Homelessness Rife with Hidden Taxpayer Costs

While an idealist measures homelessness in terms of  the cost in human suffering and loss opportunity, the pragmatic, practical, and perhaps less empathetic are more likely to respond to quantitative analysis. Those people should be aware that there is also a heavy financial cost tied to homelessness that affects governments and taxpayers at all levels.

The following are some of the statistics taken from the recent report Opening Doors: Federal Strategic Plan to Prevent and End Homelessness published by the US Interagency Council on Homelessness (USICH).

• The homeless use mental health or substance abuse treatment programs at nearly twice the rate (52 percent to 23 percent) of comparable non-homeless low income populations.
• Health care costs for people enrolled in the federal Collaborative Initiative to Help End Chronic Homelessness averaged more than $27,000 pre-enrollment.
• The VA reports that the average cost of health care for homeless Vets is $27,206, 13.3 percent higher than the cost of caring for non-homeless Veterans.
• In Washington State, school districts pay anywhere from 6 to 80 times as much to transport homeless students to and from school than they pay to transport the general population.

The National Alliance to End Homelessness provides the following statistics:

• A study in Hawaii found that 1,751 adults were responsible for 564 hospitalizations and $4 million in admission costs. This population had a rate of psychiatric hospitalization over 100 times that of their non-homeless peers and the excess cost of treating them was $4.5 million or $2,000 per person.
• The New England Journal of Medicine reports that homeless people spent an average of four days longer per hospital visit than comparable non-homeless people. This extra cost, approximately $2,414 per hospitalization, is attributable to homelessness.
• People who are homeless spend more time in jail and prisons, often because they are targeted by specific ordinances such as those prohibiting loitering, panhandling, or sleeping in cars. The University of Texas conducted a two year study and reported each homeless person cost taxpayers $14,480 per year, primarily for overnight jail. Other studies have put the cost of a bed in a state or federal prison at $20,000 per year.

Most studies of the cost of homelessness focus on increased burdens on the health care, education, and penal systems.  But there are other costs which are not easily quantified such as diminished productivity and lost contributions to the system; increased policing not reflected in jail and prison costs, lost business, declining property values, and increased security costs to businesses and residents in areas frequented by the homeless.

The costs of homelessness become more apparent and, frankly, more aggravating when compared to the savings that have been found possible when communities deal intelligently with the problem.  Here are a few statistics.

• Emergency shelter is much more expensive than permanent housing. The cost of an emergency shelter bed funded by HUD's Emergency Shelter Grants program is approximately $8,067 more than the average annual cost of a Section 8 Housing Certificate. Another recent HUD study found that the cost of providing emergency shelter to families is generally as much or more than placing them in transitional or permanent housing. This just reflects savings in the cost of shelter; it does not take into account potential savings from other areas such as health care.
• A Los Angeles study (where 10 percent of the nation's homeless are located) found that placing four chronically homeless people into permanent supportive housing saved the city more than $80,000 per year.
• Five studies quoted in Opening Doors produced evidence of reductions in the utilization of major services before and after homeless persons were entered into supportive housing programs.

Portland Maine did a pre- and post- study of a housing initiative involving about 100 homeless persons in that small city and found the following changes one year after clients were placed in permanent housing compared to the figures one year before the placement:

Even after considering the cost of the permanent/transitional housing for these individuals and families, the reduction in services saved the city an average of $944 during the year.

There seems little question that switching from a band-aid approach to treating homelessness to a comprehensive program that gets people into housing and then supports them there is incredibly cost effective. Yet, up until now, there seems to have been no systematic attempt to do so.  We will look at traditional ways of treating homelessness and how that may be changing in the next few articles in this series.  

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