Medicaid homelessness money idle

Vermont got federal approval on January 2, 2025 to use Medicaid money for homelessness services, including up to six months of rent and medical respite care for people with serious health needs. More than a year later, the program is still not operating. (medicaid.gov) The approval came through a Section 1115 Medicaid waiver, which is a federal permission slip that lets a state test benefits that ordinary Medicaid rules do not usually cover. In Vermont’s case, that meant using health dollars for housing-related help when homelessness is tied to repeated hospital use and unstable medical care. (medicaid.gov) Vermont’s Agency of Human Services said in January 2025 that the new authority could support rent for people in a permanent supportive housing pilot and pay for medical respite services for up to six months. The same announcement said the federal government also authorized up to $10.9 million in capacity-building money to help providers and partners stand the system up. (humanservices.vermont.gov) Medical respite care is a simple idea: if someone is too sick for the street but not sick enough for a hospital bed, they get a safe place to recover. Vermont Public reported in January 2025 that Bonvouloir House in Burlington had served more than 200 people experiencing homelessness before that program shut down in July 2023. (vermontpublic.org) State officials were already warning in early 2025 that federal approval alone would not make money flow. Vermont Medicaid Director Monica Ogelby said both state and federal officials would still need to approve funding for the new initiatives, and she said lawmakers were unlikely to consider setting aside state money before the 2026 legislative session. (vermontpublic.org) That forecast turned out to be accurate. Vermont Public reported on April 7, 2026 that the 2026 budget cycle was already well underway and the state share needed to unlock the federal match was still not included. (vermontpublic.org) The result is a program that exists on paper but not in practice. Vermont has had federal authority for more than a year, but without a state appropriation, the rent assistance and medical respite benefits remain idle. (vermontpublic.org) The timing has made the delay more visible. Advocates raised alarms as Vermont’s state-funded motel voucher program pushed hundreds of vulnerable people out, while Section 8 federal rental vouchers were paused and subsidized housing waitlists stretched for months or years. (vermontpublic.org) Jessica Radbord of the American Civil Liberties Union of Vermont told Vermont Public that leaving the money unused was “horrifying” after more than 100 households were removed from the General Assistance program with no clear alternative. Her criticism captures the political problem for state leaders: they won a rare federal opening, then failed to build the machinery to use it. (vermontpublic.org) There is also a Washington angle. Vermont Public reported that internal communications and a written statement from the Agency of Human Services said the Trump administration’s hostility toward Medicaid health-related social needs policy was influencing Vermont’s decisions. (vermontpublic.org) That concern is tied to a real federal policy change. On March 4, 2025, the Centers for Medicare and Medicaid Services rescinded prior federal guidance on health-related social needs, though the agency also said the rescission did not cancel approvals that states already had in hand. (hhs.gov) (content.govdelivery.com) So Vermont is stuck in an awkward middle ground. The state still has legal authority through December 31, 2027 under its approved waiver, but the services that were supposed to turn Medicaid into a housing stabilizer for medically vulnerable people have not moved from authorization to operation. (medicaid.gov) The story is not that Vermont failed to get permission. The story is that Vermont got the permission, announced the benefit on January 17, 2025, and then, by April 7, 2026, still had not put up the state dollars or built the program needed to use it. (humanservices.vermont.gov) (vermontpublic.org)