Housing First Impact on Costs and Associated Cost Offsets: A Review of the Literature

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Housing First (HF) programs for people who are chronically or episodically homeless, combining rapid access to permanent housing with community-based, integrated treatment, rehabilitation and support services, are rapidly expanding in North America and Europe. Overall costs of services use by homeless people can be considerable, suggesting the potential for significant cost offsets with HF programs. Our purpose was to provide an updated literature review, from 2007 to the present, focusing specifically on the cost offsets of HF programs.

Twelve published studies (4 randomized studies and 8 quasi-experimental) and 22 unpublished studies were retained. Shelter and emergency department costs decreased with HF, while impacts on hospitalization and justice costs are more ambiguous. Studies using a pre–post design reported a net decrease in overall costs with HF. In contrast, experimental studies reported a net increase in overall costs with HF.

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HF programs offer an alternative to traditional continuum of care models, in which a select few people graduate through a series of steps to eventually integrate permanent housing. Many variants of HF programs exist, with the most basic distinction being between whether they provide supported housing (scattered-site or congregate, independent housing with external supports, such as from an ACT team), or supportive housing (congregate housing with on-site supports). Studies have shown that HF programs significantly increase the time that people are stably housed. A description of the Pathways HF supported housing model, which has been most widely implemented and evaluated, is found in the companion In Review article.

Cost-of-homelessness reports have indicated that the service use of homeless people is significant. Service providers have observed that while chronically homeless people represent only 20% of shelter users, they consume the largest share of health, social, and justice services. Malcom Gladwell’s “Million-Dollar Murray” eloquently illustrates how a combination of homelessness, mental illness, and substance abuse can lead to repeated and costly interactions with multiple service systems. Available estimates of the economic costs that homeless people in Canada generate vary widely. In one study, combining administrative data from several systems for about 5000 homeless people with SMI in New York City, average annual service use costs were US$40,500 per person. Thus the overall costs of services can be considerable, suggesting the potential for significant cost offsets, at least among the highest-cost users.

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