Housing Is Mental Health Care: A Call for Medicaid Demonstration Waivers Covering Housing

Housing is critical to enabling people with serious mental illnesses to live successfully in their communities. Yet unlike other essential community-based services, housing cannot be covered under the Medicaid program, which guarantees states federal reimbursement for between 50% and 83% of the cost of services. Instead, service systems rely on federal housing assistance programs and, where available, on state or local housing subsidy programs. Mental health service systems could make housing more widely available if they could use federal Medicaid funds for housing. The federal government has not provided Medicaid reimbursement for housing because of Medicaid’s exclusion of “room and board,” but it has recently granted Medicaid demonstration waivers that lift a similar statutory prohibition: the institutions for mental disease (IMD) exclusion rule, which bars Medicaid payments for services to individuals ages 21 to 64 in psychiatric institutions. If the government approves demonstration waivers of the IMD exclusion, it should similarly approve demonstrations covering housing for people with serious mental illnesses. If these demonstrations show that providing Medicaid financing for housing improves mental health outcomes and reduces use of more costly services, those results should spur a conversation about modifying Medicaid to allow reimbursement for housing in appropriate circumstances.