When housing the homeless turns out to be free for all


Left to right: Metraux, Culhane and Hadley

Photo by Tommy Leonardi

Dennis Culhane, associate professor of social welfare policy, knows social problems can be expensive to solve. That’s why many of them go unsolved.

But he recently found one social problem that costs the same to fix as to ignore.

The problem in question is homelessness among people with severe mental illness. And since the solution for such people entails not only finding them housing but providing mental health services as well, it’s not surprising that for years, most politicians believed it would be much cheaper just to do nothing.

The surprise is that doing nothing is actually very expensive, and that the long-term solution for mentally ill homeless people — housing them and providing medical care on an ongoing basis —

actually costs about the same as leaving them to use services such as shelters, public hospitals and Medicaid.

A paper to be published later this year in Housing Policy Debate tells the story in detail. Culhane, working with sociology doctoral student Steven Metraux and Center for Mental Health Policy Services Research Director Trevor Hadley, used databases to track 3,365 participants in the New York/New York (NY/NY) Initiative, a state-city partnership that since 1990 has placed mentally ill homeless people in subsidized supportive housing.

Culhane and Metraux used data from eight government agencies, from shelters and health agencies to departments of corrections, to add up how much each subject cost the government in services in the two years before and the two years after receiving NY/NY housing. The researchers also tracked a control group of mentally ill homeless people who were not part of NY/NY.

Culhane and Metraux found that people in the NY/NY group cost government about the same per year as the control group. The NY/NY housing cost an estimated $17,277 per person, but residents used an average of $16,282 less in services after moving into supportive housing, with the biggest drops in shelter use and jail time. “We feel confident in saying that NY/NY fully pays for itself, because we are using very conservative numbers,” said Culhane. “We couldn’t get information about non-Medicaid services by private hospitals, so those costs are not included.”

“And we’re not economists, so we couldn’t calculate the social cost of things like having to step over somebody sleeping on a grate,” added Metraux. Nor do the numbers incorporate the cost of crimes committed, but the study shows an impressive 85 percent drop in state incarceration once subjects obtained housing.

The study, which received money and research help from the Corporation for Supportive Housing, is attracting the interest of city governments nationwide. Culhane has received “dozens of calls” requesting copies of the study, with many more downloading the study from the Fannie Mae Foundation’s Web page. The Wall Street Journal, The New York Times, CNN and NPR have all featured the findings. And Culhane and Metraux hope to convince the Department of Health and Human Services, the federal agency which stands to save the most money from housing the mentally ill homeless, to help the much smaller Department of Housing and Urban Development pay for supportive housing.

Culhane said his findings probably came as a surprise even to the people who launched the NY/NY Initiative.

“There’s no evidence that they ever thought that it would be cost-effective,” he said. “They just thought it was the right thing to do.”

Originally published on May 17, 2001