Affordable housing is at crisis levels — here's how tax reform can help

Affordable housing is at crisis levels — here's how tax reform can help
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The House Republican Tax bill proposes cuts to the country’s largest subsidized housing program, the mortgage interest deduction (MID). This $70 billion dollar tax expenditure largely benefits high income Americans: The larger the mortgage, the larger the deduction, for mortgages under $1 million.

The Republican plan would reduce this maximum mortgage to $500,000 and eliminate the benefit for second homes, resulting in savings of nearly $100 billion over the first decade. While Republicans propose to funnel these savings toward tax cuts for wealthy Americans, reinvesting MID savings into subsidies for low-income renters would be an important step toward addressing the country’s severe and growing affordable housing crisis and it would also be an important step toward improving population health.

There is currently no state in this country where full-time minimum wage employment is sufficient to affordably rent a one-bedroom market-rate apartment. As a result, many Americans experience homelessness, eviction, instability and rents that consume the vast majority of their incomes. These housing issues contribute to preventable health problems that are sometimes deadly, often painful and almost always costly.

According to the Center for Budget and Policy Priorities high-income households receive four times the federal housing benefits as low-income households. Indeed, federal rental assistance to low-income households in the form of rental vouchers, public housing units, and tax subsidies to developers, together amount to less than the MID. This lack of funding is reflected in the scarcity of available rental assistance. Fewer than 1-in-4 eligible households receives a rental subsidy, and multi-year waiting lists exist almost everywhere.

This shortage of rental assistance constitutes a serious public health problem. Families living in unaffordable housing often must choose between basic health needs such as food or medication and their rent. The stress of making ends meet can keep them up at night, wear away at their bodies, and create a cloudy haze around health-related decisions.

Others, unable to afford a place to live, are exposed to the many hardships of homelessness. Indeed, recent research finds that those receiving subsidized housing report better overall health, less psychological distress and fewer unmet health care needs than individuals who receive subsidies two years later.

While studying how low-income type 2 diabetes patients contend with the affordable housing crisis in my research at the Yale School of Public Health, I met a woman I’ll call Regina who also illustrates the health benefits of rental assistance.

Regina had recently moved into a public housing unit after spending years on the waiting list. She described her new apartment as a both a dream come true and a pronounced turning point for her diabetes management. She explained, “Then I found housing. Everything, my numbers, as far as my health, got back on track. Since I've had housing, my diabetes changed. It went from up here to being down here in the right place.” Regina’s subsidized rent leaves her with enough funds to purchase groceries. Now that she has her own kitchen, she carefully prepares her own diabetes friendly meals. She keeps her medications on a bedside table and sits in the same chair to take them each morning. Prior to moving into her apartment, her diabetes management was inconsistent. Now it is, as she says, “like brushing my teeth.”

I’ve heard Regina’s story echoed by many individuals who describe numerous challenges of managing their diabetes while waiting for rental assistance. Some are homeless and cannot safely store or take their medications in the shelters where they sleep. Their access to nutritious food is spotty or non-existent. Some, consumed by the daily challenges of finding shelter, struggle to prioritize their diabetes care. As one man I interviewed put it, “People always say pull yourself up by your bootstraps. When you don't have housing, you don't have any bootstraps. There's no way to pull yourself up.”

Even for those who have a stable place to live, unaffordable rents can interfere with diabetes management routines. Liane was on the waiting list for rental assistance and her current rent consumed most of her income. She narrowly avoided eviction by constantly juggling expenses. On this tight budget, seemingly small medication copays were significant. She explained, “That's my extra gallon of milk or my extra loaf of bread. So do I get the food for the kid or do I get my medication so I can stay alive and take care of him? It's a toss-up.”

The long-term costs of the day-to-day trade-offs that Liane describes can be enormous. When not adequately controlled, diabetes can result in repeated and expensive hospitalizations. It can also lead to amputations, dialysis, blindness and other debilitating complications that impose tremendous financial burden on already struggling patients. In addition to medical costs, these complications can limit employment opportunities and earning power. A recent American Diabetes Association study estimates the total cost of diabetes in the U.S. during 2012 at $245 million, a figure that includes both medical expenditures and reduced productivity.

While not all studies find significant effects of rental assistance on health, existing evidence strongly suggests that an expansion of the Department of Housing and Urban Development’s subsidy programs could both improve population health and reduce health care spending associated with preventable health complications like those described above.

Beyond these cost savings, expanding the subsidy program is the right thing to do. Millions of low-income Americans spend years waiting for subsidies that are their only hope for housing.

Danya Keene is an assistant professor at the Yale School of Public Health and a Public Voices fellow with The OpEd Project.