This story, by Report for America corps member Carly Berlin, was produced through a partnership between VTDigger and Vermont Public.
For more than a year, Vermont has had authority to help pay for housing for homeless individuals with high medical needs — and to have the federal government cover much of the cost.
But state leaders aren’t taking advantage of this opportunity, in part because they fear jeopardizing Vermont’s standing with the Trump administration, which dislikes the program, state records show.
The stalled initiative has come under scrutiny from advocates for unhoused Vermonters in recent days as the latest round of evictions from the state-funded motel voucher program forces hundreds of vulnerable people to find shelter. In the meantime, federal Section 8 rental vouchers are on hold and waitlists for subsidized housing are often months — if not years — long.
Jessica Radbord, a senior staff attorney at the American Civil Liberties Union of Vermont, finds it appalling that the state would leave federal cash on the table.
“That, to me, is horrifying, given that over 100 households were just removed from the General Assistance program with literally no options,” said Radbord.
In early 2025, the federal government gave Vermont permission to use federal money to help pay for housing supports for medically vulnerable individuals, through a process known as a Medicaid waiver amendment.
That approval authorized Vermont to use funds from the low-income health care program Medicaid to cover six months of rent for certain Vermonters experiencing homelessness, as well as for medical respite services, which can provide housing-insecure people with a place to recover from an illness or injury.
At the time, state officials hoped the funding would help stabilize people trying to manage severe medical vulnerabilities while unhoused — and avoid lengthy hospital visits.
The approval itself did not itself guarantee that the money would start flowing, though.
The state would first need to appropriate funding in order for the feds to unlock their matching funds. Former state Medicaid director Monica Ogelby said in January 2025 that she didn’t expect administration officials and lawmakers to contemplate setting aside state funds until the 2026 legislative session “at the earliest.”
Now this year’s budget cycle is well underway, and the state’s share of the Medicaid funds are so far not in the mix. In internal communications and in a written statement, Agency of Human Services officials say the Trump Administration’s icy stance toward the Medicaid initiative’s future is a factor in the state’s decisionmaking.
The federal government gave Vermont the housing Medicaid approval days before President Trump’s second inauguration. Soon after, the Trump administration began rolling back the program.
According to research from the health policy organization KFF last spring, the Trump administration rescinded guidance on the type of approval obtained by Vermont. That action should not affect currently approved or existing waivers, the researchers wrote, meaning that states like Vermont should still be able to access matching funding – but the move may get in the way of more states trying to secure the approvals in the future.
According to the ACLU’s review of state Medicaid documents, if Vermont put up to $34 million toward Medicaid spending for housing supports for people with disabilities this year, and $35 million in 2027, the federal government would reimburse nearly 60%.
At that rate, the state is leaving around $20 million in federal funds on the table each year, in addition to nearly $11 million in permitted funds to help build the programs.
Ted Fisher, a spokesperson for the Agency of Human Services, wrote in a statement that Vermont is not “missing out” on federal funds by failing to set up the rental assistance program.
“The waiver does not allocate or guarantee federal funding to the state—it simply provides Vermont with the authority to claim federal matching funds if and when the state invests its own dollars in an eligible program,” Fisher wrote. The Agency of Human Services did not respond to further detailed questions about the Medicaid waiver amendment.
State officials had considered trying to obtain the federal money this year, however, according to internal emails obtained by Radbord and reviewed by VTDigger/Vermont Public.
One week before agency leaders presented their proposed budget for homelessness programs to lawmakers this January, Kristin McClure, deputy secretary of the Agency of Human Services, emailed Medicaid policy director Ashley Berliner with a question about using the Medicaid funds for rental aid.
“Do we have that authority now?” McClure wrote. “If we wanted to move forward w this - what would we need to do and how much would it cost per household?”
Berliner replied the next morning. “Forgive me in advance for the cold water I’m about to throw,” she wrote.
Berliner explained that Vermont would not be able to implement the Medicaid rental benefits until program and monitoring plans were approved by the federal government. The “current federal administration” has “come out strongly” against the type of funding authority Vermont received, “and has issued policy statements that they will not extend or approve any housing waivers.”
Implementing the program “has the potential to undermine our waiver renewal position,” Berliner wrote. The state’s entire Medicaid waiver — which reaches far beyond the scope of this individual program — is up for renewal in 2027. Berliner did not elaborate further on the stakes of this perceived risk. She did not respond to multiple interview requests for this story, nor did Medicaid and Health Systems Director Jill Mazza Olson.
Politics aside, getting the rental program underway would require “a tremendous amount of policy, fiscal, and operational work” and couldn’t happen until January of 2027 “at the earliest,” Berliner wrote. The waiver authority sunsets at the end of next year.
“I really wish it was a more viable option,” Berliner concluded.
In a March 4 message reviewed by VTDigger/Vermont Public, agency staff attorney Megan Wheaton-Book wrote to Radbord that no rental assistance or medical respite programs authorized under the Medicaid waiver “have been implemented or will be implemented.”
In a statement, Ted Fisher, a spokesperson for the Agency of Human Services, wrote that “Vermont is still working on how this program would be structured and looking for additional guidance from the Federal Government on what will be allowable.”
Over a year after the feds’ approval of the waiver amendment, Fisher said that officials remain in the “planning phases” for the program. For that reason, “there is no money in the budget to provide the state match…So this program does not provide us a viable option for this year.”
State officials are also “carefully observing nationwide changes and trends related to this authority,” Fisher added.
Radbord, from the ACLU, said other states, like New York and North Carolina, have figured out how to apply for the Medicaid matching funds for similar programs. Vermont should try to quickly replicate their initiatives, she said, and avoid letting the funding window expire at the end of next year.
“The idea of letting this opportunity go to waste when it is there right now is unconscionable, in my opinion,” she said.
Ian Matheson, a case manager at the Groundworks Collaborative, a homeless services provider in Brattleboro, said being able to bill Medicaid to help cover rent for unhoused, disabled clients would be a game changer.
“I think it would make a huge difference in people’s lives,” Matheson said.
