BILL ANALYSIS Ó
AB 2821
Page 1
Date of Hearing: May 11, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2821 (Chiu) - As Amended April 26, 2016
-----------------------------------------------------------------
|Policy |Housing and Community |Vote:|6 - 1 |
|Committee: |Development | | |
| | | | |
| | | | |
|-------------+-------------------------------+-----+-------------|
| |Health | |14 - 2 |
| | | | |
| | | | |
-----------------------------------------------------------------
Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill requires the Department of Housing and Community
Development (HCD), in coordination with the Department of Health
Care Services (DHCS), to establish the Medi-Cal Housing Program
(MCHP). Specifically, this bill:
1)Requires HCD, in coordination with DHCS, on or before January
1, 2018, and every year thereafter, subject to an
appropriation by the Legislature, to award grants to eligible
AB 2821
Page 2
counties and regions to house homeless Medi-Cal beneficiaries.
2)Defines eligible counties and regions as those participating
in specified Medi-Cal programs targeting persons who are high
utilizers of health care, and requires eligible counties and
regions to meet other criteria including community
partnerships, availability of funds for the provision of care
management and other supportive services, and participation in
data reporting and evaluation.
3)Requires a county or region to use grants awards for the
following purposes, as specified: interim housing, long-term
rental assistance for periods up to five years, and up to 5%
of the total grant for county administrative costs.
4)Specifies the MCHP is subject to an initial appropriation by
the Legislature, and that after the initial appropriation, the
funding of grants under the MCHP is subject to annual
appropriations by the Legislature based on decreased costs of
care, as reported by participating counties, due to moving
eligible participants into supportive housing.
5)Requires HCD to use no more than 5% of the funds appropriated
for the MCHP for purposes of administering the program.
FISCAL EFFECT:
1)This bill does not make an appropriation, but codifying the
program results in cost pressure to fund the program. A group
of Assemblymembers, which includes the author, has proposed a
$1.3 billion package of proposals for affordable housing,
including $60 million to fund the MCHP.
2)Assuming a one-time $60 million GF appropriation for the grant
program, $500,000 to HCD to develop the grant program
criteria, and $335,000 ongoing for the life of the program,
based on an assumption of a one-time $60 million GF allocated
AB 2821
Page 3
to the program.
3)Costs to DHCS to consult on program design are expected to be
absorbable within existing resources. To the extent it is
helpful to the program design to have more involvement from
DHCS staff in the program design, some of the one-time program
development costs could be shifted to DHCS (GF).
4)There is fairly convincing data that demonstrates that housing
indigent and homeless individuals who are high utilizers of
health care significantly reduces health care costs. A number
of pilot projects have been conducted that demonstrate a clear
return on investment in a fairly short period of time. To the
extent housing grants through this program reduce health care
costs of individuals enrolled in Medi-Cal, there could be
significant savings to the Medi-Cal fee-for-service program
and a reduction in cost growth in Medi-Cal managed care.
This bill suggests any savings generated should be reinvested
in the program, by stating further funding is subject to
annual appropriations by the Legislature based on decreased
costs of care as described in #4, above. This creates ongoing
cost pressure to maintain funding. However, if additional
funding is provided based on estimated savings from housing
interventions funded by the original appropriation, these
additional grants should not result in additional costs beyond
the original appropriation.
COMMENTS:
1)Purpose. This bill, supported by housing advocates, attempts
to coordinate delivery of services between the health and
housing systems to further the goal of eliminating
homelessness.
AB 2821
Page 4
2)Housing and Health Care. It is difficult to be healthy without
a home. Homelessness often precludes good nutrition, good
personal hygiene, and basic first aid, adding to the complex
health needs of homeless people. Additionally, conditions
which require regular, uninterrupted treatment, such as
tuberculosis and HIV/AIDS, are extremely difficult to treat or
control among those without adequate housing. Diseases that
are common among the homeless population include heart
disease, cancer, liver disease, kidney disease, skin
infections, HIV/AIDS, pneumonia, and tuberculosis. Barriers
to health care include lack of knowledge about where to get
treated, lack of access to transportation, and lack of
identification, psychological barriers, and cost. As a result,
many homeless people utilize hospital emergency departments
(EDs) as their primary source of health care. Some homeless
people have high health care needs that are met in high-acuity
settings, including hospital EDs, inpatient psychiatric
facilities, and skilled nursing facilities, as well as state
and local correctional health facilities if individuals become
incarcerated.
3)Medi-Cal 1115 Waiver and Whole Person Care pilot. A new
"Medi-Cal 2020" waiver approved last year by the federal
government builds upon the state's prior work and includes
several new, ambitious initiatives to improve health care
delivery. Whole Person Care pilots are a key opportunity
included in the waiver. Under this pilot, counties will
coordinate physical health, behavioral health, and social
services in a patient-centered manner with the goal of
improving the health and well-being of beneficiaries. The
pilots will enable counties and their partners to target high
users of services, share data between systems, coordinate care
in real time, and evaluate progress. The waiver originally
proposed allowing the state to leverage federal funding for
housing, based on the demonstrated fiscal benefit to the
federal government for reduced Medi-Cal spending, but the
federal government declined to allow federal matching funds
for this purpose.
AB 2821
Page 5
4)Cost-Effectiveness. Supporters of this bill have provided
numerous studies documenting that housing individuals with
high health care needs can be cost-effective and potentially
demonstrate a positive return on investment. Results of some
pilots are striking. For example, an analysis of costs and
outcomes one year prior as compared to one year after a
housing intervention, among 163 of the most costly homeless
hospital patients in Los Angeles County, found a 72% decline
in average total health care costs from $58,962 to $16,474
among the participants who moved into supportive housing.
Another study in Washington State found a group of individuals
that was given supportive housing had 74% fewer hospital
admissions than a comparison group.
5)Staff Comments. This bill appears to target high-cost Medi-Cal
beneficiaries who are participating in either the Health Homes
or Whole Person Care pilot projects, two Medi-Cal projects
that target high utilizers of care in order to coordinate and
improve services. However, the provisions describing the
criteria for eligible individuals do not reference the
programs. Limiting eligibility to participants in the programs
would ensure the individuals targeted for housing are the ones
with high health care needs.
Eligibility for grant funding is granted based on a county
meeting certain criteria. As the appropriation and size of the
program is unknown, granting eligibility may be premature.
Granting eligibility suggests an entitlement. The author may
wish to consider amending this bill to clarify that
eligibility is subject to the availability of funding and/or
allow for some prioritization or competitive criteria in the
case the funding is inadequate to allow meaningful awards that
are sufficient to serve to all counties and all individuals
deemed eligible by the bill as currently drafted.
AB 2821
Page 6
Somewhat related to the comment above, staff notes in addition
to Medi-Cal savings, there are benefits to local government
from housing the homeless, including potential savings in the
criminal justice, mental health and substance use, and public
hospital systems. If the state provides grants to assist with
housing on the assumption it can be done on a cost-neutral or
cost-effective basis based on savings to Medi-Cal, there
should be an assurance that counties are prioritizing housing
for individuals with high health care needs for which the
state would otherwise pay. Otherwise, and perhaps even still,
it is worth considering whether counties should share in the
cost of this housing program. It also may make sense to
differentiate the program design for counties with public
hospitals versus without, because the public hospital counties
pay the nonfederal share of inpatient costs, and thus these
counties would experience the majority of health care cost
savings. In addition, many homeless individuals are childless
adults, for whom the federal government shoulders over 90% of
the cost burden. Health care cost savings among this
population will benefit the federal government. The author
may wish to consider ways to ensure fiscal benefits flow back
to the state, if the state is the only entity investing money
in housing.
Finally, staff notes reinvesting any cost savings back into
sustaining the program has merit, but would require some
fairly sophisticated modeling work to do well. Identifying
the effect of providing housing will be difficult,
particularly since participation in the Health Homes or Whole
Person Care pilots may be a confounding factor. If careful
evaluation is desired, a solid experimental design will need
to be built in from the beginning, and that does not appear to
be envisioned here. A less scientific approach still has
merit and would be simpler, but would not yield robust data as
a basis for future decision-making.
Analysis Prepared by:Lisa Murawski / APPR. / (916)
319-2081
AB 2821
Page 7