Impact of a New York City supportive housing program on Medicaid expenditure patterns among people with serious mental illness and chronic homelessness

BACKGROUND: A rapid increase of Medicaid expenditures has been a serious concern, and housing stability has been discussed as a means to reduce Medicaid costs. A program evaluation of a New York City supportive housing program has assessed the association between supportive housing tenancy and Medicaid savings among New York City housing program applicants with serious mental illness and chronic homelessness or dual diagnoses of mental illness and substance use disorder, stratified by distinctive Medicaid expenditure patterns. METHODS: The evaluation used matched data from administrative records for 2827 people. Sequence analysis identified 6 Medicaid expenditure patterns during 2 years prior to baseline among people placed in the program (n = 737) and people eligible but not placed (n = 2090), including very low Medicaid coverage, increasing Medicaid expenditure, low, middle, high, and very high Medicaid expenditure patterns. We assessed the impact of the program on Medicaid costs for 2 years post-baseline via propensity score matching and bootstrapping. RESULTS: The housing program was associated with Medicaid savings during 2 years post-baseline (−$9526, 95% CI = −$19,038 to -$2003). Stratified by Medicaid expenditure patterns, Medicaid savings were found among those with very low Medicaid coverage (−$15,694, 95% CI = −$35,926 to -$7983), increasing Medicaid expenditures (−$9020, 95% CI = −$26,753 to -$1705), and high Medicaid expenditure patterns (−$14,450, 95% CI = −$38,232 to -$4454). Savings were largely driven by shorter psychiatric hospitalizations in the post-baseline period among those placed. CONCLUSIONS: The supportive housing program was associated with Medicaid savings, particularly for individuals with very low Medicaid coverage, increasing Medicaid expenditures, and high Medicaid expenditures pre-baseline. ELECTRONIC SUPPLEMENTARY MATERIAL: The online version of this article (10.1186/s12913-017-2816-9) contains supplementary material, which is available to authorized users.