Federal Housing Policy Developments Could Affect State Health and Housing Programs

Peggy Bailey is director of the Health Integration Project at the Center on Budget and Policy Priorities and Amy Clary is a senior policy associate at NASHP.

States use a range of policy levers to address the roughly 80 percent of factors affecting health that are outside the realm of clinical care, such as access to safe housing and nutritious food. Those state policies, in turn, often hinge on federal policy decisions impacting programs that address those health-related social and economic factors. One such example is ongoing work in many states to improve health through housing.

Federal Proposals Could Alter the Rules Governing Affordable Housing Programs

State health agencies seeking to improve health through housing may be affected by recent proposals to alter the rules governing federal rental assistance programs. Currently, federal lawmakers are considering proposals that would raise rents for many households receiving federal rental assistance, and could subject households without income or with minimal income to higher minimum rent requirements. Such increases could affect low-income individuals and families participating in state health and housing initiatives. Learn more about Proposals to Raise Rents on People with Rental Assistance.

The five states (Illinois, Louisiana, New York, Oregon, and Texas) participating in the National Academy for State Health Policy’s Health and Housing Institute are working across agency silos to develop and expand sustainable health and housing programs. Their programs seek to provide both the housing and the services necessary for vulnerable populations — such as people experiencing homelessness, struggling with behavioral health or substance use disorders, or transitioning out of institutions — to become and remain safely housed in the community.

Some states are building housing-related services and activities into their state health systems by using Medicaid authorities or demonstration programs. For example, states are requiring or encouraging accountable health entities or Medicaid managed care plans to provide housing-related services and supports, such as help with completing leasing paperwork or assistance with interacting with landlords. Federal rental assistance programs from the US Department of Housing and Urban Development (HUD) are also crucial to the success of state health and housing programs, as is the federal Low-Income Housing Tax Credit (LIHTC), which helps support the creation of affordable housing. Because state efforts often incorporate these federal investments, federal decisions about funding levels, reporting and regulatory requirements, and program eligibility and administration rules may greatly affect state initiatives.

In a season when 36 states are preparing for gubernatorial elections and 46 states are gearing up for state legislative elections, it would be easy to lose track of federal housing policy developments that could affect state health and housing initiatives. When NASHP’s health and housing institute state teams met during #NASHPCONF18, they learned about major federal affordable housing programs and the role these programs can play in supporting health and housing agency partnerships.

Federal Housing Assistance

Federal affordable housing assistance for low-income families and individuals primarily falls into two categories – rental assistance and capital development. Each plays an important role as states and communities seek to increase the availability of affordable housing. Often these funding sources are combined to ensure housing is affordable for people with extremely low incomes (at or below 30 percent of the area median income).

Federal Rental Assistance: There are three major HUD rental assistance programs — Housing Choice Vouchers, Section 8 Project-Based Rental Assistance, and Public Housing. They assist about 90 percent of the households receiving federal rental assistance. Other HUD programs serve households with special needs, including the “202” and “811” Supportive Housing Programs for the Elderly and for People with Disabilities, Housing Opportunities for People with AIDS/HIV (HOPWA), and McKinney-Vento permanent housing programs for people experiencing homelessness. The Department of Agriculture also has small housing assistance programs targeting rural areas. Federal rental assistance makes housing affordable for almost 10 million people, including nearly 4 million children. However, federal resources for affordable housing are scarce — 75 percent of families who are eligible for federal rental assistance don’t receive it due to a lack of funding.

Rental Assistance Federal Policy Update: It is mostly holding steady for currently-enrolled households, with one significant increase.

HUD rental assistance programs received enough funding in 2018 to renew rental assistance for current households, and are likely to receive roughly enough to do so again in 2019. However, new eligible families can receive assistance only through turnover of current voucher recipients. While people do move on from federal assistance, the number of vouchers that will become available is small and unpredictable.

One area of federal rental assistance has seen a significant increase. In the 2018 appropriations law, Congress allocated approximately $385 million for additional HUD mainstream housing vouchers targeted to non-elderly adults (ages 18-62) with disabilities. State and local housing agencies will administer these vouchers, which will be distributed using a competitive process. The first round of awardees were announced in September 2018. At least two more rounds of funding will be distributed in the coming months.

Federal Capital Development: The primary source of funding for developing affordable housing is the Low-Income Housing Tax Credit Program. LIHTC is administered at the state level. Each state develops a Qualified Action Plan (QAP) that outlines the parameters of the state’s LIHTC program, including state priorities for the use of tax credits. Each state regularly updates its QAP using feedback from stakeholders and affordable housing experts. Housing developers use the details of the QAP to apply to the state for the tax credits. Once the tax credits are awarded, developers move forward with any additional financing they need to pay for their projects and complete the building. LIHTC developers typically opt to house people at 60 percent of area median income (AMI), which is approximately 300 percent of the federal poverty level, and they must set rents that do not exceed 30 percent of tenants’ incomes. To make LIHTC units affordable to those with extremely low incomes, residents must have housing vouchers or receive another form of rental assistance.

Capital Development Federal Policy Update: Some increases and improvements proposed.

The 2017 revisions to the tax code could reduce the value of available LIHTC resources in coming years. Recognizing this, in 2018, Congress increased the program’s allocation by 12.5 percent. However, changes included in the 2018 appropriations law also gave developers the flexibility to satisfy affordability requirements by averaging incomes across the LIHTC units within a development, a strategy that will make it easier for them to assist households with extremely low incomes. Currently, policymakers and advocates are considering proposals to strengthen LIHTC and provide incentives to serve the lowest-income households.

Review the Center on Budget and Policy Priorities’ recommendations to improve LIHTC here.

State- and Locally-Funded Housing Initiatives

While they don’t fully meet the unmet need for assistance from federal programs, states and localities frequently fund their own relatively small rental assistance programs. State investments may come about because a lack of affordable housing stands in the way of other policy goals, including ending homelessness and helping people with chronic or disabling health conditions move out of institutional care (nursing facilities, group homes, or state mental health hospital settings). These programs commonly work in combination with federal rental assistance so that people transition to federal assistance once it becomes available. Many of these programs are collaborations between state health agencies and their housing counterparts to link populations that stand to benefit from programs that improve health through housing with available rental assistance. These programs can serve an important role in quickly addressing the housing needs of a subset of communities’ most vulnerable members, all while advancing other state and local priorities.

As state officials continue to work across sectors and silos to improve health by safely and stably housing vulnerable populations, NASHP will continue to work with national experts to track developments in Washington, DC and to bring this important information to state policymakers.

This work was supported by the Kresge Foundation and through NASHP’s cooperative agreement with the Health Resources and Services Administration (HRSA), grant #UD3OA22891. This information or content and conclusions are those of the authors and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the US government.