Billions of Opportunities: Health Plan Investment in Affordable Housing and Community Development

According to business news earlier this year, UnitedHealth has about 13.84 billion reasons to look back on 2019 fondly. However, they’re not alone. Similarly, Anthem recently announced a 20 percent increase in their Medicare Advantage business and revenue of $103 billion in 2019. Cigna, Centene and Humana had similarly good years, as each company saw their net worth rise comparative to 2018, reaching anywhere from $12-44 billion.

Massive profit reports for health plans are not exactly “breaking news.” But as the health system struggles to address the systemic problems that result in poor outcomes and increased costs, the question remains: could plans leverage their billions in capital to better help the people they care for?

Health plans and health care systems are set up to deal with people only when they need health care services. But for 99 percent of patients – even those with serious and complex medical conditions – life is predominately lived outside the walls of the health system. And that life outside the walls is contributing significantly to the continued success or failure of medical interventions. Social drivers of health – such as housing, access to nutritious food and transportation – play a crucial role in our health, and health plans – which are increasingly on the hook for their members’ health outcomes – have a vested interest in addressing these social drivers.

While there are many ways to accomplish this, we argue in a recent paper that health plans should consider investing some of their capital in affordable housing and community development. Part of the rationale for undertaking such investments is the fact that a portion of the billions in profits earned by plans are built on taxpayer dollars from public programs like Medicaid and Medicare Advantage and, as a result, those dollars should be reinvested in projects and programs that contribute to the public good. Plans would receive a financial return on their investments and those investments would support the creation of much-needed affordable housing units. Additionally, just as a hospital is often considered an “anchor institution” – rooted in communities and with a vested interest in the health and wellbeing of those communities – so too are health plans. The commitment to invest in a community must reach throughout the entire health system and not be the sole responsibility of the physical institutions where people receive care.

UnitedHealth, to its credit, has been a leader in this area, acknowledging this link when it singled out the importance of “…remov[ing] social barriers to better health for people in underserved communities” when it announced it had surpassed $400 million in investments in affordable housing since 2011.

And UnitedHealth is not alone in recognizing this link. CareOrgeon, UPMC for you and others have begun using a variety of permissible investment vehicles to make these kinds of critical community investments (more examples are discussed in our brief). They’re accomplishing this through investments in private equity funds, loans, direct contributions and tax credits. They are often providing funding desperately needed by the developers of affordable housing. While this is a promising start, initiatives like this need a more sizable investment and more buy-in from other actors in the space.

We recognize that this work also cannot occur in a vacuum and health plans cannot and should not act unilaterally when making decisions that affect the communities they serve. Our Social Investment Initiative seeks to connect state-based health care and housing advocates to health plans to promote this critical area for community investment. This work is currently underway with partners in Massachusetts and North Carolina, and we hope to use the lessons learned to develop models that can be replicated across the nation.

At the end of the day, health plans have billions of opportunities to improve the lives of the people they serve and, we would argue, a societal obligation to do so.

Additional background and information on this issue can be found in our new brief, “Healthy Investments: Leveraging Health Plan Capital for Affordable Housing and Community Development.”

Renée Markus Hodin, deputy director of the Center for Consumer Engagement in Health Innovation & Nancy Turnbull, senior associate dean for professional education and a senior lecturer in health policy at the Harvard T.H. Chan School of Public Health