The Enduring Role of Medicaid in Addressing Drivers of Health

Editor: Patti Boozang
Authors: Melinda Dutton & Mandy Ferguson

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tl;dr 

Medicaid plays a significant role in addressing social and economic factors that impact health (drivers of health or DOH), a role that is likely to continue in the next Trump Administration. 

• Bipartisan Efforts. Medicaid's initiatives to address DOH have take-up in both red and blue states, including 1115 demonstration programs approved under both the Trump and Biden administrations. 

• Economic Benefits. Investing in DOH has shown a strong return on investment in terms of both health outcomes and costs. 

• Health Gains. Addressing DOH aligns with the incoming Trump administration’s focus on reducing chronic illness. 

• Durable Policies. While the new administration may take a different approach to DOH, many Medicaid authorities are durable and will continue to provide states pathways for addressing DOH. 

 The 80 Million Impact 

The concept of DOH is both intuitive —it takes more than health care to keep us healthy – and borne out in data. Upstream social and economic factors (think access to stable housing, nutritious foods, reliable transportation, personal safety) account for about 50% of health outcomes; adding environmental and behavioral factors brings that number to 80%. So, it is perhaps not surprising that addressing DOH has become increasingly integral to public and private efforts to improve health and control healthcare costs. Medicaid – which provides health insurance to a population disproportionately impacted by social and economic needs – has been at the forefront of these efforts. And with the impending change in administration, anticipated pressure to reduce Medicaid spending to fund tax cuts and other priorities, and some criticism from the left and the right about the appropriate role of Medicaid in addressing social needs, it is reasonable to question what the future holds. Still, several factors point to the likelihood that addressing DOH is here to stay.  

A Bipartisan Foundation 

Medicaid has a long history of addressing DOH, including under Home and Community Based Waiver programs that serve elderly and disabled Medicaid enrollees, in both red and blue states. Recent efforts to extend the value of DOH services to a broader swath of the Medicaid population started with the first Trump Administration’s Center for Medicare and Medicaid Services (CMS) issuing the first comprehensive DOH guidance in January 2021. The guidance’s stated purpose was to “support states with designing programs, benefits, and services that can more effectively improve population health, reduce disability, and lower overall health care costs in the Medicaid and CHIP programs by addressing SDOH.” Clocking in at more than 50 pages, the guidance was a painstaking accounting of the existing authorities under which states could leverage Medicaid to address DOH. This guidance came on the heels of Trump Administration approvals of 1115 Demonstration waivers in three states (Hawaii, North Carolina, and Virginia) permitting the use of Medicaid dollars to pay for nonmedical, health-related services related to housing and nutrition among other domains. In its waiver approval letters, CMS noted the ability for these initiatives to “promote health and wellness through greater independence and improved quality of life” and “address eligible enrollees' specific health determinants to improve health outcomes and lower healthcare costs.”  

So, while the language and animating purpose of addressing DOH may change in the transition to a new Trump administration, there is also reason to anticipate room for common ground.  

Addressing DOH Is Good Business  

A growing body of evidence over a decade shows that investing in DOH has a strong return on investment—leading to better health outcomes while simultaneously reducing healthcare costs. This evidence base is only strengthening with time.  

Take North Carolina’s “Healthy Opportunities Pilots” (HOP) 1115 demonstration, for example. Approved under the first Trump Administration, HOP provides services addressing housing, food, transportation, and interpersonal safety needs in three primarily rural regions of the state. According to an independent interim evaluation of the program, HOP participation is associated with decreased emergency department and inpatient visits, resulting in an estimated service spending reduction of, on average, $85 per HOP participant per month, after accounting for the cost of the nonmedical services provided under the waiver.  

With healthcare costs continuing to outpace the rate of inflation, and state and federal leaders eager for opportunities to reduce the rate of growth if not overall spending, these and similar results are hard to ignore. 

DOH Innovation in Medicaid Can Help Make America Healthy Again 

President Trump and his presumptive nominee to lead the Department of Health and Human Services (HHS), Robert F. Kennedy, Jr., have made reducing chronic illness central to the incoming administration’s health platform – specifically noting the impact of food and nutrition in achieving that goal. Medicaid is essential to the success of this effort, given its scale and the disproportionate share of people with chronic and disabling conditions it serves. While specific priorities of the next Trump Administration remain to be seen, the focus on prevention creates an opening for new HHS leadership to embrace at least some strategies to address DOH.  

Many DOH Authorities are Durable 

With every change in administration, it is reasonable to expect shifts in priorities and program policies. It is possible that an incoming Trump administration will take a less expansive approach to approving new DOH 1115 demonstrations. Other authorities, however, are more durable. Guidance authorizing the use of ILOS in Medicaid managed care delivery systems, for example, is in regulation, which cannot be reversed without additional formal rulemaking. HCBS Waivers are rooted in both statute and a long history of rulemaking. States also have flexibility to select certain state plan services, such as targeted case management, to address DOH. As a result, states will continue to have options to implement initiatives and pay for services designed to address DOH in their Medicaid programs, even if potentially less expansive than in the Biden years. 

The Bottom Line 

While the specific language, mechanisms and areas of focus may change, the imperative to reduce costs and improve care by addressing DOH is likely to continue to bridge the political divide.