Medicaid return to its primary function of providing health care to low-income and disabled Americans.

Sally C. Pipes is President, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is “False Premise, False Promise: The Disastrous Reality of Medicare for All” (Encounter 2020). Follow her on X, @sallypipes.