Health Affairs: Rescinding Health-Related Social Needs Guidance Undermines Trump’s Own Economic Goals
In early March 2025, the Centers for Medicare and Medicaid Services (CMS) under the Trump administration abruptly rescinded its multiyear guidance framework on health-related social needs (HRSN), eliminating a long-evolving roadmap for states seeking to address social determinants of health (SDoH) through Medicaid programs. While the slew of federal cuts will undoubtedly have major impacts on public health nationwide, this decision appears antithetical to the administration’s overarching goal of optimization. Addressing SDoH is important for many reasons, including improving the health and well-being of marginalized communities and often unincluded people. However, this article intends to argue that this and any further policy reversal threatens economic efficiency in our health care system.
Efficiency in this realm comes by keeping individuals out of the costliest mechanisms in health care: the emergency department and inpatient stays. Paradoxically, the rescission of HRSN guidance directly contradicts longstanding conservative fiscal priorities and governance philosophy. These economic principles emphasize reducing wasteful spending, promoting market-based solutions, and streamlining government. By eliminating guidance for programs that have demonstrated return on investment through this type of optimization, the administration is effectively ensuring billions in continued wasteful spending across the health care system, contradicting its stated goal of fiscal responsibility. Furthermore, this action represents a significant federal overreach that undermines state authority—a principle that Republicans have historically championed—as the HRSN framework had empowered states to design locally tailored solutions through their Medicaid programs. Rescinding any SDoH-related guidance or otherwise reducing Medicaid’s power in the states contradicts the administration’s supposed interest in state flexibility and limited federal intrusion.
SDoH Offer Efficiencies That Link Health With Social Care
SDoH account for approximately 80 percent of health outcomes, significantly outweighing the effect of direct medical care. While addressing these social determinants has immense cost benefit, leaving them unaddressed drives substantial wasteful health care spending through multiple well-documented pathways.
Food insecurity is associated with poor physical and mental health, worse control of chronic diseases, and medication non-adherence—factors that are associated with increased emergency department use. One study estimated that food insecurity was associated with approximately $77.5 billion in additional health care expenditures annually. Similarly, housing instability drives preventable hospitalizations and readmissions. One cross-sectional study found that housing instability was associated with longer hospital stays, at a cost of $9.3 billion. In these cases, the hospital becomes a costly substitute for stable housing and access to food, while doing nothing to address the underlying issues.
Fortunately, guidance, funding, and regulation have helped health care organizations and social service providers find strong financial incentives to address these factors. A 2020 study in Health Affairs found that programs addressing social needs such as housing insecurity yielded a positive return on investment of nearly 3:1. Major health systems including Kaiser Permanente and CommonSpirit Health (formerly Dignity) have developed comprehensive SDoH strategies partially because they make financial sense. A broader survey of hospital systems found that more than half of the hospital’s polled were motivated by the evidence of cost reductions.
The rescinded CMS guidance provided critical regulatory clarity for health care organizations and managed care plans making these investments. Its removal creates uncertainty that will chill innovation and prevent scaling of cost-effective interventions that can reduce downstream health care costs.
Evidence Of Effectiveness From Federal And State Programs
The CMS Accountable Health Communities (AHC) Model, which tested whether connecting Medicare and Medicaid beneficiaries to community resources could improve health outcomes and reduce costs, showed early promise. Evaluation data from the program’s first year demonstrated that Medicare fee-for-service beneficiaries in the intervention group had 9 percent fewer emergency department visits than those in the control group. This reduction was statistically significant in the first three-quarters following screening, indicating that addressing social needs can meaningfully affect use patterns.
Further evidence comes from state 1115 Medicaid waiver programs. North Carolina’s Healthy Opportunities Pilots program, which provides services such as healthy food boxes and housing navigation financed by Medicaid, has shown promising results. A 2025 comparative evaluation published in JAMA found that the program was associated with a Medicaid spending trend of -$85 per beneficiary per month, with monthly spending equivalent to estimated counterfactual expenditures by month eight and lower thereafter.
Similarly, California’s CalAIM program has successfully improved care coordination and outcomes through Enhanced Care Management and Community Supports—programs that have directly included new models of health centered around non-traditional and traditional implementers, including managed care plans, behavioral health organizations, community-based organizations, social services providers, and other institutions. An implementation survey of CalAIM in 2024 found that 53 percent of implementers reported the overall experience of care had improved for the people they serve.
Other states such as New York, Massachusetts, Arizona, Oregon, and Washington have made substantial progress in integrating HRSN services into their Medicaid programs through approved 1115 demonstrations. The guidance framework developed by CMS represented years of careful policy refinement and stakeholder input that builds on the progress that states have been forging for decades. The sudden withdrawal of federal guidance creates uncertainty about the future of these programs and whether they will continue to receive federal matching funds. This uncertainty directly challenges states’ ability to exercise their traditional authority in Medicaid program design and implementation. Since Medicaid’s inception, states have been laboratories for health care innovation, with federal guidance providing guardrails rather than rigid restrictions, a nuance that these frameworks respected by offering flexibility while maintaining accountability.
Cascading Economic Impacts
Given the cross-sectoral nature of SDoH policy within health care, the elimination of this guidance will create broader economic ripple effects. Several states had leveraged the HRSN framework to develop housing supports for high-need populations. These initiatives created predictable revenue streams for affordable housing providers and spurred development in underserved areas. The guidance had supported the development of community health workers and social care navigator roles. These positions created career pathways for individuals with lived experience in underserved communities. The AHC evaluation specifically highlighted the importance of this workforce, noting that effective navigation led to reduced emergency department use.
Health technology companies have developed platforms and services specifically designed to meet requirements outlined for SDoH service delivery. Capital had flowed toward these solutions because of the regulatory clarity provided by CMS. Without effective mechanisms to address social needs, states face increased costs for emergency services, crisis response, and institutional care—all substantially more expensive than preventive approaches outlined in the rescinded guidance.
A More Effective Path Forward
The Trump administration should not seek to further eliminate these HRSN provisions or find additional ways to reduce or eliminate social safety-net programs. In doing so, they are undermining the administrative and economic arguments for which they claim to be fighting. The work demonstrated by these HRSN programs, while imperfect at times, has helped build toward a social safety system that reduces waste by addressing the root causes of expensive health care problems. Over the course of my career, I’ve worked toward setting up the ecosystems that organize health and social care together, and optimize administrative burden. In my organization’s current work, we’ve been able to demonstrate cutting the total cost of care of previously unhoused Medicaid enrollees in half by reducing their emergency department use by around 80 percent. Nationwide, similar methods help reduce unnecessary health care expenditures such as emergency care and hospitalizations and create opportunities for new non-traditional health service providers to participate in the economy.
Studies and programs have consistently demonstrated that monies put into the programs result in greater savings, making it clear that few other health interventions demonstrate such positive returns on investment. Instead of eliminating any programs related to this, even the most fiscally conservative government should help states grow their ability to support innovation and cross-sectoral partnerships. Health care organizations, states, and advocacy groups should advocate for restoration of clear federal guidance on HRSN. This isn’t merely about compassionate care—it’s fundamentally about economic efficiency, market stability, respecting state authority, and the long-term financial sustainability of our health care system.
By FwdSlash cofounder and NYU doctoral student, Joshua Prasad, April 11, 2025