For a while now I’ve been meaning to write a post about the connection between housing instability and health. Of late, this topic has drawn a good deal of coverage in high-profile news outlets, and organizations across the healthcare spectrum are taking notice. The idea is buoyed by the notion that addressing negative social determinants of health (SDOH) is a worthy aim not just because it’s the right thing to do, but because there’s a solid business case to be made for adopting such an approach.
I’ve written multiple posts about the interplay between insurance and population health, but in this post I’d like to discuss how health insurance companies are investing in housing to improve the health outcomes of some beneficiaries. At first it might sound counterintuitive that payers, who are in the business of making money, would shell out significant amounts of cash to either fix up substandard housing or subsidize their beneficiaries’ accommodations outright. But a deeper look shows how this strategy is paying dividends, both in terms of better health outcomes and enhanced bottom lines.
The connection between housing instability and poor health outcomes has been known for some time. Indeed, as a 2017 Health Affairs article put it, “Access to health care has been shown to improve health, and housing instability is correlated with poor access to health care.” The authors of that same study found that those receiving US Department of Housing and Urban Development (HUD) housing assistance had “a lower uninsurance rate and a lower rate of unmet need due to cost” when compared with those who hadn’t received housing assistance.
Put another way, when people are given financial help, they don’t have to worry as much about making tradeoffs between healthcare visits and paying rent each month. Ensuring access to healthcare is a central tenet of population health, and alleviating the difficult choice between healthcare and housing seems to have finally caught on with insurers across the country.
But before we launch into a discussion about payers and subsidized housing, I’d like to clarify what I mean by the term “housing instability” and its synonym, “housing insecurity.” While it may be tempting to think of housing instability as equivalent to homelessness, it is actually a separate, if related, term. The Office of Disease Prevention and Health Promotion defines it this way:
“Housing instability encompasses a number of challenges, such as having trouble paying rent, overcrowding, moving frequently, or spending the bulk of household income on housing.”
So being housing unstable means that the costs associated with housing are burdensome to a given person or group of people. If left unmitigated, the factors leading to this turmoil can precipitate homelessness. While the problem of housing instability is multifaceted, high housing costs relative to income is a primary culprit. The U.S. Department of Health and Human Services frames the issue of expensive housing this way:
“Households are considered to be cost burdened if they spend more than 30 percent of their income on housing and severely cost burdened if they spend more than 50 percent of their income on housing. Cost-burdened households have little left over each month to spend on other necessities such as food, clothing, utilities, and health care.”
Not to belabor the topic of housing instability, but I want to zoom in a little further on its component parts to give us a deeper appreciation for what insurers are up against in combating it. For starters, substandard housing is one cause of housing instability that can lead to sub-optimal health. I’ve written about this topic in the past, and how some community organizations have banded together to overcome it.
The National Center for Healthy Housing calculates that nearly six million U.S. homes fall into the substandard category. To get a better handle on how this problem is quantified, it’s instructive to consult the American Housing Survey (AHS), which is sponsored by HUD and conducted by the U.S. Census Bureau. The AHS rates housing as “severely inadequate” based on eight criteria:
- Unit does not have hot and cold running water.
- Unit does not have a bathtub or shower.
- Unit does not have a flush toilet.
- Unit shares plumbing facilities.
- Unit was cold for 24 hours or more and more than two breakdowns of the heating equipment have occurred that lasted longer than 6 hours.
- Electricity is not used.
- Unit has exposed wiring, not every room has working electrical plugs, and the fuses have blown more than twice.
For the eighth criterion, the habitation in question must show evidence of five or six of these structural conditions:
- Unit has had outside water leaks in the past 12 months.
- Unit has had inside water leaks in the past 12 months.
- Unit has holes in the floor.
- Unit has open cracks wider than a dime.
- Unit has an area of peeling paint larger than 8 by 11 inches.
- Rats have been seen recently in the unit.
An issue brief by the Robert Wood Johnson Foundation states that “Substandard housing such as water leaks, poor ventilation, dirty carpets and pest infestation can lead to an increase in mold, mites and other allergens associated with poor health.” In addition, note the brief’s authors, “Concentration of substandard housing in less advantaged neighborhoods further compounds racial and ethnic as well as socioeconomic disparities in health,” a phenomenon often referred to as “housing inequity.”
To this latter point, it should come as no surprise that substandard housing affects some demographic groups more than others. A 2016 article from the Brookings Institution titled “Time for justice: Tackling race inequalities in health and housing” notes the following:
“Substandard housing conditions such as pest infestation, lead paint, faulty plumbing, and overcrowding disproportionately affect black families and lead to health problems such as asthma, lead poisoning, heart disease, and neurological disorders. Blacks are 1.7 times more likely than the rest of the population to occupy homes with severe physical problems. Concentrated housing inequity also disproportionately exposes black communities to environmental pollutants and isolates black populations from essential health resources…”
In addition to substandard housing, overcrowding is another factor leading to housing instability. Sometimes referred to as a form of “hidden housing instability,” 3.7 million people lived in overcrowded housing in 2019. Robust recent data on the number of children living in overcrowded homes in the U.S. is sparse, but it has been established that “living in a crowded home can negatively affect academic performance, educational outcomes, behavioral health, and physical health.”
Although there doesn’t seem to be a consensus on what constitutes overcrowding, a 2016 study by HUD’s Office of Policy Development and Research that examined various interventions to combat homelessness used an outcome measure called “persons per room” to track crowding. Looking at “information collected from the adult respondent about the number of rooms in the housing unit (not counting kitchens, hallways, and bathrooms) and the number of people living in the housing unit,” in this formulation, housing situations where more than one person occupied a single room were considered crowded.
Because the parameters of overcrowding aren’t well-defined, measuring overcrowding or, as it’s sometimes called, “doubled-up” homelessness, is challenging. In addition to HUD’s definition above, a range of organizations quantify the concept differently, taking different variables into account. One measure that seems to fill in a few gaps found in other approaches was put forward by the authors of a 2021 study called “Quantifying Doubled-Up Homelessness: Presenting a New Measure Using U.S. Census Microdata.” The authors’ rationale for arriving at an overall number is as follows:
“(W)e defined doubled-up homeless persons as poor or near-poor individuals in a poor or near-poor household (at or below 125% of a geographically adjusted poverty threshold) who met the following conditions: a relative that the household head does not customarily take responsibility for (based on age and relationship); or a nonrelative who is not a partner and not formally sharing in household costs (not roomers/roommates). Single adult children and relatives over 65 may be seen as a householder’s responsibility, so such cases are included only if the household is overcrowded — an arrangement that we believe, based on the literature and feedback from experts working in the homelessness response system, provides evidence of economic hardship and involuntary doubling up.”
Homelessness and the U.S. Population
Now let’s focus on the separate but related concept of homelessness. According to the HUD Exchange, “individuals who lack resources and support networks to obtain permanent housing meet HUD’s definition of homeless.” As with the housing unstable population in the U.S., thanks to a raft of aid programs, homelessness has not worsened significantly in recent years. It bears saying, however, that this trend will likely be influenced by aid programs ending with the impending end of the Public Health Emergency (PHE) and the eviction moratorium. But because data on the end of the PHE won’t be available for some time, it’s worth noting trends in this population over the past few years.
According to a December 2022 report produced by HUD, there was “a .3% increase in the number of people experiencing homelessness from 2020 to 2022.” This number includes a drop in the number of veterans experiencing homelessness between 2020 and 2022 of 11%, and, during the same period, a decrease in the number of families with children experiencing homelessness by 6%.
As mentioned above, while these numbers have been heading in the right direction, some experts worry that with the Supreme Court’s ruling that overturned the eviction moratorium in 2021, housing instability and homelessness may once again be on the rise. Similar to those experiencing housing instability, this burden falls unevenly, with certain underserved populations experiencing homelessness at rates much higher than the rest of the country.
Indeed, the Centers for Disease Control and Prevention (CDC) reports that “People who are Black or African American and those who are American Indian or Alaska Native have higher rates of homelessness.” Similarly, America’s elderly are predicted to see a significant downturn in their housing status. In a recent article, the Los Angeles Times quoted a 2019 study by the University of Pennsylvania that predicted that “the U.S. population of people 65 and older experiencing homelessness will nearly triple from 40,000 to 106,000 by 2030, resulting in a public health crisis as their age-related medical problems multiply.”
Home ownership, which can serve as a rough proxy for housing stability, does not break evenly along demographic lines. The Pew Research Center notes that “Nationwide, about 58% of households headed by Black or African American adults rent their homes, as do nearly 52% of Hispanic- or Latino-led households…By contrast, roughly a quarter of households led by non-Hispanic White adults (27.9%) are rentals, as are just under 40% of Asian-led households.” In other words, African-American and Hispanic households are more likely than White households to be burdened by costs associated with housing.
A Nationwide Problem
Issues like substandard housing, overcrowding, homelessness, and other challenges related to ensuring that everyone in the U.S. has adequate housing are set against a housing crisis that’s persisted more or less since the Great Recession of 2007-2010. While the number of owner-occupied homes is not insignificant at 64.6%, that leaves about a third of U.S. adults who rent their homes. Estimates of the housing shortfall in the States range from 1.5 to 5 million homes. For myriad reasons the US homeowner vacancy rate, which tracks the percent of units available for occupancy, is at near historically low levels, which equates to rising prices.
While there is an argument to be made that, financially speaking, it makes more sense to rent than to buy in a hot housing market like the one much of the country is still experiencing, in the long run, as the Brookings Institution puts it, “Owning one’s home…provides greater stability and predictability of housing expenditures than renting.”
Given the shockwaves that the COVID-19 pandemic sent through most sectors of the economy, many have faced housing instability over the past three years. As bad as things got, however, if not for government interventions like the eviction moratorium instituted by the CDC in September of 2020, the situation could have been worse. The moratorium helped many renters by giving them a reprieve from losing their accommodations, and as we’ll soon see, maintaining stable housing has a direct impact on positive health outcomes.
A Role for Insurers
When taken as a whole, the above issues negatively affect access to quality healthcare. And when people can no longer keep themselves healthy, everyone loses — including insurers. Key to the success of any payer is maintaining balanced risk pools, which have been defined as “groups of individuals across the medical complexity spectrum, which allow both private and public payers to potentially offset the cost of sicker individuals with higher medical expenses with premiums from healthier individuals with lower utilization rates.”
Large and balanced risk pools often lead to more predictable — and thus more stable — premiums. But if the balance between sick and healthy beneficiaries is thrown off and the insured population grows more and more sick, a phenomenon called “adverse selection” can occur where an outsized number of unhealthy beneficiaries crowd out healthier members. When this happens, it becomes hard for payers to manage financial risk and keep premiums at manageable levels without sacrificing profit.
After all, healthier people are not as likely to need expensive treatments, which equates to fewer claims for the insurance company to pay out. By extension, this helps keep costs down, resulting in lower overall premiums. So with the aim of reducing healthcare costs by addressing SDOH related to unstable housing, some health insurance carriers have begun to proactively offer housing support to their lower-income beneficiaries.
An example of this can be seen with insurance giants Humana and UnitedHealth. In recent years, these companies have begun to invest heavily in housing. According to a recent article in Forbes, in reaction to their own Medicaid data showing a link between housing instability and sub-optimal health outcomes, “In 2022, UnitedHealth invested $100 million in building affordable housing in parts of the country where they operate. That’s in addition to the $700 million they’ve already invested in the past decade, creating a total of nearly 20,000 homes — so far — for low-income residents.” Interestingly, the housing projects UnitedHealth is developing include on-site health services for nearby residents and access to public transportation, among other services.
For its part, Humana has invested $90 million in affordable housing since 2021. Billed as “Humana’s Bold Goal,” the company has dedicated itself to improving the health of the communities they serve by 20% “by addressing the health of the whole person.” For the time being, their approach seems more limited in scope than UnitedHealth’s in that they aim to stabilize housing insecure beneficiaries for 90 days, providing services like job training and behavioral health. In addition, Humana has explored promoting permanent supportive housing programs through various funding models in the “pay for success” mold. These models resemble healthcare value-based payment models in that they are outcomes-based approaches that “align payment for support services to priority objectives” and can potentially establish sustainable funding for these programs.
With housing issues mounting, these are just a few ways insurers are looking to both improve health outcomes and control healthcare costs. Medicare and Medicaid have also entered the subsidized housing market, using rebates and Section 1115 waivers to offer stable living conditions to their beneficiaries. I may focus a future blog post on how public payers are changing the housing landscape of the United States. Let me know in the comments if you know of any other similar approaches taken by insurers either in this country or around the world.