In the news the other day, “Hawaii bill would classify homelessness as medical condition.” Yes, you read that right:
[Hawaii State Senator Josh] Green last week introduced a bill in the Hawaii Legislature to classify chronic homelessness as a medical condition and require insurance companies to cover treatment of the condition.
But if a doctor wrote a prescription for six months of housing, where would the patient fill the prescription?
That’s where Green wants Medicaid to step in.
He wants to redirect some of Hawaii’s $2 billion annual Medicaid budget to pay for housing.
It’s indeed true that homeless produces/exacerbates health conditions, whether its chronic health problems like diabetes or high blood pressure, or mental health conditions. The homeless have a such a high rate of emergency room visits that it costs less to simply pay for housing, and there have been various pilot programs taking the approach of simply providing for the homeless without setting out preconditions such as sobriety/drug abuse treatment or requiring efforts to find employment. These programs are called “Housing First,” and, per Wikipedia, have been around since 1988, and are already supported by federal grants.
But if this funding isn’t enough for Hawaii, why fund this through Medicaid? Why not just allocate money for such a program from somewhere else in the system, knowing that, in the end, if the state reduces the funds it pays for Medicaid, it’s a win in terms of the overall budget?
Consider how Medicaid is funded: the standard funding method had been for the federal government to match, on a dollar-for-dollar basis, all state spending. If the state spends generously, the federal contribution is equally generous. What’s more, for any individuals who were ineligible under a state’s pre-Obamacare eligibility requirements, but are eligible under Obamacare, the federal government pays 100% of the cost, sliding down to 90% in 2020 and later.
Seems like a recipe for massive cost overruns, if the states design the benefits but the federal government pays, but, if I’m not mistaken, what keeps the states in check is that they have to offer the same benefits to everyone. If, previously, poor mothers and their children, plus the poor disabled and elderly, were eligible, with benefits funded 50/50 between the state and the federal government, and now poor men, childless women, and poor empty-nester couples are also covered, at the 100% -> 90% level, the states can’t increase benefits/doctor reimbursement rates for the second group without doing so for the first group as well.
But the homeless are pretty much all in the second group — while poor mothers with children might technically be homeless, they are more likely to have the stability of a stay in a mothers-and-children shelter and transitional housing support. So if the state can find a way to deem funds for rent to be “medical care” and covered under Medicaid, then they’ve come up with a way to get the federal government to pay 90% of a cost which, if it were to come from housing funds, would otherwise be paid for by the state.
And — it seems to me — this happens repeatedly. There was an article not long ago about a local town deciding whether to repair or replace a bridge. Repair cost considerably less and would have been a perfectly appropriate decision, as the bridge, if repaired, would have plenty of useful life left. Repair would have been the least wasteful decision, both in terms of money spent and the use of resources to destroy a bridge and build a new one. But the feds would provide matching funds for the replacement, not for a repair.
And how many other similar decisions are made, day in and day out, because it’s better to use someone else’s money wastefully than spend your own wisely?
So, to sum up: providing housing for the homeless, good. Trying to get “something for nothing” because the feds are paying, not so much.
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