Chronic homelessness and cost studies

written by naehblog
August 15, 2011

This morning, I got a call from a reporter curious about cost studies.

Which got me thinking about chronic homelessness.

It’s one of the things I learned quickly at the Alliance: permanent supportive housing ends chronic homelessness. Permanent supportive housing provides housing stability (permanent housing) + supportive services (medical, mental, physical, etc.) to homeless people with the highest needs who are often struggling with mental illness, substance abuse, and/or physical issues.

In the last decade or so, we’ve implemented permanent supportive housing across the country and measurably reduced chronic homelessness in the United States. Chronic homelessness was the focus of many of the first community Ten Year Plans. The federal strategic plan to end homelessness, Opening Doorsaims to end chronic homelessness in five years.

And the outcomes are reflective of the effort: from 2005 to 2008, chronic homelessness in the countrydecreased approximately 28 percent.

While the cost of incarceration, institutionalization, hospitalization, etc. vary from state to state, many cost studies have found  that providing chronically homeless people permanent supportive housing is more cost-effective than incarcerating, institutionalizing, hospitalizing, etc. them.

Below is a smattering of some cost studies:

  • Seattle, WA (2009)
    • A Housing First facility in Seattle, WA served chronically homeless people with severe alcohol problems who had previously incurred multiple and expensive mental health care and medical costs.
    • Housing First participants had median costs of $4,066 per person per month. Median monthly costs decreased to $1,492 and $958 after 6 and 12 months in housing, respectively. The total cost rate reduction was 53 percent for housed participants relative to wait-list controls over the first 6 months. The total cost offsets for Housing First participants relative to controls averaged $2,449 per person per month after accounting for housing program costs.
  • Los Angeles, CA (2009)
    • This study examined four people with substance abuse, physical health, mental health, and criminal justice issues.
    • The study found that the the total cost of public services spent on [four individuals] over two years on the streets was $187,288.
    • The study also found that the total cost of public services for these four individuals living in permanent housing with support services for two years was $107,032.
  • Portland, ME (2009)
    • This project provided an opportunity to review the current permanent supportive housing options in Maine as well as to examine the cost of permanent supportive housing as compared to the cost of a life lived in homelessness.
    • Urban Maine (greater Portland)
      • 50% reduction in Service costs during the second year of permanent supportive housing;
      • 46% reduction in Health Care costs representing a $264,046 decrease in health costs;
      • Permanent supportive housing placements continued to reduce costs in the following areas: emergency room by 49%, incarceration by 87%, ambulance transportations by 53%, and police contacts by 51%.
    • Rural Maine
    • 37% reduction in service costs by providing continued permanent supportive housing to people with disabilities experiencing homelessness in rural areas;
    • 54% reduction in Mental Health costs representing a $389,977 decrease in mental health costs;
    • Permanent supportive housing placements continued to reduce costs in the following areas: emergency room by 15%, incarceration by 91% and ambulance transportations by 16%.

Permanent supportive housing is ending chronic homelessness. By providing the most high-need homeless people with housing stability coupled with the supportive services they need, we can not only end homelessness for those individuals but relieve some of the financial burden on the municipalities serving them.

We can end chronic homelessness by committing to this effective strategy. To find out more and how to get involved, please visit the Alliance website and sign up to advocate.