During his first administration, President Trump’s top health officials gave North Carolina permission to use Medicaid money for social services not traditionally covered by health insurance. It was a first-in-the-nation experiment to funnel health care money into housing, nutrition, and other social services.
Some poor and disabled Medicaid patients became eligible for benefits, including security deposits and first month’s rent for housing, rides to medical appointments, wheelchair ramps, and even prescriptions for fresh fruits and vegetables.
Such experimental initiatives to improve the health of vulnerable Americans while saving taxpayers on costly medical procedures and expensive emergency room care are booming nationally. Without homes or healthy food, people risk getting sicker, becoming homeless, and experiencing even more trouble controlling chronic conditions such as diabetes and heart disease.
Former President Joe Biden encouraged states to go big on new benefits, and the availability of social services exploded in states red and blue. Since North Carolina’s launch, at least 24 other states have followed by expanding social service benefits covered by Medicaid, the health care program for low-income and disabled Americans — a national shift that’s turning a system focused on sick care into one that prioritizes prevention. And though Mr. Trump was pivotal to the expansion, he’s now reversing course regardless of whether evidence shows it works.
In Mr. Trump’s second term, his administration is throwing participating states from California to Arkansas into disarray, arguing that social services should not be paid for by government health insurance. Officials at the Centers for Medicare & Medicaid Services, which grants states permission to experiment, have rescinded its previous broad directive, arguing that the Biden administration went too far.
“This administration believes that the health-related social needs guidance distracted the Medicaid program from its core mission: providing excellent health outcomes for vulnerable Americans,” CMS spokesperson Catherine Howden said in a statement.
“This decision prevents the draining of resources from Medicaid for potentially duplicative services that are already provided by other well-established federal programs, including those that have historically focused on food insecurity and affordable housing,” Howden added, referring to food stamps and low-income housing vouchers provided through other government agencies.
Mr. Trump, however, has also proposed axing funding for low-income housing and food programs administered by agencies including the departments of Housing and Urban Development and Agriculture — on top of Republican proposals for broader Medicaid cuts.
The pullback has led to chaos and confusion in states that have expanded their Medicaid programs, with both liberal and conservative leaders worried that the shift will upend multibillion-dollar investments already underway. Social problems such as homelessness and food insecurity can cause — or worsen — physical and behavioral health conditions, leading to sky-high health care spending. Medical care delivered in hospitals and clinics, for instance, accounts for only roughly 15% of a person’s overall health, while a staggering 85% is influenced by social factors such as access to healthy food and shelter for sleep, said Anthony Iton, a policy expert on social determinants of health.
Health care experts warn the disinvestment will come at a price.
“It will just lead to more death, more suffering, and higher health care costs,” said Margot Kushel, a primary care doctor in San Francisco and a leading researcher on homelessness and health care.
The Trump administration announced in a March 4 memo that it was rescinding Biden-era guidance dramatically expanding experimental benefits known as health-related social needs. Federal waivers are required for states to use Medicaid funds for most nontraditional social services outside of hospitals and clinics.
Last month, the administration told states that these services, which can also include high-speed internet and storage units, should not be part of Medicaid.
Future waiver requests allowing Medicaid to provide social services — a liberal philosophy — will be considered on a “case-by-case basis,” the administration said. Rather, it has signaled a conservative shift toward requiring most Medicaid beneficiaries to prove that they’re working or trying to find jobs, which puts an estimated 36 million Americans at risk of losing their health coverage.
“What they’re arguing is Medicaid has been expanded far beyond basic health care and it needs to be cut back to provide only basic coverage to those most desperately in need,” said Mark Peterson, a health policy expert at UCLA. “They’re making the case, which is not widely shared by specialists in the health care field, that it’s not the job of taxpayers and Medicaid to pay for all this stuff outside the traditional heath care system.”
Although states have not received formal guidance to end their social experiments, Peterson and other health policy researchers expect the administration not to renew waivers, which typically run in five-year intervals. Worse, legal experts say programs underway could be halted early.
Evidence supporting social investments by Medicaid is still nascent. An expansion in Massachusetts that provided food benefits reduced ER visits and hospitalizations, for instance. But often, it’s a mixed bag.
California is going the biggest, investing $12 billion over five years to provide a slew of new services, from intensive case management to help people with severe behavioral health conditions to housing and food assistance through a pair of federal waivers. The most popular benefits provided by health insurers are those that help homeless people on Medicaid by placing them in apartments or securing beds in recovery homes, covering up to $5,000 for security deposits, and preventing eviction.
Since the CalAIM program launched in 2022, it has served only a small fraction of the state’s nearly 15 million Medicaid beneficiaries, with roughly 577,000 referrals for benefits. Yet it has improved and even saved the lives of some of those lucky enough to get help, including Eric Jones, a 65-year-old Los Angeles resident.
“When I got diabetes, I didn’t know what to do and I had a hard time getting to my medical appointments,” said Jones, who lost his housing this year when his mom died but received services through his Medi-Cal insurer, L.A. Care. “My case manager got me rides to my appointments and also helped me get into an apartment.”
California is considering making some of its social services permanent after the CalAIM waivers expire at the end of 2026. Gov. Gavin Newsom’s administration is adding more housing services, including up to six months of free rent under a third waiver approved by the Biden administration. Medi-Cal officials contended early evidence shows CalAIM has led to better care coordination and fewer hospital and ER visits.
“We are fully committed,” said Susan Philip, a deputy director for the state Department of Health Care Services, which administers the program. “We have invested so much.”
Heidi de Marco/KFF Health News 
Health insurers, which deliver Medicaid coverage and receive greater funding to cover these additional benefits, say they’re worried the Trump administration will end or curtail the programs. “If we do things the same old way, we’re just going to generate the same old results — people getting sicker and health care costs continuing to rise,” said Charles Bacchi, president and CEO of the California Association of Health Plans, which represents insurers.
Industry leaders say the expansion is already changing lives.
“We believe wholeheartedly that housing is health, food is health, so seeing these programs disappear would be devastating,” said Kelly Bruno-Nelson, executive director of Medi-Cal for CalOptima Health, a health insurance provider in Orange County.
Oregon is also providing low-income Medicaid patients with a range of new services, including home-delivered healthy meals and rental payment assistance. Residents can even qualify for air conditioners, heaters, air filters, power generators, and mini fridges. State Medicaid officials say they remain committed to providing the benefits but worry about federal cuts.
“Climate change and housing instability are huge indicators of poor health,” said Josh Balloch, vice president of health policy and communications at AllCare Health, a Medicaid insurer in Oregon. “We hope to prove to the federal government that this is a good return on their investment.”
But even as the Trump administration curtails waivers, it is retaining discretion to provide social services in Medicaid, just on a smaller scale. Supporters say it’s fair to scrutinize where to draw the line on taxpayer spending, arguing that there isn’t always a direct health connection.
“We’re seeing these things increase, with the free rent, and we’re seeing some states pay for free internet, paying for furniture,” said Kody Kinsley, who previously served as North Carolina’s top health official. “We know there’s evidence for food and housing, but with all of these new benefits, we need to look closely at the evidence and the linkage to what actually drives health.”
Current North Carolina officials say they’re confident the new social services Medicaid provides in their state have resulted in better health and lower overall spending on expensive and acute care. Medicaid recipients there can even use the program to buy farm-fresh produce.
While it’s too soon to know whether these experiments have been effective elsewhere in the United States, early evidence in North Carolina shows promise: The state had saved $1,020 per participant a year into its experiment — operating in mostly rural counties — by reducing ER trips and hospitalizations.
State health officials also touted the economic benefits of driving business to family farms, home improvement contractors, and community-based organizations providing housing and social services.
“I welcome the challenge of demonstrating the effectiveness of our programs. It’s making for healthier people and healthier budgets,” said Jay Ludlam, deputy secretary for North Carolina’s Medicaid program. “Family farms that were on the verge of collapse after Hurricane Helene are now benefiting from a steady income while they also serve their community.”
KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — the independent source for health policy research, polling, and journalism.
