Can Developers and Service Providers Work Together on Housing for the Mentally Ill?

Oregon is under pressure to improve the way it delivers care for people with serious mental illness, a problem compounded by the West Coast housing crisis.

Chris Bouneff has been agitating for years for more housing for people living with mental illness. The director of the state branch of the National Alliance on Mental Illness sees this as the biggest challenge for this group of Oregonians, particularly after the Affordable Care Act expanded Medicaid, and greatly decreased the number of people without health insurance.

Bouneff has been frustrated -- the state started putting up money in 2013 for housing, but the supply has only trickled upward while demand has increased more rapidly.

Under former President Barack Obama, the U.S. Department of Justice and Oregon agreed  to add 2,000 housing units for people with serious mental illness to live while receiving care in their communities -- thus avoiding a costly and less humane trip to the state mental hospital

A new development has the hardened advocate feeling optimistic. For the first time, he says, affordable housing developers and behavioral health providers are communicating about how to link their services behind a concept called supportive housing.

“There’s still this chasm between people who build affordable housing and the people who offer the services,” Bouneff said. “You’re putting together people who have never worked together. ...There may be real opportunity for progress.”

Left to themselves, landlords and people with serious and persistent mental illness can end up in a lose-lose situation. The vulnerable person ends up a bad tenant and can’t maintain their housing situation. They can also easily be passed by when demand outstrips supply as badly as it does in Oregon, especially the Portland metro area.

If a case manager can mediate between a developer or property manager and the prospective tenant with mental illness, that case manager can see to it that both sides get what they need, including assurance that the client is getting treatment and has the money to move in and pay their rent. And if something comes up, a professional is there to work out the problem.

Paying for this support has been the tricky part, and state bureaucrats are debating potential legislation and administrative changes that will be released next month, to be included in Gov. Kate Brown’s 2019-2021 budget proposal.

Six years after coordinated care organizations were launched to reform the state Medicaid system amid a drumbeat of lofty talk about integrating dental, physical and mental healthcare,  progress toward that integration has been glacial.

Oregon is now looking to the example of other states, such as Louisiana, which had an enormous task on its hands trying to develop housing for low-income and mentally ill residents after the devastation of Hurricane Katrina in 2005. A lot of that money came from one-time disaster funding, but the state also found ways to adjust its Medicaid program to use healthcare dollars to stabilize the housing needs of people with disabilities -- a key social determinant of health and a current focus of state policymakers.

“Folks with a mental illness are not going to succeed in their mental health treatment if they don’t have housing,” said Kenny LaPoint of the Department of the Oregon Housing and Community Services Department.

Oregon can get reimbursed for case management, but Louisiana has gone beyond that to include mediation with private landlords to help remove barriers such as unpaid utilities or a security deposit.

Changing Incentives

The CCOs are also off the hook for residential treatment, giving them a perverse incentive to shift costlier patients onto the state, either in privately delivered settings or the Oregon State Hospital.

Michael Morris of the Oregon Health Authority said his agency does have plans in place to move residential treatment into the global budgets of CCOs. Given the higher cost of this care, this should force CCOs to prioritize keeping people stable and healthy enough to receive mental health treatment in an outpatient setting. “We agree that’s the best place for it to be and that the CCO should be responsible for their continuous care,” he said.

The Oregon Performance Plan, which was adopted under pressure from the federal government, is supposed to have placed 1,355 people in new housing units out of its total goal of 2,000 units by July, but it could fall short. Morris said they had 966 units as of last September, but the steadily increasing rent prices have stymied progress.

Most tenants have some form of income, such as Supplemental Security Income, of which 30 percent would go toward rent. In 2013, the state was paying an average of $500 a month toward  rent for each tenant. But the starting rent for an apartment in Portland is now over $1,100 and that $500 monthly state allocation is not covering the increased cost of housing, forcing the state to pay more per case. Starting monthly rents in other counties, such as Marion, Lane and Clatsop, are in the ballpark of $700.

“Right now our biggest challenge is just finding the place,” Morris said.

As OHA offers rental assistance, the Oregon Housing and Community Services Department works on building more affordable living options. In 2017, the state Legislature injected $150 million from the general fund to the Department of Housing and Community Services to help build low-income housing. A new revenue stream created from the tripling of the real estate document recording fee will add $30 million annually for low-income housing construction.

That money is being allotted through a scoring system that gives points to help people already enrolled in the Department of Human Services’ self-sufficiency programs, rural communities and racial preferences for non-whites.

Reach Chris Gray at [email protected].


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