The Limits of Medicaid-Funded Social Services

The Biden administration’s U.S. Playbook to Address Social Determinants of Health (SDOH) promotes increased spending on housing, education, and other social services by arguing such investments reduce health care costs. While this justification has led to expanded use of Medicaid and Medicare funds for nonmedical services, critics argue that much SDOH research lacks rigorous evidence of causality or cost-effectiveness. Though low-income populations face worse health outcomes, the best studies show weak links between social spending and health improvements. Instead, the popularity of SDOH initiatives largely stems from the opportunity to access federal health care funds, particularly through Medicaid’s generous matching structure. States increasingly reclassify nonmedical programs under health care to tap these funds, using waivers and managed care options to cover expenses like housing, food, and violence prevention. However, critics caution that using health care programs to fund social services distorts budget priorities and fails to effectively aid those most in need. The report concludes that health care costs are unlikely to be significantly reduced by such spending and recommends policymakers limit the expansion of Medicaid-funded nonmedical services. Instead, social programs should be funded directly and independently of the health care system.

Rauch, J. (2024, April 23). The overblown social determinants of health. Manhattan Institute. https://manhattan.institute/article/the-overblown-social-determinants-of-health