Homelessness as Public Health Crisis: Interventions That Make Financial Sense

Published on October 27, 2020

By Kurt Waltenbaugh

Let’s start with this study from Santa Clara County, California: Home Not Found: Cost of Homelessness Study. It describes researchers’ observations (from 2007 to 2012) as they followed 104,206 individuals to understand the financial impact of homelessness to the community, which they found to be an average of $520 million per year. Clearly, the burden is massive.

More than 60% of that spend – $312 million per year! – is attributed to the healthcare system and highly concentrated in a subset of the population. While spend averaged $5,148 PMPY, the top 5% cost the community a staggering $102,000 PMPY. Much of the remaining costs were spent on public safety (policing, judicial system, and incarceration), demonstrating how our public health and public safety crises stem from the same root causes.

The full report and analysis is well worth a detailed read, but here is one illustration of the costs of homelessness:

Simply staggering! As a “barrier to health,” living without shelter impacts health and spend on healthcare in a dramatic way. In fact, those who are homeless age faster, exhibiting health conditions (and the related spend) at 15-20 years older than their biological age and a 15- to 30-year reduction in lifespan.

No wonder that “warmth” and “rest” – key attributes provided by shelter – are identified as basic needs on Maslow’s hierarchy of needs, along with air, water, and food.

So – the cost is high. And even higher for an identified subset.

Do Interventions Work?

Yes. Emphatically yes! Several studies demonstrate cost-effective solutions.

Let’s look at three:

  • The Santa Clara study (previewed above) took 103 homeless residents, all in the top decile of spend. Their cost was $62,473 PMPY before intervention. Post-housing, those costs fell to $19,767 PMPY, which means that as long as the housing intervention costs less than $42,706 per year, it can be done on a cost-neutral basis. Let’s imagine a $25,000 intervention ($2,000 per month in rent) and expand out to the 4,582 individuals in Santa Clara who are in that top decile. The program would cost $114 million per year and save $217 million per year in reduced healthcare spend. After paying for the housing, the NET savings would exceed $102 million annually. Who wouldn’t make that investment?
  • Looking at smaller communities, INFORUM examined homelessness in the Fargo-Moorhead metro area (250,000 people in North Dakota and Minnesota). Over 1,000 people there are homeless on any given night, and 50% are BIPOC in a community that is 90% white. Most of those entering shelters previously had a home or apartment before being hit with a financial crisis – most often a surprise medical bill. INFORUM asked the logical question: what if we could intervene up front, before people lose their homes, and stabilize the situation to prevent homeless from occurring in the first place? (This gets at the fundamental difference between “housing instability” and “homelessness.”) They estimate that intervening up stream would prevent 4,000 families from experiencing the effects of homelessness – at a far lower cost than housing them once they lose their home.
  • An experiment in British Columbia provided a one-time $7500 CAD grant to 50 homeless individuals, following them (along with a control group) for 12-18 months. The pro-forma savings due to avoided services (primarily shelter bed days and healthcare spend) were more than enough to pay for the cost of the program.

What Concrete Actions Will Help?

Here are some recommendations for addressing homelessness as a public health issue:

  1. Prevent homelessness for those at risk of housing instability by identifying that risk and moving upstream to support families before they lose their homes. This will impact more than half of the eventual homeless need at a lower cost. The key is understanding the risks as early as possible at an individual level – who might be impacted by recent layoffs? Who is at risk for a surprise medical bill?
  2. Create and expand programs to support “rapid rehousing” for those who have lost their homes. As soon as you learn a community member is losing their home, intervene to address the immediate, short-term need. From the research, 93% of those re-housed will remain housed, and this intervention can alleviate a significant amount of the homelessness burden with minimal health or safety impacts.
  3. Establish new, permanent, supportive housing to address the existing and long-term homeless population. This is critically important for the 10% who are most clinically risky today. While this is the largest investment of the three, with the longest lead time, we note that the housing investment has a positive ROI and can pay for itself over time in reduced healthcare spend and reduced public safety impact.

As a state or local government, Medicaid insurance program, health system, FQHC (Federally Qualified Health Center), employer, or even taxpayer, you are paying for the costs of housing insecurity and homelessness. These financial costs – and the impact on the individuals and families in both health issues and early deaths – are avoidable.

With that in mind, what can you do to solve this crisis and ensure everyone has a home?

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Blog image sourced from Nathan Dumlao via Unsplash.

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