Proposed Changes to CalAIM Could Impede the State’s Efforts to Address Homelessness

California’s efforts to reduce homelessness depend on the stability of permanent supportive housing (PSH) and the services that help residents remain housed, particularly for people exiting chronic homelessness. But proposed changes to CalAIM—California Advancing and Innovating Medi-Cal—in the Governor’s May Budget Revision may undermine that foundation by curtailing a key source of funding used to support these services.

For almost five years, affordable housing providers have been relying on Medi-Cal payments to help cover the costs of providing supportive services to residents in their properties. By proposing to limit eligibility for Housing Tenancy and Sustaining Services (HTSS) beyond an initial six-month period, the State would effectively cut off a critical source of ongoing supportive services funding for PSH providers. Under the current system, Medi-Cal providers evaluate whether residents still require support, and can authorize continued services based on clinical and housing-related needs.

CalAIM is part of a broader state effort to integrate housing and health care systems to improve health outcomes, reduce avoidable health care costs, and strengthen long-term housing stability. This vision is particularly critical to the long-term viability of PSH. While California has invested heavily in building supportive and affordable housing through programs like Homekey and the Low-Income Housing Tax Credit (LIHTC), providers face chronic shortfalls in funding needed to operate buildings and support residents over the long term. Terner Center research has documented the ways in which affordable housing developers and operators are leveraging CalAIM funding to provide housing related services. Specifically, CalAIM authorizes providers to offer three housing-related Community Supports—often referred to as the “Housing Trio.” The Housing Trio includes housing transition navigation to assist with finding and securing housing; housing deposits, to fund one-time expenses associated with moving into a unit, such as first month’s rent; and HTSS, which provides support in maintaining stable tenancy after moving in.^[1]

Although implementation has been uneven and operational challenges remain, there are encouraging signs that CalAIM is beginning to achieve its intended goals. For example, our research has found that housing providers have used HTSS to hire additional case managers onsite that help residents understand and comply with lease conditions, connect them to jobs, and help them address mental or physical health concerns. Providers who have leveraged CalAIM funding report improvements in care coordination, leading to better outcomes for residents, as well as the ability to step up interventions to respond to rising homelessness rates in their communities. The State’s data also show this model works. A Department of Health Care Services (DHCS) evaluation found that when unhoused people received at least one of the Housing Trio Community Supports, their emergency room visits and hospital admissions decreased.

As part of the Governor’s May Budget Revision, HTSS eligibility would be limited to an initial six-month period, a shift driven largely by impending federal cuts in eligibility and funding to Medicaid under House Resolution (HR) 1, which are creating significant budgetary and administrative pressures. However, mental illness, substance use disorders, and trauma accumulated through chronic homelessness typically require longer-term support. Ongoing HTSS funding enables on-site staff to de-escalate behavioral health crises, help residents maintain lease compliance, and prevent returns to homelessness. A six-month limit would not only cut off these supports during a critical period of housing adjustment, but also make it less likely that providers will be able to use CalAIM to build the stable, long-term staffing models on which PSH depends. The proposed limits to HTSS would undermine the progress providers have made in building the housing-health partnerships central to addressing homelessness in California.

Acknowledgments

We would like to thank the many state and local stakeholders who informed this analysis. We also extend our appreciation to Carol Wilkins and our Terner Center colleagues—Ryan Finnigan, Sarah Karlinsky, and Ben Metcalf—for their guidance and thoughtful contributions.

Thank you to the California Health Care Foundation and Tipping Point Community for supporting Terner Center’s CalAIM case studies that informed this commentary.

This research does not represent the institutional views of the University of California, Berkeley or of Terner Center’s funders. Funders do not determine research findings or recommendations in Terner Center’s research and policy reports.

Endnote

^[1] In 2026, the State also implemented a new housing Community Support—Transitional Rent—which will provide up to six months of rent payments for eligible members.

Image courtesy of RH Community Builders