Broderick Alexander lived on the streets for more than two years in Chicago, but since 2005, he has slept in his own apartment. A case manager visits once a month, helping the 48-year-old set goals as part of a program that links housing to health care.
Knowing he has a safe place to return at night, Alexander said, helps him focus on taking his medications and staying out of the emergency room.
"My five- to seven-year goal is to become independent of all social service programs and leave this housing opportunity for someone else to have," Alexander said, adding that he is looking for a job as a commercial truck driver.
Since the 1990s, a movement toward housing-as-health care that started in New York City has spread to several cities, including Chicago, Seattle and Toronto. In Illinois, Gov. Pat Quinn now wants to expand such supportive housing -- typically apartments with subsidized rent and help from social workers -- by using federal and state Medicaid dollars.
Quinn's administration is making its pitch by promising future savings in health care costs. Federal rules don't allow states to build housing or pay rent with federal Medicaid money, but states can seek permission to try new approaches.
At a legislative committee hearing held Wednesday in Chicago, officials said the Quinn administration's entire Medicaid waiver proposal -- which goes beyond housing to restructure much of the state's Medicaid system -- would bring in, if approved, $3.2 billion in new federal funds over five years.
Illinois will post its proposal online Feb. 7, then public feedback will be taken for 30 days before the plan is sent to federal Medicaid officials on March 10.
"The ability to stabilize people in housing is very important. We view it as critical to the success of our efforts," said Illinois Deputy Gov. Cristal Thomas, who is leading the initiative for the governor's office.
The idea is to target poor adults who are homeless or living in institutions because of disabilities, such as severe mental illness or substance abuse. Although the research is mixed on whether the approach saves taxpayer dollars when housing costs are included, some studies have shown it can save money in health care by reducing emergency room visits and hospital stays.
The Illinois plan sketches out how insurance companies with Medicaid contracts could get financial bonuses for finding housing and support teams for homeless and institutionalized patients. The plan is one piece of a 78-page draft Medicaid waiver that needs fleshing out before it's submitted for federal approval.
The Illinois Medicaid program covers 2.8 million people with a budget of $17.8 billion. With an expansion of Medicaid under the new federal health care law, the program could soon cover 3 million poor and disabled Illinois residents -- and the waiver being sought by the state would touch almost all those people.
Quinn last week created the Office of Health Innovation and Transformation to oversee the waiver and coordinate the program's numerous parts.
However, a financial analysis isn't yet complete, so it's unclear how much money the state thinks the waiver will save in health care costs. The lack of specifics is raising concerns among some lawmakers, including Chicago Democrat Rep. Greg Harris, who chaired the committee holding Wednesday's hearing on the waiver.
"I hear `transformation' and `realignment' and `person-centric,' but how is this going to make people's lives better?" Harris said in an interview.
The state wants to consolidate nine programs that now serve different categories of disabled people, including adults and children with developmental disabilities, medically fragile children, people with HIV or AIDS, the elderly and people with physical disabilities.
The waiver also would provide financial incentives for nursing homes that close or convert to other uses, and develop a "universal assessment tool" to determine patients' needs. It also would create a new office called the Innovation and Transformation Resource Center.
The proposal seeks federal matching money for programs that currently receive only state dollars. Those include workforce training programs at the University of Illinois and Southern Illinois University, programs for parolees operated by the Department of Corrections, and stop-smoking and other prevention programs run by the Department of Public Health.
But some are concerned by the proposal's size and complexity.
"We worry about the capacity of state government to do all this and to do it all well," said John Peller, vice president of policy for the AIDS Foundation of Chicago, which now coordinates the AIDS Medicaid waiver for the Chicago metropolitan area.
The housing section needs more detail, added Samantha Olds, executive director of the Illinois Association of Medicaid Health Plans, a trade association representing nine health insurers that have Medicaid contracts in the state.
"Supportive housing is absolutely going to decrease ER visits, hospital admissions and readmissions," Olds said. "But the waiver as drafted is unclear on the size and scope of the program, so it's hard to tell if the savings derived from supportive housing will be enough to cover the upfront investment."
Creating more supportive housing also would help the state meet the settlement terms of three class-action lawsuits filed on behalf of disabled Medicaid clients living in nursing homes.
Research shows that whether housing can lower health care spending depends on finding the most expensive patients: those who are regularly cycling from the street to emergency rooms.
"Once housing programs start, the ability to obtain major savings in the hospitals and jails depends in part on having targeted resources to the most vulnerable," said Dr. Stefan Kertesz, a researcher on homelessness at the University of Alabama at Birmingham. "A lot of them will be people who are making a sad and avoidable circuit between institutions and the streets."
Thomas, the deputy governor, described the waiver as "the next natural step of our health care reform efforts."
"We think it's a great opportunity for Illinois to leverage additional federal dollars without increasing state spending," Thomas said.