As Congress considers the federal budget proposal for fiscal year 2018 to reduce funding for services to poor and homeless Americans, programs with proven cost-effectiveness should not be on the chopping block. One such program is supportive housing for homeless people with severe mental illness.
Supportive housing, funded and coordinated by several different federal agencies and nonprofits, provides homeless people who have severe mental illness with housing coupled with treatment and support services. There is no increase in net public cost compared to street and shelter living.
While it may appear that paying for supportive housing is a drain on the federal budget, research has shown that ending homelessness for the severely mentally ill saves taxpayers money.
Because funding comes from several different agencies, it is hard to know specifically from the president’s budget plan how deep the cuts to supportive housing could be. Yet we do know that the president has proposed cuts in funding to Housing and Urban Development by 13 percent and to Health and Human Services by 19 percent. Both these agencies provide significant funding for supportive housing.
I research mental illness and homelessness. Cutting funds to house the homeless would cost us more money than it would save.
Supportive housing and the homeless mentally ill
Since the 1980s, homelessness has plagued cities and towns across the country. Today, more than a half-million people in the U.S. are homeless. One in every three homeless people suffers from a mental illness, which is often compounded by multiple health problems and substance abuse.
The homeless mentally ill are likely to remain undomiciled and without treatment for long periods of time. This brings a high social and economic cost to society. Disabled by mental illness and unable to work, these individuals have little hope of exiting homelessness without public assistance.
Beset with extreme poverty and disability, their inability to work renders them heavily dependent on the largesse of government agencies for disability income, housing support and health care.
The challenges facing homeless people in general are daunting. Security, privacy and creature comforts are in short supply. The daily burden of being homeless involves finding ways to assuage exhaustion and hunger, and to sidestep the violence and victimization that regularly occurs in life on the streets. An estimated 14 to 21 percent of homeless people are victims of crimes, compared to about 2 percent of the general population.
Supportive housing, started in the early 1980s, has shown to make a big difference. Unlike the temporary respite provided by crisis shelters, it provides access to permanent housing, mental health treatment and support from mental health professionals to guide the adjustment from homelessness to stable residence in the community.
Supportive housing tenants must have a behavioral health condition that qualifies them for a federal disability income. Residents pay one-third of the cost of rent and utilities with their disability income (about US$733 per month). The balance is covered by a housing subsidy provided through private or governmental sources. In some cases, eligibility for a housing subsidy is based on duration of street and shelter living.
The numbers tell the story
At an annual cost ranging from $12,000 to nearly $20,000 per unit, permanent supportive housing is expensive, but it is substantially less than the annual cost of a stay in a homeless shelter, jail or prison, or psychiatric hospital.
Some of the funding comes from the federal government, including from the Department of Housing and Urban Development’s Continuum of Care and from Section 8 housing subsidies. The Department of Health and Human Services and the Department of Veterans Affairs also provide funding.
States including New York, California, Washington and Connecticut have helped to fund housing for people with mental illness, as have some city and county governments.
Other sources of funding include low-income housing tax credits, private foundations and charitable donations to nonprofit housing providers. The Affordable Care Act Medicaid expansion program provides Medicaid reimbursement for services provided to individuals in supportive housing.
And the winner is…everyone
Controlled trials conducted in the United States and Canada have found the majority of people who have had access to supportive housing remain housed for a year or more, showing greater housing stability than that among comparison subjects. In addition, individuals in supportive housing not only stayed longer but also had a reduction in subsequent homelessness and decreased use of emergency departments and hospitals.
Cost offset studies show that supportive housing leads to less use of costly public services.
A landmark analysis of administrative data from multiple public service systems examined the impact of supportive housing placement on 4,679 individuals and their use of the public shelter system, public and private hospitals, and correctional facilities. The study found that persons placed in supportive housing experienced significant reductions in use of homeless shelters, hospitals and time incarcerated. In fact, public service cost reductions following housing placement nearly offset the cost of the housing itself.
Significantly, supportive housing is nearly half the average cost per year of $35,578 for a chronically homeless person. Part of the reason is that stable housing resulted in a shift in service use from expensive crisis services to less costly community-based care.
Strong and compelling evidence indicates that supportive housing is a “win-win” for both the homeless mentally ill and the holders of the public purse. It offers people with mental illness safe and adequate housing and greater access to treatment, essential elements in their recovery. And it can lead to greater cost-efficient use of public services.
Currently there are not nearly enough supportive housing units to house the thousands of individuals with severe mental illness who are currently unstably housed or are at risk of falling into homelessness.
It would not make economic sense to cut funding for a cost-effective intervention that provides a solution to homelessness. Rather, what we need now is the public will to bring supportive housing to scale so that the most fragile among us might achieve stable residence in the community. They, too, deserve the opportunity for personal fulfillment and involvement in mainstream society.