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Free housing for the homeless costs taxpayers less?

Added on Monday, May 7, 2012

Does giving a homeless person a free place to live actually cost taxpayers less than doing nothing?

Surprisingly, yes. Study after study shows that leaving people homeless is more expensive to the government than flat-out giving them a permanent home.

Specifically, we’re talking about permanent supportive housing – free or subsidized long-term housing accompanied with on-site case management. The Salvation Army has been a major player in this frontier for years, offering hundreds of living units across Minnesota. The units are overseen by caseworkers who give residents one-on-one support and referrals for life skills education, rehabilitation, medical treatment, employment opportunities and more.

Some opponents say this type of housing is too expensive and the homeless do not deserve a “free” home. But research shows convincing evidence that permanent supportive housing is smart, necessary and surprisingly cost-effective.

Before an explanation for that fact is given, one must first understand who homeless people are. Most studies agree that the main problem with homelessness lies within 5 to 10 percent of the homeless population. These are the “chronically homeless” – those 18 years and older who have been homeless for more than one year. These people typically cannot help themselves because of chronic substance abuse or psychological problems.

“The vast majority of the homeless population ceases to be homeless after a relatively brief period of time,” according to Oxford Analytica, a research company that analyzes social developments for businesses and the government. The rest of the population – the chronically homeless – accounts for “the vast majority of shelter space and (the) bulk of health costs.”

And those costs add up. They come in the form of temporary shelter, hospitalization, incarceration and police intervention, most of which are funded by you, the taxpayer. Medical treatment is the most expensive; a week in the hospital can easily top $50,000. Incarceration isn’t cheap, either, with the average cost of a prison bed at about $20,000 per year.

“A housing-based approach to homelessness is not only more cost-effective than a shelter-based approach, but more effective in the long-term,” affirms the National Alliance to End Homelessness (NAEH), a leading advocate for permanent supportive housing. “Homelessness both causes and results from serious health care issues…that require long-term, consistent care. Homelessness inhibits this care, as housing instability often detracts from regular medical attention, access to treatment and recuperation.”

The NAEH cited a study that determined placing four chronically homeless people into permanent supportive housing saved the city of Los Angeles, Calif., more than $80,000 per year.

In the big picture, Oxford Analytica says that chronically homeless people in the U.S. cost the public nearly $11 billion a year. If they were permanently housed, the expense would fall below $7.9 billion.

Pictured is H.O.P.E. Harbor, The Salvation Army’s five-story, 96-unit permanent supportive housing facility in downtown Minneapolis.