To Reduce Health Costs, Insurer Spends on Housing

Dalton Duffie, an outreach coordinator at Capital Studios, an affordable housing site in downtown Austin, was homeless before he got a subsidized apartment.
Dalton Duffie, an outreach coordinator at Capital Studios, an affordable housing site in downtown Austin, was homeless before he got a subsidized apartment.

Nine years ago, Dalton Duffie was trying to fall asleep under a trailer — where he’d temporarily sought refuge from the pouring Austin rain — when he realized he would not live much longer if he stayed on the streets.

Haunted by a constant hunger and the relentless cravings of drug addiction, Duffie was oblivious to the illnesses ravaging his body: the dangerously high blood pressure threatening heart failure and the hepatitis C infecting his liver.

But in that moment, Duffie recalls, he knew he was toying with death. So he went to rehab, where he spent two years before a counselor set him up in an affordable housing project in South Austin. A health care worker there pushed him to see a doctor about his blood pressure, and he eventually got a prescription for the hepatitis. Now, Duffie says, he is fit and healthy, working as an outreach coordinator for a different supportive housing site downtown.

“When you’re homeless, the main thing you want to do is survive,” he said in an interview at Capital Studios, where he works. “The second thing is to get high. If you don’t have stable housing, then you don’t have access to anything like health care.”

Now, one private company that provides health insurance to poor and disabled Texans is taking a gamble that it can keep vulnerable patients like Duffie healthier — and save money — with a cash investment to get them off the street and into supportive housing.


By law, housing costs are not covered by the state's Medicaid program, the insurer of last resort, a divisive issue in the health care community. That means insurance companies can't count them as health care costs when they report their expenditures to the state. 

But that hasn't stopped UnitedHealthcare, one such insurer, from contracting with local homeless coalitions in Houston and Austin to track down the health plan’s members who don’t have a stable place to live. UnitedHealthcare says that will allow the insurer to work with those members to find subsidized housing and help coordinate their health care — and in some cases, pay for “barrier busters” to help them move into apartments or buy necessities like furniture.

The bet United is taking is that its high-risk members will make fewer expensive visits to the emergency room if they have a safe place to live. If the initiative is unsuccessful, the company says it will take the loss out of its own pocket.

Experts say the initiative aligns with a larger shift in U.S. health policy toward paying health providers based on the value of the care patients receive, rather than the volume. That’s broadening the notion of what services fall under the umbrella of health care, and could lead policymakers to better address the “social determinants” of health, like poverty, nutrition and access to housing, said Elena Marks, president and CEO of the Episcopal Health Foundation, which funds community health programs.

“We have talked about health in terms of medicine forever and ever, and I think that’s changing,” she said. “I wouldn’t look at it as welfare or social programs. I would look at it as, what does it take for a person to remain healthy so they can continue to be productive?”

Duffie, who is not a Medicaid enrollee, said his experience with homelessness nonetheless demonstrates the value of secure housing to a person’s health. Before rehab, he said, he wouldn’t have even considered seeing a doctor for preventive care.

“That would’ve been the last thing I wanted to do,” he said. “When you’re homeless, whatever ailments you have are ignored, totally, even if you know you’re qualified for Medicaid, Medicare, whatever.”

Nationally, there are limits on how insurance companies that are stewards of state Medicaid funds can invest in housing. In New York, the Obama administration in 2013 rejected a request from the state health department that it provide matching funds to help Medicaid enrollees pay for a place to live.


That decision came as a blow to advocates for the poor and uninsured, who say it had ripple effects on healthy housing initiatives nationwide.

“We’ve over-invested in health care and under-invested in social services,” said Pam Mattel, chief operating officer of the Acacia Network, a nonprofit in New York that integrates health care and housing services for low-income Latinos.

For now, UnitedHealthcare is doing it by dipping into its own funds. The insurer, for example, is a major investor in the affordable units at Austin's Capital Studios.

The insurer's pilot initiative for the homeless is modest in size — one company representative said United hoped to begin serving about 20 people — but not for lack of need. United has identified nearly 300 of its members in Austin and more than 3,000 in Houston who are either homeless or using supportive housing services.

Kim Nettleton, who has worked on the homelessness initiative for the insurer, said local homelessness coalitions had to work hard to find those people. “We had a very large number of members that we couldn’t find,” she said. “The addresses that they gave the state had either changed or were wrong, or they literally said, ‘Under the bridge.’”

For now, she said United will have to focus on those patients with the highest health care costs and the medical diagnoses that put them most at risk.

“We can’t boil the ocean,” she said.

And that’s even with Texas’ restrictive eligibility requirements — among the toughest in the nation — for people to enroll in the public insurance program. Were Texas to expand Medicaid to cover adults living in poverty, demographers say thousands more homeless Texans would become eligible for health care services.

Upstairs at Capital Studios, Duffie points down a hallway leading to some of the building's 135 efficiency apartments, each about 400 square feet. The sentiment among those who live here is that they are generally healthier since moving in. On the street below, a few residents chat by the city's bike-sharing station in front of the property, which they can use for a discounted price.

But for those residents who spent time on the streets, the physical toll lingers.

“We probably have 15 to 20 that die every year because folks have been out on the street a long time and have chronic health issues,” said Walter Moreau, executive director of Foundation Communities, the supportive housing network that includes the studios.

For Duffie, this space is certainly cozier than the remnants of a burned-down home on Austin’s east side where he once took shelter.

Once you go from being homeless to having a place to live, "then you are able to think, you are able to relax, you are able to put things in perspective,” he said. “Before that, there’s no prioritizing. Priority is staying alive. Priority is waking up the next day without a knife in your back.”

Disclosure: United Healthcare is a corporate sponsor of The Texas Tribune. For a full list of donors and sponsors click here

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