BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 2821 (Chiu) - Medi-Cal Housing Program
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|Version: June 16, 2016 |Policy Vote: HEALTH 9 - 0, T. & |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Brendan McCarthy |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 2821 would require the Department of Housing and
Community Development to establish a program to fund competitive
grants to pay for rental assistance for homeless Medi-Cal
beneficiaries.
Fiscal
Impact:
Unknown annual costs to provide grants to support rental
assistance for homeless Medi-Cal beneficiaries (General Fund).
The bill does not appropriate any funding for the program nor
does it specify a projected level of funding for future years.
Staff notes that the author and other members of the Assembly
had proposed to include $60 million in the current year budget
to fund this bill (as part of a larger program for affordable
housing). That funding was not included in the enacted Budget
Act.
One-time costs of about $500,000 to develop program
requirements, consult with stakeholders, and adopt program
AB 2821 (Chiu) Page 1 of
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guidelines by the Department of Housing and Community
Development (General Fund). The bill would require the
Department to develop the program immediately, whereas
actually funding grants under the program would be subject to
an appropriation by the Legislature. Therefore, the Department
would incur the upfront administrative costs, regardless of
whether the Legislature appropriated money in future years for
the program.
Ongoing costs of about $300,000 per year to administer the
grant program by the Department of Housing and Community
Development (General Fund). Based on the initial proposal for
$60 million in initial funding, the Department anticipated
needing about $300,000 per year to administer the grant
program.
Ongoing costs, likely in the low hundreds of thousands per
year, to contract with an independent evaluator to analyze
program data, including health care spending data for program
participants (General Fund). The bill requires the Department
of Housing and Community Development to contract for an
independent evaluation. The bill does not place an end date on
the evaluation of the program, therefore staff assumes that
program evaluation will be an ongoing cost.
Ongoing costs, likely in the low hundreds of thousands, for
the Department of Health Care Services to coordinate with the
Department of Community Development and to collect and report
on Medi-Cal expenditures for participating Medi-Cal
beneficiaries (General Fund and federal funds). The bill
requires the independent evaluator to determine changes in
health care costs for participating Medi-Cal beneficiaries.
The Department of Health Care Services will likely incur staff
costs to compile both fee-for-service and managed care
expenditure data.
Unknown, but significant future public savings are likely due
to reduced health care costs for participating individuals, to
the extent the program is funded (General Fund, local funds,
federal funds). There are numerous published studies that have
shown significant reductions in public spending when homeless
individuals who are high-utilizers of public services are
provided housing as well as physical and mental health
services. Those studies have shown a strong cost-benefit ratio
AB 2821 (Chiu) Page 2 of
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to "housing first" pilot projects. To the extent that this
program is funded and funding is targeted towards
high-utilizers of health care services, the program is likely
to generate future cost savings in avoided health care costs
(as well as potential savings due to decreased costs in the
criminal justice system). Cost savings could accrue to the
state due to reductions in hospitalizations at private
hospitals, to local governments due to reductions in
hospitalizations at public hospitals or psychiatric hospitals,
and to the federal government which provides matching funds
for Medi-Cal services. Because of the complexity of financing
for Medi-Cal services, cost savings to the state may or not
fully offset state expenditures.
Background: Under state and federal law, the Department of Health Care
Services operates the Medi-Cal program, which provides health
care coverage to low income individuals, families, and children.
Medi-Cal provides coverage to childless adults and parents with
household incomes up to 138% of the federal poverty level and to
children with household incomes up to 266% of the federal
poverty level. The federal government provides matching funds
that vary from 50% to 90% of expenditures depending on the
category of beneficiary.
Federal law generally prohibits federal Medicaid matching funds
from being used directly to support housing of Medicaid
beneficiaries. However, there are two federally authorized
Medi-Cal programs that do allow federal funds to be used for
services associated with housing. The Whole Person Care Pilots
(a program included in the new Section 1115 "Medi-Cal 2020"
waiver) authorizes federal matching funds for a variety of
social services and supports for high-utilizers of Medi-Cal
health care services. Funding for the Whole Person Care Pilots
will come from additional federal funds ($300 million per year
for five years) and intergovernmental transfers from
participating counties. Also, the state has authorized
participation in the federal "Health Homes" program, which
provides enhanced federal matching funds (90%) for two years to
provide additional services and supports to individuals with
high-health care costs and/or mental illness.
AB 2821 (Chiu) Page 3 of
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Proposed Law:
AB 2821 would require the Department of Housing and Community
Development to establish a program to fund competitive grants to
pay for rental assistance for homeless Medi-Cal beneficiaries.
Specific provisions of the bill would:
Require the Department of Housing and Community Development,
in coordination with the Department of Health Care Services,
to establish the Medi-Cal Housing Program by July 1, 2017;
Require the Department of Housing and Community Development to
establish draft guidelines to fund competitive grants to pay
for rental assistance for Medi-Cal beneficiaries;
Specify certain criteria that must be included in the grant
guidelines;
Require the Department of Housing and Community Development,
on or after December 31, 2017, subject to appropriation of
funds by the Legislature, to award competitive grants to
participants in the Whole Person Care Pilots or Medi-Cal
managed care plans administering the Health Home Program;
Require the Department of Housing and Community Development to
collect data from participants and the Department of Health
Care Services;
Require the Department of Housing and Community Development to
contract with an independent evaluator to determine the
changes in health care costs for Medi-Cal beneficiaries who
are provided services under the Program;
Specify the eligibility requirements for grant applicants -
including a requirement that the applicant be either the lead
agency for a Whole Person Care pilot or is located in a county
where a Health Home Program is operating, that the applicant
has identified sources of funding for certain housing-related
services and that the applicant agrees to contribute funding
for rental assistance, and other requirements;
Require the Department of Housing and Community Development
and the Department of Health Care Services to coordinate to
collect Medi-Cal data on health care costs for participating
beneficiaries;
Specify the eligible uses of grant funds;
Specify the eligibility criteria for individuals receiving
assistance funded through the program - primarily that
participants be Medi-Cal eligible and be homeless;
Make the program subject to annual appropriation by the
Legislature;
Limit administrative costs to 5% of program funding;
Specify that the bill shall only be implemented after all
AB 2821 (Chiu) Page 4 of
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necessary federal approvals have been received and only to the
extent that the bill's implementation does not jeopardize
federal funding.
Related
Legislation: AB 1618 (Committee on Budget, Statutes of 2016)
establishes a program for the Department of Housing and
Community Development to distribute $2 billion in funding for
permanent supportive housing for individuals eligible for
services under the Mental Health Services Act (Proposition 63).
Funding for this program will come from a securitization of
future Mental Health Services Act tax revenues.
Staff
Comments: The author of this bill and several other members of
the Assembly proposed to include $1.3 billion for affordable
housing (including $60 million to fund AB 2821) in the 2016-17
Budget Act. In addition, there was a separate proposal to
provide $400 million for affordable housing the Budget Act.
Neither of those proposals were included in the enacted Budget
Act.
The bill requires the Department of Housing and Community
Development to develop the grant program required in the bill
before any funding is appropriated by the Legislature. The
Department would incur substantial administrative costs before
knowing whether future funding would be available.
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