California governor wants Medicaid to pay rent for homeless, cost $100 million

California Governor Gavin Newsom wants to use Medi-Cal funding for a new purpose: paying rent.

Newsom has proposed using federal healthcare funds to cover at least six months of rent for homeless California residents and those close to losing their homes.

Newsome asked President Joe Biden’s administration to approve a 6-month “transitional rent” program under Medi-Cal, according to a report from Kaiser Health News.

California is modeling the program off of similar programs in Oregon and Arizona that have been previously approved by the federal government.

“I’ve been talking to the president,” Newsom told KHN. “We cannot do this alone.”

Proponents of the proposed program, including Newsom, argue that it will save taxpayers money since they will not have to pay as much for these people’s expenses in hospitals, nursing homes and prisons.

Bruce Alexander, a Centers for Medicare & Medicaid Services spokesperson, did not tell KHN if it plans to approve California’s plan.

Homelessness is a major issue in the state. California had 171,000 homeless people last year, according to federal estimates; the state has 30% of the country's homeless population.

Statewide, 5% of Medi-Cal patients account for 44% of the program’s spending. The homeless population contributes to this spending with frequent emergency room visits, according to a report from the Public Policy Institute of California.

“California emergency departments (EDs) treated about 143,000 people experiencing homelessness in 2019, according to hospital discharge records,” the report reads. “Almost half of homeless patients visited the ED four or more times in the year.”

Health insurers generally oppose the idea, according to KHN, arguing that it would not save money.

Dr. Margot Kushel, director of the University of California-San Francisco’s Center for Vulnerable, supports the plan. However, she said the state needs more housing stock to make it a reality.

“We can design incredible Medicaid policies to alleviate homelessness and pay for all the necessary supportive services, but without the adequate housing, frankly, it’s not going to work,” Kushel told KHN.

If the Biden administration approves California’s plan, homeless people could start receiving rental assistance via Medi-Cal by 2025. The program would cost $117 million per year, according to KHN.

Thus far, 11,000 people have already enrolled for Medi-Cal housing services.