How Ronald Reagan’s secret entitlement program will eventually end homelessness.

Which is the cheapest accommodation?

1. A one-room apartment.
2. A jail.
3. A hospital room.

Which is the cheapest labor?

1. A social worker.
2. A criminal-justice worker (police, lawyer, judge, etc.)
3. A healthcare professional (doctor, nurse, etc.)

For both questions, #1 is the cheapest and that is why giving housing to the homeless is three times cheaper than leaving them on the streets.  Nobody likes keeping homeless people on the streets, but there are only two ways to get rid of them.  You can give them housing in apartments or you can criminalize homelessness and lock them up in jail.  Giving them housing in ordinary regular apartments with social worker oversight is a lot cheaper than housing them in a jail with guards plus putting them through the court system where highly paid lawyers and judges pile on more fees.

Central Florida Commission on Homelessness study indicating that the region spends $31,000 a year per homeless person on “the salaries of law-enforcement officers to arrest and transport homeless individuals — largely for nonviolent offenses such as trespassing, public intoxication or sleeping in parks — as well as the cost of jail stays, emergency-room visits and hospitalization for medical and psychiatric issues.” By contrast, getting each homeless person a house and a caseworker to supervise their needs would cost about $10,000 per person.

It is easy to see why it is cheaper to get them an apartment than to put them in jail, but why is it so expensive to just let them live on the street?

Because when Ronald Reagan created a little-known program called EMTALA, he turned the economics of homelessness upside down. EMTALA guaranteed healthcare to all comers in any emergency room.  Without the EMTALA guarantee, hospitals could refuse to treat the homeless and they could die cheaply under a frozen bridge. Because of EMTALA, homeless people cost the medical system millions of dollars due to homelessness-related illness.  An emergency room is an extremely expensive place to provide healthcare.

Over the past two centuries, average longevity in the US almost doubled and improved housing was one of the main contributors to improved health. Clean running water (for drinking and handwashing), sewage treatment, heating, refrigerated food storage, and air conditioning have saved more lives than all our medical technologies combined. The homeless on the street forgo these mortal technologies and develop more illnesses as a result.  Clean tap water prevents many of humanity’s most lethal infections and without heating, a simple cold can turn into a life-threatening crisis.

Plus, without a regular address, it is expensive if not impossible for social workers and healthcare providers to provide education, treatments for drug abuse, and other services that prevent illness and help people become more productive and get jobs.

American policymakers are only just beginning to realize that we could save money by ending homelessness.  Malcolm Gladwell wrote an excellent story entitled Million Dollar Murray about a homeless man who Gladwell claims had the highest annual medical bills of anyone in the state of Nevada.  As Gladwell says, “living on the streets in a state of almost constant intoxication was a reliable way of getting sick.” Plus, Murray created huge criminal-justice-system costs. He sometimes got arrested multiple times on the same day.

Atul Gawande wrote a similar account about a man he called call Frank Hendricks who was the most expensive patient in Camden New Jersey.  What Hendricks really needed was cheap visits from a social worker, but instead America lavished him with repeated, all-expense-paid visits to emergency rooms.  These are both examples that show why Elizabeth Bradley argues that a little more social service spending could save money by reducing healthcare costs.

Because of EMTALA, America could save money be being more generous to homeless people. We have been penny wise and pound foolish, but a major impediment to saving money is the compartmentalization of our social services. Ending homelessness would save money that goes to our police, courts, prisons, and especially our private hospitals, but they don’t know how to run a homeless program.  Plus, our for-profit prison lobby is happy to have the business.  Meanwhile, the social workers who know how to help the homeless don’t get the funding to house the Million-Dollar Murrays partly because Americans are so cash strapped after paying for our hospitals, lawyers, and prisons, that we don’t want to pay taxes to support homeless people.  It is hard to convince voters that reducing homelessness is an investment that would save money in the long run if we did it right.