Association for Public Policy Analysis & Management

Evidence suggests that “supportive housing” for homeless individuals, who often have serious medical, mental health or substance abuse problems, may help stabilize their lives and thereby reduce the need for emergency room visits or hospital admissions, as well as reduce other social costs.  As a result, there is substantial interest in the possibility of using Medicaid to fund supportive housing through Pay for Success (PFS) program funding models.  Proponents believe that this would allow an innovative cross-sector approach to solving social problems that can lead to poor health and high Medicaid costs for a vulnerable population.  This analysis critically examines evidence regarding savings, current federal policy regarding Medicaid and low-income housing, and the legal and practical challenges in using Medicaid funding and savings to repay private investors in PFS-supportive housing demonstrations.  The background study was conducted by experts at George Washington University under contract with the U.S. Department of Health and Human Services’ (HHS) Assistant Secretary for Planning and Evaluation (ASPE).