Health Benefits of Supportive Housing Can Yield Net Savings

In "How Investing in Housing Can Save on Health Care", researchers at the National Housing Conference reviewed a wide array of existing research on the cost-effectiveness of housing-based health interventions. While the methodologies do not all yield generalizable results, they find evidence that permanent supportive housing is effective in reducing health care expenditures related to homelessness. It is most likely to generate significant net savings when targeted at the most vulnerable people among the homeless population. Additional research is needed to strengthen the evidence about costs and savings of other housing-based health interventions, particularly when serving lower-risk or nonhomeless populations.

Major findings:

• A Seattle Housing First program for homeless individuals with substance use problems was found to generate $42,964 in health cost savings annually for a cost of $13,440. Health services use continued to decline with additional time in the program.
• A permanent supportive housing program in Maine led to per person reductions in health care costs in excess of $14,000 annually for a housing cost of $13,092 per person annually.
• An analysis of supportive housing for the general homeless population in Los Angeles found a net savings of $14,280 per resident annually, with the highest savings for individuals with mental illness, substance use, or HIV/AIDS.
• In San Francisco, a longer-term analysis estimated that, by year seven, the cost savings of supportive housing were $13,095 per person per year.
• The Family Options study, which evaluated the effectiveness of three programs for homeless families, found that each approach cost about the same as the status quo, but a permanent housing subsidy had the largest effect on housing stability and generated some health benefits. However, the study did not monetize the benefits.
• The Culhane report, which tracked the first two years of costs and savings of supportive housing to chronically homeless individuals in New York, found that 90 percent of the costs of the supportive housing, including operating, service and debt service costs, were covered by reductions in the use of other public services. This is likely a conservative estimate since healthcare utilization has sometimes found to spike in the initial years after being housed.
• A 2003 evaluation of the HUD-VA Supportive Housing (HUD-VASH) program found no significant differences in health among three different intervention groups, concluding that vouchers alone may be as effective as vouchers with case management through HUD-VASH.
• Research published in 1998 estimated the cost of hospital care for a mentally ill homeless person at $17,500 per year and the annual cost of supportive housing at $12,500.