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Cutting Funding for Medicaid Will Increase Homelessness

Written by Yolanda Stevens February 20, 2025

As Congress decides how much funding federal programs will receive in FY25, the House of Representatives’ current budget resolution would impose cuts in federal spending of $1.5 trillion over the next decade. Up to one half of that amount (at least $880 billion) could come from Medicaid, the safety net health insurance program relied on by nearly 80 million Americans.

In addition to healthcare programs, Medicaid plays a critical role in addressing housing insecurity and homelessness through a variety of authorities which can cover services like tenancy, housing navigation, and limited rental assistance. Cuts to Medicaid funding would have dire impacts on people experiencing homelessness, many of whom rely on Medicaid for their health care and services.

What’s at Stake

Congress is considering various proposals to cut Medicaid programs:

One proposal suggests converting Medicaid to a block grant program, which means states would receive a fixed amount of federal funding to cover essential health and long-term care, regardless of actual costs incurred.
Congress could reduce the Federal Medical Assistance Percentage, which is the percentage of Medicaid costs paid by the federal government. This shift would force states to cut overall Medicaid spending because they would not be able to absorb the difference.
Lawmakers could make it more difficult for eligible people to access Medicaid and maintain their enrollment. For example, one proposal includes adding work requirements; history shows that the inability to comply with this type of red tape will cause many to lose their Medicaid coverage. By implementing work requirements, Medicaid beneficiaries (people who enroll and are found eligible) would need to demonstrate they are working, participating in job training, or volunteering a set number of hours each week. Medicaid beneficiaries, as well as their employers, instructors, or organizations where they volunteer, would be required to complete documentation to confirm their participation. It also means that staff within the local Medicaid office would need to verify and confirm compliance with the requirement, adding to their workload.

Why It Matters

While it is unclear how Medicaid programs will be cut, it is clear that cutting Medicaid funding by up to $880 billion will cause millions of Americans to lose access to medical and long-term care, as well as specialized benefits like housing support.

Medicaid is an essential public assistance program providing access to healthcare, especially for people experiencing homelessness:

  • Most Permanent Supportive Housing residents rely on Medicaid.
  • Medicaid expansion improved access to health coverage for people experiencing homelessness.
  • Medicaid plays a critical role in addressing housing insecurity and homelessness through a variety of authorities such as 1115 waivers, 1915i waivers, and in lieu of services, which can cover services, such tenancy, housing navigation, and limited rental assistance.
  • In rural communities, many clinics and other medical programs rely on funding by federal resources, including Medicaid, to operate. Medicaid cuts are most harmful to rural communities because of these factors.
  • Cutting coverage for these essential services would lead to increases in housing instability and homelessness.

In a February 15 letter, Alliance CEO Ann Oliva urged Congress not to impose cuts in Medicaid funding:

“A robust Medicaid can improve both health outcomes and housing stability for people experiencing homelessness. Cutting funding for Medicaid and imposing work requirements will increase homelessness. Already under-resourced local homelessness systems are strained if not overwhelmed by the inflow of people into homelessness for the first time. Surely, we can expect that Congress won’t take decisions that would make homelessness worse by cutting funds for Medicaid and imposing work requirements.”

What You Can Do

Congress ultimately determines if cuts to Medicaid will happen, so it’s important to reach out to your Members of Congress.

Here’s how it works: The House of Representatives will consider the budget resolution on the floor. After the House and Senate have agreed on a budget resolution, various committees (including those with jurisdiction over Medicaid) will draft additional legislation to impose the cuts required by the budget resolution. This reconciliation legislation, which presumably will include significant cuts in Medicaid funding, would have to be passed by both the House and the Senate and then signed into law by the President. That’s why it’s important to keep up to date, join forces, and contact your legislators.

Here are steps you can take to advocate against Medicaid funding cuts:

Sign up for the Alliance’s Advocacy Alerts, an email list that will let you know when it’s time to take action.
Contact your state’s Medicaid Director to share potential impact on your clients and learn how you can join forces in advocating for Medicaid.
Contact your Congressional Legislators to share the potential impact on your clients and tell them to oppose proposed Medicaid reforms.