NCPA - National Center for Policy Analysis

Economics Of Housing The Mentally Ill

May 2, 2001

A new study reveals that housing the homeless and mentally ill costs only slightly more than leaving them to fend for themselves on the streets. The study, conducted at the University of Pennsylvania Health System and financed by the Fannie Mae Foundation, looked at 10,000 mentally ill homeless people in New York.

They were divided into two groups. Half were placed in government-funded housing with mental-health assistance. The other half were left on their own.

  • The half that were housed cost about $41,494 a year, while the un-housed ran up bills averaging $40,500 for their use of public services -- such as emergency rooms, psychiatric hospitals, shelters and prisons.
  • The study's lead author, the university's Dennis P. Cullhane, called his housing-cost estimates conservative because they did not include the savings that come from fewer burdens on police and court systems, nor the economic impact of homelessness on local businesses and tourism.
  • Nationwide, an estimated 110,000 chronically homeless people have mental illnesses.
  • The researchers determined that each year the average homeless person with severe mental illness spends 4.5 months in a shelter, two months in state psychiatric hospitals, seven weeks in various hospitals and nearly three weeks in jail or prison.

"A considerable amount of public dollars are spent essentially maintaining people in a state of homelessness," Cullhane says.

Source: Barbara Martinez, "Housing Homeless Who Are Mentally Ill Cuts Their Emergency Costs, Study Says," Wall Street Journal, May 2, 2001; Dennis P. Culhane, Stephen Metraux, and Trevor Hadley, "The Impact of Supportive Housing for Homeless People with Severe Mental Illness on the Utilization of the Public Health, Corrections, and Emergency Shelter Systems: The New York-New York Initiative," Center for Mental Health Policy and Services Research, University of Pennsylvania, May 2001, forthcoming in Housing Policy Debate, Fannie Mae Foundation.

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