States and Health Systems Find that Housing Services Can Improve Mental Health and Reduce Costs

United States of Care was founded with a mission of supporting long-lasting, practical solutions that improve the health care experience for everyone. While we often think of health care as something that occurs in a physician’s office or hospital room, the most effective care can take place outside of a medical setting. For example, states and health systems are increasingly supporting housing security as a way to improve both physical and mental health for patients experiencing homelessness. Patients facing housing instability are disproportionately likely to have mental health and/or substance use disorder. Estimates show that, on any given night, about 26% of all sheltered persons who were homeless had a severe mental illness and about 35% had chronic substance use issues.

As part of Mental Health Awareness Month, US of Care is highlighting recent pilots and programs by states and health systems that are improving the health and wellbeing of this population. United States of Care will continue to support states in developing sustainable policy solutions that not only improve access to affordable health care, but also ensure access to critical mental health services.

In February, JAMA published an article discussing recent successful health system pilot programs aimed at addressing this issue. One of these programs, a 3-year study at the University of Illinois Hospital in Chicago, provided patients with $1,000 per month for housing. The pilot, supported by Better Health Through Housing, a partnership with the Center for Housing and Health, reduced health care costs for the initial cohort of patients by about $1,100 per month, an 18% decline. Before the pilot, some patients experiencing homelesness (who were later included in the pilot) were “literally living in the hospital” and some patients were at the hospital “100 times in a year.” With passage of the ACA, hospitals now face a financial penalty for readmissions, so financial support for housing may be much more cost-effective.

An earlier program through The Los Angeles County Department of Health Services found that housing support led to significant reductions for Department of Health Services (DHS) inpatient services (75.8% percent), DHS emergency services (66.3% percent), and crisis stabilization (59.2% percent). Even after accounting for the cost of housing, this program reduced costs of public services (both health and non-health) by 20%. More important than reducing costs, these programs are stabilizing patients’ health and improving patients’ quality of life. In this program, participants’ self-reported mental health functioning improved after receiving housing, although self-reported physical health was largely unchanged.

Earlier this year, the CEO of Well-Being Trust (a foundation with a mission of improving mental health and well being and a partner to US of Care) noted that health systems are increasingly recognizing the important link between housing and health, and called on these efforts to be brought to scale. Sarah Hunter, PhD, senior behavioral and social scientist and lead author of the evaluation for LA County’s program, is similarly confident that “a health system can take this on, and it can be done in a large scale”.

States have also paved the way for solutions addressing housing instability, with a number of options under Medicaid and demonstration programs to cover housing-related services. Though Medicaid cannot directly pay for room and board, the Centers for Medicare and Medicaid Service (CMS) have approved demonstration waivers that allow Medicaid to pay for housing-related services in California, Illinois, Minnesota, New York and, most recently, Florida. In March, CMS approved a demonstration waiver allowing Florida’s Medicaid program to pay for flexible services, including temporary housing assistance for Medicaid beneficiaries with severe mental illness or substance use disorders. Last year, CMS also approved a waiver allowing North Carolina’s Medicaid program to use evidence-based interventions to address social determinants of health, including housing insecurity. Late last year, HHS Secretary Alex Azar said CMS is considering allowing Medicaid to directly pay for housing through the innovation center (CMMI). If launched by CMMI, direct support for housing using Medicaid funds could reach people at an unprecedented scale.

Access to health care through a physician’s office or hospital is important, but interventions outside a medical settings can be just as important to improving patient outcomes and reducing costs. For individuals experiencing homelesness, who are also disproportionately likely to suffer from behavioral and substance use disorders, support for safe, clean, affordable housing may be one of the most effective interventions.

During Mental Health Awareness Month, state policymakers should take time to consider how they can best dismantle silos that separate care in a medical setting from care in the community. Evidence from health systems and pilot projects suggests that the housing and healthcare sectors should partner together to reduce unnecessary costs in health care and improve quality of life.