California Taps Health Care Money to Pay for Homeless Services

Standing in his new apartment, on the top of a two-level building in Oakland, Daniel Yapo admits his journey from homelessness to housing took a lot of help.

Yapo spent years bouncing between temporary homes and jail, even spending time living on a roof in nearby Hayward. Service providers helped him find a place of his own, navigate treatment for mental illness and handle the tasks that come with independent living.

"Whatever problem I had, whether it be courts, or my license, or anything that I had a problem with, they assigned somebody to help me with that," Yapo said. "They just keep on helping me!"

A new program launching around the state this summer aims to help more Medi-Cal recipients like Yapo by using federal health dollars to pay for supportive housing services.

The Whole Person Care program represents a breakthrough in using health care money for housing services, which the federal government had long been wary of doing. The five-year pilot program allows local governments to pay for support services, but not actual rental costs, through a matching grant from Medicaid.

State lawmakers are now hoping to take the program a step further, and fund rental assistance for vulnerable Medi-Cal recipients.

"We really think that housing is health care," said Maria X. Martinez, who is running the Whole Person Care pilot in San Francisco. "There’s a small number of homeless folks who are not only very poor, they’re very sick, either from living on the streets for so long or maybe their illness precipitated their homelessness."

The program could save taxpayers money by treating people early on, so they won't end up requiring expensive emergency room care.

Counties and cities are planning to use the $1.5 billion of matching funds in a variety of ways -- from creating a tool to evaluate the health of residents on the street and share that data among service providers, to boosting services to help the homeless find and stay in housing, In Alameda County, the grant will bring the total supportive housing slots in the county from 2,000 to 3,000.

It means that the newly housed homeless like Daniel Yapo can get help from local providers such as Abode Services that extend beyond traditional medical care.

"I feel like they enveloped me and took care of me," Yapo says. "They took me to a lot of activities that I might of missed when I was a child. Simple things like movies, beach, plays, creative writing classes."

The latter seems to have paid dividends for Yapo, who eagerly recited a poem he wrote entitled "Careful What You Wish For" about his journey out of homelessness.

Services around supportive housing aren't new, but the idea of paying for them with health care dollars had traditionally been rejected by the federal government. That changed when the federal Centers for Medicare & Medicaid Services approved California's waiver to create the program in 2015. Other states, including New York and Washington, are taking a similar approach with federal waivers.

"Homelessness is considered a social determinant. It’s not really health related," said Sharon Rapport, associate director for California policy with the Corporation for Supportive Housing. "But it is health related in that when somebody is homeless, they are going to experience health conditions, even if they were healthy before."

Rapport said that state health officials were unable to convince the Obama administration to use Medicaid dollars to actually pay the rent of homeless Medi-Cal recipients.

"The federal government was really nervous about doing that," she said.

As a result, participants in Whole Person Care will have to rely on a variety of categorical funding sources to pay rent, from the federal Department of Housing and Urban Development, to state sources like the Mental Health Services Act.

“It’s a doughnut," said Dr. Kathleen Clanon, who is leading the Whole Person Care pilot in Alameda County, adding there's a need to fill the "hole in the middle of our doughnut."

The effort to fill the funding doughnut has been adopted in the state Legislature by Assemblyman David Chiu (D-San Francisco). His Assembly Bill 74 would use general fund money to pay for rental assistance for Whole Person Care recipients.

An identical bill passed the Legislature last year, but was vetoed by Gov. Jerry Brown.

"While the goal of this bill is laudable and the policy could lead to savings in the health care system, codifying a program without an identified funding source raises false expectations," the governor wrote in his veto message. "This grant program, like any new expenditure, is best left to budget discussions."

The $90 million that Chiu and Assembly Democrats pushed for in this year's budget was dropped in negotiations. Chiu is hopeful that the plan can be included in a larger legislative deal around housing that legislators are currently discussing with the governor's office.

"If we make an investment in rental assistance and housing for these folks, in the long run that is far cheaper, more effective, and more humane for those individuals than what we are currently doing today," Chiu said.