California Bets Big on Housing in Medicaid

September 22, 2022

Dale Stout is one of the first people to benefit from the additional housing supports in California’s new Medicaid initiative, CalAIM. (Photo by Ryan Levi)

California is in the early days of one of the most ambitious initiatives ever to address Medicaid patients’ social needs in hopes of improving their health. This week, we trace the origins, early results and challenges of “CalAIM.”

Listen to the full episode below, read the transcript or scroll down for more information.

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Jacey Cooper is the director of Medicaid in California, and she’s never been afraid of big challenges.

She commuted two hours each way from Bakersfield to Los Angeles to complete her senior year at the University of Southern California after giving birth to twins.

Just a few years later, at 27, she helped a large county hospital lower costs and double the size of its program for uninsured and low-income patients by pairing them with care managers, who help them navigate the complex health care system and stay out of the emergency department.

Now, the 39-year-old has designed the nation’s most ambitious effort to push Medicaid coverage beyond the four walls of the traditional health care system.

CalAIM, which went live on Jan. 1, will touch almost all of the nearly 15 million people covered by Medi-Cal, California’s Medicaid program. It will add new dental benefits, change how Medi-Cal addresses addiction and mental illness, and expand the reach of managed care in the state, among other reforms.

But the most innovative piece of CalAIM is focused on a smaller group: people who lack a safe, stable place to live. With CalAIM, Cooper is betting that if Medi-Cal can help people get and stay housed, they will be healthier and cost the state less in the long run.

“It’s more than just paying for an emergency room visit or paying for a clinic visit,” Cooper said. “We are caring for some of the most vulnerable, low-income individuals in this state, and our job is to do way more than that.”

Building a first-of-its-kind Medicaid program

CalAIM began to take shape in April 2018, when Cooper criss-crossed California to hear from Medi-Cal providers and insurers about what they thought was and wasn’t working in the program.

At almost every stop, she saw counties, hospitals and managed care plans working to address patients’ social problems to better address their health needs.

Cooper spent the next 10 months focused on turning what she learned into CalAIM.

One of the most challenging pieces was figuring out how to get the federal government to pay for things that were not traditional medical services. Each state runs its own Medicaid program but shares costs with the federal government, which has strict rules about what it will pay for. For example, federal Medicaid dollars cannot go toward paying someone’s rent.

‘It’s more than just paying for an emergency room visit or paying for a clinic visit,’ said Jacey Cooper, the architect of CalAIM. ‘We are caring for some of the most vulnerable, low-income individuals in this state, and our job is to do way more than that.’ (Photo by Ryan Levi)

All of the programs Cooper had seen during her listening tour were funded by health plans, counties or hospitals without Medicaid reimbursement, or they were part of small Medicaid-funded pilot projects.

Cooper remembers thinking to herself: “Here are all these things that are actually working for people that we haven’t been able to find solutions for historically or we haven’t paid for them. How do I find a way to pay for that? Because once you can pay for something, once you finance it and once there’s sustainability, then it can grow.”

To find that financial sustainability, Cooper turned to “in lieu of services,” a part of federal Medicaid regulations that allows managed care plans to pay for — and get reimbursed for — non-traditional medical services, as long as they had a connection to a patient’s health and had data showing they were cost-effective and improved care.

Over the course of two to three months, Cooper and her colleagues whittled their list down to 14 “community supports” that would be core pieces of CalAIM. Almost all of them were related to housing, from helping someone find an apartment and pay first month’s rent to keeping someone in their home by paying to remove mold from the walls or installing bathroom grab bars.

“By allowing someone to get housed, they can start thinking about how they’re going to address some of the other things in their life because they are not worried about where they’re going to sleep or what they’re going to eat that day,” Cooper said, summing up the philosophy behind the new services.

Cooper paired the community supports with another new benefit in CalAIM, enhanced care management, which would provide patients with a care manager to help them coordinate all of their medical and social needs.

Cooper spent 2020 and 2021 convincing state and federal officials to sign off on CalAIM before ultimately getting the final thumbs up from the federal Centers for Medicare and Medicaid Services a few days after Christmas 2021.

“I came home and my husband opened a bottle of champagne and, of course, I wrote CalAIM on that cork and I will keep it for a very long time,” Cooper said.

CalAIM in action

Dale Stout is one of the first people in California to benefit from CalAIM.

Stout had a stroke earlier this year, and while he was in the hospital, the bank took his home.

“It came down like a ton of bricks,” he said.

Stout feared he would end up in a shelter or on the streets, but a hospital social worker referred him to Illumination Foundation, a nonprofit that runs housing and health care programs across Southern California.

Thanks to CalAIM, Stout’s Medi-Cal insurer paid for him to stay at Illumination Foundation’s medical respite facility in Riverside, where he was able to continue his recovery. CalAIM also paid for a caseworker to help Dale look for a new place to live and apply for housing assistance.

“If [Illumination Foundation] hadn’t stepped in and taken me, I would have been on the streets,” Stout said. “I’d be dead.”

Instead, Stout has relearned how to walk, maintained his sobriety, made it to all of his medical appointments and is scheduled for brain surgery this fall.

Proponents of CalAIM point to stories like Stout’s as evidence that helping a person stabilize their life and addressing their social needs are critical first steps to tackling their medical issues.

“I’m actually a walking miracle,” Stout said.

An ambitious program with many challenges

Stout’s story is also emblematic of one of the biggest challenges facing CalAIM: housing availability.

Months after he was healthy enough to have moved into his own place, Stout was still at Illumination Foundation waiting for a housing voucher to come through, something CalAIM can do little to change.

“It is hard when you have certain parts of the puzzle really working right, and then you hit a limitation that you don’t fund,” Cooper, CalAIM’s architect, said.

A homeless encampment next to train tracks including tents, tarps and trash on the ground.

A homeless encampment known as “Heroin Alley” in Modesto, California. (Photo by Ryan Levi)

Stout is on track to get a voucher before he has to leave Illumination Foundation in December. But California is still facing a homelessness crisis. The latest estimates put California’s homeless population around 161,000, a far greater number than the 3,800 people CalAIM has helped look for a place to live, or the 5,900 it’s helped to stay in their homes.

Other concerns center around the basic mechanics of pulling off a program this ambitious: Will the program find enough social service providers to offer these new services? Can those providers adapt to the bureaucratic, administrative burdens of Medicaid? Will doctors, nurses and social workers even know about CalAIM to refer patients?

A major concern of consumer advocates in the state is whether managed care plans — which are responsible for providing these new non-traditional services — will be able to deliver.

“Those health plans do not have the best track record, even with providing some of the basic core health care services — childhood vaccinations, providing access to the primary care and specialists that patients need,” said Anthony Wright, executive director of Health Access California.

Managed care plans are not required to offer community supports, but as of July 1, all 24 plans were offering at least two.

Will CalAIM help patients and save money?

Paula Lantz, a researcher at the University of Michigan who has spent decades studying attempts by Medicaid to improve health by addressing patients’ social needs, is worried about claims that CalAIM will save the state money.

While some studies have shown that getting people housed and providing them with supportive services saves money in the long run, Lantz points to a 2019 literature review she co-wrote that found connecting complex patients to social services rarely improved outcomes or lowered costs compared to similar patients who received traditional medical care.

“These kinds of interventions are often oversold to get the political buy-in and to get the resources by saying they’re going to be cost neutral,” Lantz said. “My biggest worry is that there could be very positive impacts of what they’re doing that don’t show up in a bottom line, and then it just makes people not even want to invest in it any further.”

Cooper is confident CalAIM will save money because so many of these services did just that as local pilots. Her department estimates that if emergency room, hospitalization and long-term care use drops just 3.3 percent by 2026, that would offset the costs of the new community supports.

But that’s not the most important outcome in her mind.

”We should be prudent with taxpayers’ dollars, but if people’s health outcomes are improving and they’re getting access to the appropriate services they need, I think overall that is success. That is what we are trying to do,” Cooper said.

Cooper knows implementing CalAIM will be a long and messy process, but she’s committed to the idea that Medicaid can and should do more for its most vulnerable members.

“I think it’s just increasing the bar of what we should be doing, what our society should be doing,” she said. “So it’s a huge opportunity, and I hope that we meet the moment.”

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Episode Resources

Selected Reporting and Research on CalAIM:

Taco Bowls and Chicken Curry: Medi-Cal Delivers Ready Meals in Grand Health Care Experiment (Heidi de Marco and Angela Hart, California Healthline, 5/31/2022)

Launching CalAIM: 10 Observations About Enhanced Care Management and Community Supports So Far (Diana Crumley, Kelsey Brykman and Matthew Ralls; Center for Health Care Strategies; 5/24/2022)

California Efforts to Address Behavioral Health and SDOH: A Look at Whole Person Care Pilots (Michelle Tong and Elizabeth Hinton, KFF, 3/17/2022)

California launches ambitious effort to transform Medi-Cal to ‘whole person care’ (Kristen Hwang, CalMatters, 2/14/2022)

California prepares to spend billions on Medi-Cal services for homeless people and others (Angela Hart, Kaiser Health News, 9/7/2021)

CalAIM Explained: A Five-Year Plan to Transform Medi-Cal (California Health Care Foundation, 7/26/2021)

Interim Evaluation of California’s Whole Person Care (WPC) Program (Nadereh Pourat, Emmeline Chuang, Xiao Chen, Brenna O’Masta, Leigh Ann Haley, Connie Lu, Michael P. Huynh, Elaine Albertson and Denisse M. Huerta; UCLA Center for Health Policy Research, September 2019)

Selected Reporting and Research on Health Care Addressing Social Needs:

The U.S. pours money into health care, then holds back on social services. But those services often can do more to improve health. (Guy Boulton,
Milwaukee Journal Sentinel, 9/15/2022)

Optimizing Investment in Housing as a Social Determinant of Health (Stuart Butler, JAMA Forum, 9/15/2022)

Housing and Health Problems Are Intertwined. So Are Their Solutions. (Center on Budget and Policy Priorities, 6/29/2022)

If Housing Is a Health Care Issue, Should Medicaid Pay the Rent? (Lucy Tompkins, New York Times, 6/14/2022)

Medicaid Authorities and Options to Address Social Determinants of Health (SDOH) (Elizabeth Hinton and Lina Stolyar, KFF, 8/5/2021)

In Health Care, More Money Is Being Spent On Patients’ Social Needs. Is It Working? (Phil Galewitz, Kaiser Health News, 6/21/2021)

Medicaid’s Role in Housing (MACPAC, June 2021)

Medicaid Doesn’t Pay For Housing. Here’s What It Can Do To Help Meet Enrollees’ Social Needs (Hannah Katch and Peggy Bailey, Health Affairs, 1/17/2020)

‘Hot Spotters’ on Trial (Tradeoffs, 1/8/2020)

Interventions to Decrease Use in Prehospital and Emergency Care Settings Among Super-Utilizers in the United States: A Systematic Review (Samantha Iovan, Paula M. Lantz, Katie Allan and Mahshid Abir; Medical Care Research and Review; 4/26/2019)

Episode Credits


Jacey Cooper, Director, California Medicaid Program

Bradley Gilbert, MD, MPP, Former Chief Medical Officer and CEO, Inland Empire Health Plan

Lacy McClellan

Dale Stout

Anthony Wright, Executive Director, Health Access California

Paula Lantz, PhD, James B. Hudak Professor of Health Policy, University of Michigan Gerald R. Ford School of Public Policy

The Tradeoffs theme song was composed by Ty Citerman, with additional music this episode by Blue Dot Sessions and Epidemic Sound.

This episode was produced by Ryan and mixed by Andrew Parrella. Editing assistance from Cate Cahan.

Special thanks to Francis Angeles, Pooja Bhalla, Daniel Diep, Hector Gallegos, Jessica Hamilton, Jordan Hoiberg, Sabrina Johnson, Stacey Kuzak, Mia Laake, Jose Alberto Lopez, Audrey Mendonza, Shira Shavit, Melora Simon, Dwayne Soloman and everyone Dan and Ryan met who shared their stories of being homeless in Modesto.

Additional thanks to:

Anna Bailey, Lindsey Browning, Diana Crumley, Nicole Evans, Len Finocchio, Dianne Hasselman, Elizabeth Hinton, Clemens Hong, Amanda Ingram, Jeanna Kendrick, Shelly LaMaster, Kim Lewis, Jeff Little, Anish Mahajan, Cindy Mann, Dan Mistak, Sara Rosenbaum, Mary Lisa Russell, Amy Scribner, Hemi Tewarson, Eduardo Villarama, the Tradeoffs Advisory Board and our stellar staff!