What's The Relationship Between The Cost of Healthcare & Homelessness?

What's The Relationship Between The Cost of Healthcare & Homelessness?

By Josephine Reid

For years, homeless advocates have argued that if governments put up money to house people, they will reap cost savings down the line. There has been a new study that seems to bring validation to this argument.

Housing for Health, a division of the Los Angeles County Department of Health Services, places chronically homeless people into housing and connects them to a case manager for support services, such as substance abuse treatment. For every $1 spent on the program, the county government saved $1.20 in health care and other social service costs.

“The study provides more fuel to say that what we’re doing is effective,” says Marc Trotz, director of Housing for Health. “The implications are that we need to do more of this, faster.”

Homelessness is a pressing issue for Los Angeles County. Out of 43,854 homeless people, the percentage without shelter increased from 70 percent to 75 percent in the past year, which is one of the highest unsheltered rates of any metro area in the country. Overall homelessness in the county also grew by 7%.

Since launching in 2012, Housing for Health has found permanent placements for more than 4,000 people. The program uses a “housing first” approach, meaning that people don’t need to be sober or in mental health treatment before receiving help. Unlike most places, the county offers rent subsidies to people who don’t qualify for federal housing vouchers. The program is also unusual in the sense that a local health department is investing in housing services.

Of the 890 individuals in the study, most had been chronically homeless with a combination of medical, mental health and substance abuse conditions. Over two and a half years, researchers looked at participants’ use of 10 different public services before and after entering the housing program.

Altogether, the program resulted in a nearly 60 percent reduction in those public service costs. People in the program made fewer visits to the emergency room, had shorter inpatient stays at public hospitals and visited outpatient clinics less often.

In the year before receiving housing and case management, the cost per person was $38,146; in the year after entering the program, the per-person cost was $15,358. Even after taking into account the cost of the housing program, the county saw a 20 percent net savings.

There is the suggestion that this is a cost-saving approach to addressing homelessness.  Some state and local governments are testing the idea that investing in housing and case management would result in comparatively greater savings in other areas of government, such as health care, social services and criminal justice.

The county’s costs went down, too, by nearly 60 percent. Health service agencies saw the largest reductions, with the Department of Health — the provider of emergency, hospital and outpatient services — seeing a reduction of about $20 million in spending after the participants’ first year in the program.

By Josephine Reid

I'm Josephine Reid and I work at Dressamed.com headquarters in Los Angeles. I have a B.S. in Retail Merchandising and Business from the University of Wisconsin-Stout. I like to keep a beautiful balance of a creativity and business mindset.