The conventional approach to homelessness starts with services. But starting with permanent housing instead costs less and works better.
By Nan Roman and Lisa Stand Posted on July 22, 2012
The equation for ending people’s homelessness has traditionally been to move them through a continuum of temporary housing and services until they are “ready” for permanent housing. But surprisingly—given that it’s a problem defined by housing—the housing part of the equation has often been neglected.
What’s Missing Is Housing
While homeless people certainly have service needs, it is the lack of housing that defines them as homeless. However, when homelessness first emerged in the early 1980s, the system that was created to address it paid little attention to getting people back into housing. Early approaches emphasized crisis intervention, resulting in shelters and soup kitchens that could address people’s immediate needs. Over time, these programs began to offer a variety of services, but they had little access to resources that could help people find or afford housing. Eventually, by the mid-1990s, there were over 40,000 programs addressing homelessness; very few of them focused on housing.
However, as early as the late 1980s, the concept that became known as Housing First began to emerge for homeless families, and in the early 1990s a similar approach surfaced for homeless adults with severe mental illness. The idea was to focus on the housing—to get homeless people as quickly as possible into a permanent, stable place to live—and then to provide them with the services that they need. Housing First says something that is fairly intuitive—that people do better when they are stabilized in housing as soon as possible. Unstable housing impedes the effectiveness of interventions to address people’s problems. Homeless people themselves recognize this and generally identify housing to be their first priority.
While housing people to end homelessness may seem self-evident, the services-first approach persisted, in good part because of the considerable public and private infrastructure that was built up around it. Even those organizations that wanted to focus more on housing had a difficult time as resources for rent assistance were few and targeted.
But over the years, research has demonstrated that permanent housing can cost less than long stays in temporary housing and involvement with costly public acute care systems, and the Housing First principle has begun to take hold.
Housing First generally involves three steps:
- Crisis resolution and assessment—to address immediate problems and then identify housing needs.
- Housing placement—including strategies to deal with bad tenant and credit histories, identify units, negotiate with landlords, and access rent subsidies.
- Service connections—to provide housed people with services, or connect them to services in the community.
In some cases, Housing First shows that housing interventions can be among the least expensive steps to ensure good outcomes in health, education, corrections, and other systems. It also demonstrates that housing is a necessary platform for people’s well-being in a host of realms—keeping families together, recovering from mental illness, sustaining employment, helping to strengthen a neighborhood, and so on.
For Chronically Homeless People
Chronically homeless people are those who spend years—sometimes decades—homeless. Most also have disabilities like severe mental illness and substance use disorders. Destitute, disabled, and with no place to live, they interact frequently with expensive publicly-funded systems such as jails, emergency rooms, and hospitals. Housing First can save public money as people reduce their use of these acute care systems.
For people with chronic disabilities, Housing First focuses on placement in permanent, subsidized supportive housing. In 2005, community leaders in Quincy, Mass., undertook a broad Housing First program, and began placing chronically homeless people from shelters and the streets into permanent supportive housing. They also examined available data and saw a clear connection between homelessness and people exiting jails, hospitals, and detoxification facilities. With this information, they could enlist those institutions to focus on discharge planning that could better prevent vulnerable individuals from falling into homelessness in the first place. This initiative eventually allowed Quincy to close an emergency shelter due to lack of use. Between 2005 and 2009, the city reduced its chronically homeless population by more than 50 percent, from 97 to 48.
In Wichita, Kansas, United Way of the Plains led a Housing First project that included city and county funding for 64 units of permanent housing with supportive services attached. The housing was scattered across various neighborhoods, and service delivery was tailored to this model. In just the first six months of the program, the city was able to house, and keep housed, 54 people who were chronically homeless (30 percent of the chronically homeless population). Between 2005 and 2009, the chronically homeless population of Wichita fell 62 percent, from 184 to 71.
Housing First can save money for publicly funded care systems beyond the homeless system. A prime example is 1811 Eastlake in Seattle, permanent housing created and operated by Downtown Emergency Service Center (DESC) for chronic street inebriates who in many cases also suffer from psychiatric disorders and physical ailments. Even though sobriety is not required for tenancy, nor is abstinence or treatment, there is intensive assistance available on site and consistent encouragement to reduce consumption. A financial impact evaluation, conducted by DESC and the University of Washington and published in the _Journal of the American Medical Association_ in 2009, found that in the year prior to moving into 1811 Eastlake, tenants averaged $4,066 per month in costs to those public services examined, including corrections, shelter, substance abuse treatment, and health care. After moving into 1811 Eastlake, the study found that the average cost offset per person per month (after accounting for housing program costs) was $2,449.
The data from Seattle are bolstered by reports out of Chicago, where the AIDS Foundation of Chicago and its public sector and community partners have reduced health care costs by providing housing and case management to homeless people exiting hospitals after incurring high Medicaid costs. The project included a randomized controlled study of 407 homeless people with chronic illness who were being discharged from area hospitals. Over 18 months, those placed in permanent supportive housing with case management showed measurably fewer hospitalizations, visits to the emergency room, treatment encounters for substance abuse, and days in prison than the control group. Annual savings were estimated to be $6,300 per person.
For chronically homeless people, the stability of housing ends people’s homelessness and improves the efficacy of treatment. Further, at least among the highest need people, the cost of housing can be offset by significant savings to public systems of care.
For Economically Homeless People
Rapid rehousing is another name for a Housing First intervention used for families and individuals who become homeless for economic reasons. It provides rent deposits and/or a limited number of months of rent assistance. Sometimes this serves as a bridge to longer-term rental assistance (such as Section 8 or even permanent supportive housing). Rapid rehousing strategies generally address services needed by linking re-housed households to existing services in the community, although direct services are sometimes provided.
For these lower-need populations, Housing First shows less evidence of immediate cost savings to acute care systems, but there is good evidence of cost savings to the homelessness system itself and an indication of long-term savings associated with employment, education, and general well-being. Providing housing first can be less costly than other homelessness interventions, as a 2010 HUD study suggests. Costs Associated with First-Time Homelessness for Families and Individuals examined a sample of jurisdictions and found that the cost of the fair market rent for a two-bedroom unit was less expensive—often considerably so—than the cost of emergency shelter or transitional housing. The latter did include services, but also significant agency overhead. Meanwhile, it is difficult for people to obtain and maintain employment, succeed in education, and integrate into the community when they know that their residence is temporary.
Homeless families would be helped especially by a Housing First approach, as there is extensive evidence that children in families do not do well while they are homeless, and therefore rapid housing stability interventions would improve their outcomes. A stimulus program, the Homelessness Prevention and Rapid Rehousing Program, which was designed to forestall a recession-related increase in homelessness, devoted an estimated $400 million to rapid rehousing and additional funds to prevention. While a full-scale evaluation of the program is not yet complete, there is evidence that HPRRP helped reduce or avoid homelessness for approximately 1 million individuals.
The Way Forward
Housing First shows that housing improves outcomes in a host of other areas such as health care and education. Because it demonstrates the importance and cost effectiveness of investing in affordable housing, it is time it received more attention from the entire housing community, rather than just those concerned about homelessness.
Since housing of high-need people may more than pay for itself in savings to publicly supported systems like emergency shelter, medical care, and law enforcement, and is a cost effective way to support children and families, it would seem that cash-strapped governments would be flocking to invest in affordable housing. Clearly, they are not. One reason is that spending money on housing in order to save money on health care, incarceration, and so on, is difficult in a siloed public policy environment with annual appropriations. Savings in one silo (say, health care) do not necessarily accrue to another silo (say, housing). Those responsible for public budgets are not always persuaded by the argument that spending in one fiscal year would result in savings in another if they cannot access those savings to offset the initial spending.
However, an opportunity might be presenting itself as so much of the nation’s attention is focused on health care costs. Implementation of the Affordable Care Act (ACA) presents some specific openings, especially to make the case for Housing First as a necessary platform to achieve cost-effective and positive health care outcomes. The ACA reforms affecting Medicaid and community health safety nets are changing payment policies to encourage coordination of services for high-cost consumers. This “patient-centered” movement allows for a team approach that can combine resources and interventions based on what a person needs to recover and remain in the best health possible.
That is why champions of supportive housing are carefully watching ACA implementation and its elevation of “medical homes” for coordinating behavioral health and physical health care. The Medicaid version, called a “health home,” allows people with serious chronic and mental health conditions to be served by a provider or team of providers who coordinate various sorts of care. Case management and referrals to community services are covered. While Medicaid will not pay for housing itself, community agencies could have more Medicaid resources to incorporate housing-related services. They may do so as the evidence is growing that housing is necessary for treatment interventions to work properly.
Now is an opportunity for housing advocates to build new partnerships with the medical community and business leaders concerned about health care costs, in much the same way that homeless advocates approached collaboration in Quincy. Public hospitals, first responders, and even health insurance plans have an economic interest in lowering the costs of caring for chronically homeless and other people who have high medical costs. The evidence shows that permanent housing is the key, with appropriate supports. These institutions are also, often, well-positioned in a community to lead or sponsor collaborative solutions, for instance pooling investments in housing and public health infrastructures. As illustrated by the story in Quincy, discharge to homelessness is the least effective way to manage services for very vulnerable people.
Still, housing is one of several siloed systems that together struggle to provide the full spectrum of assistance to low-income people. Some of these other systems have, at the moment at least, greater public and political attention. The Housing First model points out, however, that without housing, the performance of these other systems is impeded, their outcomes are adversely affected, and their costs can go up. It makes sense for housing advocates to continue to build the case that housing is a cost-effective intervention that can improve outcomes in a host of other areas including health care, corrections, employment, and education.
Nan Roman is president and CEO of the National Alliance to End Homelessness.
Lisa Stand is a senior policy analyst with the Alliance.
- Chicago AIDS Foundation and the Chicago Housing for Health Partnership.
- “Costs Associated with First-Time Homelessness for Families and Individuals,” U.S. Department of Housing and Urban Development, 2010.
- “The State of Homelessness in America 2012,” National Alliance to End Homelessness, 2012.
- “Health Care and Public Service Use and Costs Before and After Provision of Housing for Chronically Homeless Persons With Severe Alcohol Problems,” Journal of the American Medical Association, April 2009.
- “Community Snapshot, Quincy, Mass.” and “Community Snapshot, Wichita, Kansas,” National Alliance to End Homelessness, 2009.