San José is pursuing federal funding to reduce housing costs for people experiencing homelessness, a move that could reshape how the city addresses one of its most pressing social challenges. The initiative centers on leveraging Medi-Cal reimbursements to offset shelter expenses, a strategy that has drawn both support and scrutiny from local officials and advocacy groups. As housing insecurity continues to affect thousands across Santa Clara County, city leaders are exploring innovative financing mechanisms to sustain and expand emergency housing services without overburdening municipal budgets.
The proposal reflects a growing trend among California municipalities to tap into state and federal health programs as a way to fund homelessness interventions. By classifying certain shelter-related services as medically necessary, San José aims to qualify for federal Medicaid matching funds through Medi-Cal, California’s version of the federal Medicaid program. This approach hinges on demonstrating that stable housing and supportive services directly impact health outcomes, particularly for individuals with chronic medical conditions exacerbated by homelessness.
City officials have not yet disclosed the exact amount of federal funding being sought, nor have they specified which shelters or service providers would be included in the initial rollout. What is clear, however, is that the plan depends on approval from both state and federal health authorities, a process that can capture months or even years to complete. Advocates argue that if successful, the model could free up local dollars for long-term housing solutions while ensuring that shelters remain operational during periods of high demand.
Medi-Cal has increasingly been used in recent years to cover non-traditional health-related services, including housing navigation, tenancy support and behavioral health coordination—particularly under California’s Medicaid waiver programs like CalAIM (California Advancing and Innovating Medi-Cal). These waivers allow the state to test innovative ways of delivering care that address social determinants of health, such as housing instability. San José’s effort would align with this broader strategy by treating shelter costs as part of a comprehensive care plan for vulnerable populations.
To date, several California counties have piloted similar uses of Medi-Cal funds for homelessness services. Los Angeles County, for example, has received federal approval to use Medicaid dollars for housing-related support services under its Whole Person Care pilot, which preceded CalAIM. San Francisco has also explored using Medi-Cal to fund interim housing and case management for individuals with complex health needs. These precedents suggest that San José’s approach is not without precedent, though success will depend on meeting strict federal guidelines around eligibility, documentation, and cost allocation.
Critics of the plan caution that relying on Medicaid reimbursements introduces administrative complexity and potential delays in funding. Unlike direct municipal allocations, federal health funds require rigorous reporting, compliance with clinical eligibility criteria, and coordination across multiple agencies—including health departments, housing authorities, and nonprofit service providers. There is also concern that shifts in federal policy could jeopardize future reimbursements, leaving shelters vulnerable if funding streams are interrupted.
Despite these challenges, city leaders maintain that diversifying funding sources is essential to building a resilient homelessness response system. With rising rents and limited affordable housing stock, San José has seen a steady increase in the number of people living unsheltered or in temporary encampments. According to the most recent point-in-time count conducted by Santa Clara County, over 6,000 individuals were experiencing homelessness in the jurisdiction—a figure that has fluctuated but remained persistently high in recent years.
The pursuit of federal housing-related funding through Medi-Cal underscores a shift in how cities are rethinking the intersection of health and housing policy. Rather than treating shelter as a purely social service, officials are beginning to frame it as a public health intervention—one that can reduce emergency room visits, stabilize mental health conditions, and improve long-term outcomes for vulnerable residents. If approved, San José’s initiative could serve as a model for other California cities seeking to maximize limited local resources through innovative financing.
As of now, no formal application has been submitted to the Centers for Medicare & Medicaid Services (CMS), and the city has not announced a timeline for when such a request might be made. Officials emphasize that any effort to access federal funds will require close collaboration with the California Department of Health Care Services (DHCS), which administers Medi-Cal at the state level. Until those conversations progress, the plan remains in the exploratory phase, though it signals a willingness to pursue unconventional paths toward housing stability.
For residents and stakeholders interested in tracking the development of this proposal, the City of San José’s Housing Department regularly posts updates on its official website, including meeting agendas, budget reports, and public notices related to homelessness services. The Santa Clara County Continuum of Care also coordinates regional efforts and publishes data on housing inventory and service utilization. Both entities provide transparent access to information about how local and federal resources are being deployed to address homelessness.
While the outcome of San José’s federal funding push remains uncertain, the effort highlights a broader movement toward integrating health and housing systems to better serve people experiencing homelessness. Whether through Medi-Cal reimbursements, state grants, or public-private partnerships, the goal is clear: to reduce the human and financial toll of housing insecurity by ensuring that no one is left without a safe place to stay—and the support they require to rebuild their lives.
The next confirmed checkpoint in this process will be any official announcement from the City of San José regarding a formal submission to state or federal health authorities for Medi-Cal reimbursement eligibility. Until then, city officials continue to evaluate feasibility, gather stakeholder input, and assess how such a model might fit within the broader regional strategy to prevent and end homelessness.
We encourage readers to share their perspectives on this developing story. Have you or someone you grasp been affected by housing insecurity in San José? What solutions do you believe would work best for your community? Join the conversation by commenting below or sharing this article with others who care about equitable access to housing and health.