Does Housing First literally save money?

La version française de ce billet se trouve ici.

It’s often claimed that Housing First saves taxpayer dollars. This claim is often presented as a win-win proposition—after all, if spending one dollar on something saves you more than one dollar down the road, then why not fund more of it? In reality, it’s not quite that simple.

Here are 10 things to know.

1. Housing First refers to the provision of deeply subsidized permanent housing, combined with social work support,[1] to a person who has experienced long-term homelessness. Importantly, a prospective tenant does not have to prove they are ‘housing ready’ in order to receive Housing First. The term gets used differently by different people (indeed, there’s been some cooptation of the term). Sam Tsemberis is considered the founder of Housing First, and his recent book is a useful reference guide.[2]

2. Advocates, practitioners and researchers often claim that Housing First ‘pays for itself.’ The logic goes as follows: once a person starts to receive Housing First, they will typically have less need for other services (e.g., emergency shelters, Emergency Departments, ambulance services, etc.); they’ll also get arrested less.

3. Housing First is indeed associated with reduced use of health, justice, and social services. One good article on the topic is here, and other here. Both of those studies found not only association, but also causation (admittedly, randomized controlled studies show more modest cost offsets than pre-post studies).

4. Unfortunately, it isn’t easy to convert that reduced service use into true cost savings. One reason for this is fixed costs. Another is scale.

5. Health, justice, and various social services are often fixed (though this does depend on the country). A hospital will have a certain number of doctors, nurses and social workers on staff on a given day. A police precinct will have a certain number of officers working a given shift. An emergency shelter will have a certain number of staff on shift. These remain relatively stable over time.

6. In most cities, fewer than 0.001% of the general population would receive Housing First in a given year. Recall that Housing First is typically targeted to persons who’ve experienced long-term homelessness; so the scale isn’t there to make a serious dent in the expenditures of a local health or justice system (even though the intervention can make a major difference in the life of a person receiving Housing First!).

7. The distinction between theoretical cost savings and true cost savings may be particularly important to central agencies. Staff working at such agencies, which I’ve previously written about here, provide important advice to cabinet. Exaggerated claims about a program may not be well-received. Worse, such claims may become a target for a sharply written briefing note—indeed, a paper tiger claim can become a convenient target for an overzealous public servant providing analysis.

8. All that said, Housing First does free up resources for other people to use. When a program such as Housing First prevents a night in an emergency shelter, a hospitalization, or an Emergency Room visit, that resource is now available for other people to use. Thus, for example, even if a health authority’s expenditures don’t change in the short term, reductions in service use add value to the local health system, including by reducing wait times for other patients.

9. Cost savings should never be the main driver of good social policy. It’s convenient to point out long-term savings associated with various types of social policy (e.g., early childhood education, vaccinations, cancer prevention initiatives, etc.). But essential services (e.g., heart surgery, long-term care for seniors) should not have to demonstrate future cost savings in order to be provided by our public system (even if future cost savings should be a consideration).

10. Rather than say Housing First saves money, it’s probably better to say it leads to a more efficient allocation of public resources. This is a safer statement to make—one that is significantly more defensible under scrutiny.

In sum. Housing First is an important innovation, and government should absolutely scale it up. That’s because when it comes to housing policy, the value of a human life and dignity should be the primary metric, with budget savings being of secondary importance. But when we talk about Housing First, it’s better to play the long game than the short game. Developing a nuanced, honest pitch about Housing First can help build trust with a wide range of stakeholders.

I wish to thank Dan Dutton, Jim Hughes, Ron Kneebone, Eric Latimer, Jedd Matechuk, Jenny Morrow, Annick Torfs, and one anonymous source for assistance with this blog post.

[1] I’m using the term ‘social work support’ very broadly here. For a nuanced overview of the types of professional supports actually offered with a Housing First intervention, see the Sam Tsemberis book referenced at the end of this paragraph.

[2] There are a great many positive outcomes associated with Housing First; many are discussed here.