As hospitals falter, Newsom eyes tapping Medi-Cal to pay for housing

Valley hospitals have long complained about being shortchanged by state healthcare programs for the poor. Now, California wants to spend Medicaid dollars elsewhere.

California’s low Medi-Cal reimbursement rates were at the center of Madera Community Hospital’s closure at the beginning of the year. 

Now, California is looking to expand its Medicaid program to cover rent payments, a proposal that has staunch support from at least one Central Valley lawmaker. 


The backstory: In 2016, California launched a pilot program in 26 counties for Medi-Cal, the state’s Medicaid program, to pay for some housing-related expenses such as security deposits and furniture, but not rent. 

  • A study from the UCLA Center for Health Policy Research found that the program saved taxpayers an estimated $383 per patient annually. 
  • Arizona and Oregon received permission from the Biden administration to use Medicaid money directly for housing. 

The big picture: Looking to join Arizona and Oregon, California Gov. Gavin Newsom is proposing to spend $100 million annually in the state’s Medicaid program to cover up to six months of housing for people. 

  • Those eligible for the program would be at-risk of becoming homeless, recently released from prison, coming out of foster care or are at-risk for hospitalization or emergency room visits. 

By the numbers: California has more than 13 million patients in Medi-Cal, which is the largest in the nation and is around one-third of the state’s population. 

  • The Legislative Analyst’s Office estimates that the proposal would increase Medicaid spending by $2.5 billion over the next three years. 
  • Yet the proposal comes at a time when California is not flush with cash as the state is expected to have a $22.5 billion budget deficit this year. 

What they’re saying: Asm. Joaquin Arambula (D–Fresno), a former emergency room doctor, is the chair of the budget subcommittee and expects wide support on the issue from his Democratic colleagues. 

  • “I became very good at being able to get cockroaches out of people’s ears,” Arambula told the Associated Press in announcing his support for the measure. “The living conditions of many of our communities, especially in our rural communities, really can affect a person’s ability to get adequate sleep, to be prepared for the next day and to stay healthy.”
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