During his first term, President Donald Trump’s administration allowed North Carolina to use Medicaid funds for nontraditional services like housing and nutrition—an experiment aimed at improving health while reducing medical costs. The initiative helped low-income and disabled patients access services such as rent support, wheelchair ramps, and fresh food prescriptions.
Under President Joe Biden, this model expanded rapidly, with at least 24 states adopting similar programs. Medicaid, once focused solely on medical care, began to prioritize prevention by addressing social needs that influence health.
But in a major reversal, Trump’s second-term administration has begun pulling back federal support. In a March 4 memo, the Centers for Medicare & Medicaid Services (CMS) rescinded Biden-era guidance that encouraged states to cover health-related social services.
“This administration believes the guidance distracted Medicaid from its core mission,” CMS spokesperson Catherine Howden said, pointing to overlapping programs like food stamps and housing vouchers.
Despite this, Trump has also proposed cuts to those very programs, including HUD and USDA services. The rollback has caused concern in both red and blue states, where officials worry about the impact on existing multimillion-dollar programs designed to reduce homelessness, food insecurity, and chronic illness.
Health experts argue that ignoring social factors will increase suffering and medical costs. “It will just lead to more death, more suffering, and higher health care costs,” said Dr. Margot Kushel, a San Francisco physician and homelessness researcher.
States like California have invested heavily—$12 billion over five years—in Medicaid-funded housing, nutrition, and behavioral health services. Since 2022, its CalAIM program has offered support to over 577,000 people, including services like rent deposits and help avoiding eviction.
Though early evidence is mixed, some data show these investments reduce hospital visits and improve outcomes. Still, future Medicaid waivers will now be reviewed case by case, with the administration signaling a return to stricter rules and work requirements for recipients—putting coverage at risk for millions.
“They’re making the case that Medicaid should return to basic care,” said Mark Peterson, a health policy expert at UCLA. “But many in the field disagree.” Legal experts warn that even current programs may be cut short under the new direction.
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