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Minnesota DHS launches new Medicaid program to combat homelessness

Star Tribune - 7/23/2020

Amid a severe shortage of affordable housing, Minnesota officials this week launched an innovative new program that aims to help thousands of people who are poor or have disabilities to find their own homes and avoid living on the streets.

The program breaks new ground in that it uses funds from Medicaid, the state-federal health insurance program for the poor, to pay for a wide range of housing-related services for people at risk of becoming homeless. It will help cover the cost of the housing application and search process and aims to prevent evictions by identifying tenant problems before they become crises, among other services. State officials said they expect the benefits package -- called “housing stabilization services” -- will help about 7,000 people on Medicaid to find and retain housing.

The initiative took three years to prepare and reflects a shift in the way policymakers and state agencies are approaching the problem of homelessness. Health and housing programs historically served many of the same people, but they have been administered separately by a patchwork of nonprofits and government agencies with different funding sources. Yet a growing body of research shows a link between health and housing: That a person’s overall health improves once they find a stable place to live.

Other states are pursuing a similar model, but Minnesota is the first state in the country to receive federal approval to offer housing support services in its publicly funded Medicaid program.

“This is a huge breakthrough and could become a model for the rest of the country,” said Michelle Decker Gerrard, senior research manager at the Wilder Foundation, a St. Paul-based nonprofit that tracks the state’s homeless population. “It recognizes that housing is absolutely essential to a person’s health and well-being, and that many of the folks experiencing homelessness also have chronic health problems.”

The new benefit comes as state and local officials struggle to find practical solutions to the affordable housing crisis, which has become more visible during the coronavirus pandemic. On Monday, police cleared a sprawling homeless encampment at Minneapolis’ Powderhorn Park, which had swelled to several hundred people, citing increasing crime and health concerns. In Hennepin County alone, officials estimate there are about 80 homeless camps, most with just a few tents. The camps have grown in size and number, outreach workers say, because many homeless people fear catching the coronavirus and feel safer sleeping outside than in crowded shelters.

In response, Hennepin and Ramsey county officials launched an unprecedented effort to move hundreds of homeless people at risk for the coronavirus to hotels, but they are still struggling to bring social services to a hard-to-reach population of people sleeping outside who have mental illness and substance abuse issues. A Wilder Research study released last year found that 64% of homeless adults in Minnesota have a serious mental illness, and 24% have a substance use disorder. Nearly 60% have a chronic physical health condition, Wilder found.

“We know that housing is a powerful determinant of health,” said Erin Sullivan Sutton, director of housing and support services at the state Department of Human Services (DHS), which launched the new benefit on Monday. “You are more apt to be healthy if you have some stability in your life and a home.”

Those who qualify for the new services would get help finding a place to live, making sure a home is safe and ready to move in, as well as assistance negotiating leases with a landlord. But unlike many short-term housing programs, the support services do not end once a person moves into a home. The program also pays for a variety of tenant services, such as early identification of behavioral problems, designed to prevent evictions.

The new Medicaid benefit does not cover the cost of rent, but it would help cover tenant services that are provided by a patchwork of organizations across the state. Until now, these providers have had to cobble together funding through federal, state and local agencies, often combined with private grants, to pay for such services. Sometimes the services are interrupted or end when the money runs out, leaving tenants in the lurch, say nonprofit organizations.

“The fact that these benefits are part of the overall Medicaid package is really groundbreaking,” said Susan Haigh, former president of Twin Cities Habitat for Humanity and who helped spearhead a state emergency fund for the homeless. “It helps stabilize the funding stream and will enable providers to broaden and sustain their array of services.”

Jill Wiedemann-West, chief executive officer of People Incorporated, a St. Paul-based nonprofit, said her organization has struggled for years to fund housing support services. The nonprofit has street outreach teams that help transition people to stable housing, as well as case managers who work with people over a longer period to help them avoid eviction. But the program, known as Housing First, has never had a sustainable funding source and has been operating at a loss for years, she said.

The outreach work is “very labor intensive,” she said, and is complicated by the fact that many people who are chronically homeless are suffering from trauma and mental health problems that make it difficult for them to pay rent and avoid eviction. In some cases, she said, it can take years to build enough trust from someone that they will accept services.

“You can’t just say, `Welcome to your house and here’s a set of sheets and some pots and pans,’?” Wiedemann-West said. “There is a lot of trauma, and individuals have been living outside so long that they don’t always have the basic skills to manage in a more normal, closed environment.”

The Department of Human Services estimates the annual cost of the new benefit will be about $2.6 million.

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