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For the Homeless, Housing Is Healthcare

And it's saving taxpayers' money.

Sony Salzman

Spencer Platt / Getty Images

Harold McClinton loves his apartment, a spacious, West-facing studio decorated with artwork and potted plants. The 75-year-old lives in a brand new apartment complex in Manhattan paid for by New York Medicaid's ambitious new program that funnels healthcare dollars to housing rather than medical expenses for the state's homeless and unstably housed population.

McClinton, who worked as a professional chef for most his life, had a heart attack and stroke in his mid-50s that temporarily put him out of work. He developed diabetes, and had a second heart attack some years later. By 2012, McClinton was living at the Susan & McKinney Nursing and Rehabilitation Center in Brooklyn, and had become a so-called "high cost" Medicaid user. According to a recent report by the Government Accountability Office, an estimated 5 percent of Medicaid recipients account for 50 percent of the program's cost.

By 2014, McClinton had recovered, but his landlord refused to resign a lease for his Brooklyn apartment, where he had been living for more than a decade. That's when his social worker suggested that he apply for a brand new affordable housing unit on East 99th Street in Spanish Harlem, funded by $75 million set aside by Governor Andrew Cuomo for New York's ambitious Medicaid "experiment," launched in 2013.

The gleaming, 176-unit apartment complex at East 99th Street is a far-cry from transitional or halfway houses. It has a state-of-the-art security system, new appliances, and an outdoor terrace and garden. Each tenant pays 30 percent of his or her income on rent each month.

The building is specifically designed for high-cost Medicaid users like McClinton, as well as homeless people with chronic medical problems who can rack up of thousands of dollars in emergency room and nursing home bills because they have nowhere else to go, explains Stephanie Knepper Basman of SKA Marin, the development firm managing East 99th Street. Those bills are ultimately footed by Medicaid.

Proponents of the so-called "Housing First" movement argue that taxpayer dollars would be better spent providing homeless people with a safe place to live so they can take care of themselves, instead of cartwheeling between the emergency room and the streets.


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People who are homeless "are worried about putting a roof over their heads," says Liz Misa, deputy Medicaid director, New York State Department of Health. Taking care of their health comes second. "When they have the opportunity to move into housing, it is really life changing," Misa says. The Housing First concept also applies to people like McClinton who live in hospitals or nursing homes, but don't really need 24-hour care.

In 2011, Governor Cuomo set up a Medicaid Redesign Team—a task force ultimately charged with designing, implementing, and analyzing savings of a Housing First program in New York state. By doing so, New York state has established itself as the leader of an experimental approach to healthcare in which state Medicaid dollars are spent on room and board for homeless people in the hope of avoiding runaway emergency room bills later down the line. While the Medicaid Redesign Team had hoped this program would be matched by federal Medicaid dollars, so far, it has not.

To date, the Medicaid Redesign Team's Supportive Housing program has allocated $641 million on East 99th Street and dozens of similar projects across the state. These housing units are expensive to build and operate, but cheaper than paying for the medical costs of residents who would otherwise be homeless.

According to a recent analysis of the savings from the East 99th Street project, the residents' average Medicaid expenses were around $11,800 per person, per year. Across all the projects, the program resulted in a 40 percent reduction in inpatient days, a 26 percent reduction in emergency department visits, and an overall savings of 15 percent in Medicaid health expenditures.

The movement was born during the 1990s at a time when there was a surge numbers of homeless people were suffering from psychiatric disorders, substance abuse or HIV/AIDS. While New York's homeless problem has always been pervasive—and it's not the first state to implement a Housing First approach (versions of them exist in San Francisco, Los Angeles, Boston and Chicago)—the initiative is arguably the most ambitious state-level program in the United States.

It seeks to bring new evidence to an ongoing debate about whether a Housing First approach can truly pay for itself. For years, researchers working on these programs drummed up mixed findings about cost-effectiveness. Numerous studies have demonstrated that Housing First programs generally improve the health and housing situation for the people enrolled. However, some studies found limited cost savings, or no savings at all.

Generally, researchers have determined that a Housing First approach can be cost-effective for a very high-risk population who tend to overutilize Medicaid. This group includes homeless or unstably housed people with two or more chronic medical conditions, psychiatric disorders, drug abuse, or infectious disease such as HIV.

The data that emerged from New York's experiment seems to back up the notion that cost savings will be highest when the program is targeted to the highest users of Medicaid. For example, for tenants who came from state-owned psychiatric facilities, supportive housing saved nearly $78,000 per person, per year, according to a recent evaluation.

McClinton, who was one of the first residents to move into the East 99th Street apartments in Spanish Harlem, was initially skeptical of the program. "I didn't think I was going to like it," he says. "I didn't trust anybody, I thought everybody was out to get me." But McClinton quickly acclimated to his studio apartment, and soon started taking cooking and nutrition classes offered at the wraparound service center on the first floor.

He even uses the kitchen in his studio to cook every once in awhile. "I'm a diabetic. In here, I learned how to take care of my blood sugar, how to eat proper food. This is a lovely place," says McClinton, who believes having his own apartment helped him get his health back under control. "I'm happy here."

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