Pilot project: Housing homeless people cuts state’s health care burden

In Summary

A California pilot program aims to provides housing for vulnerable homeless people and saves taxpayer money. A RAND analysis found that for every dollar Los Angeles County invested in the program, saved $1.20 in reduced health care and social service costs.

The reality of California’s homeless crisis is that there is little social safety net to catch the very poorest residents before they fall to the streets.

As more than 100,000 people find homes on California’s sidewalks, roadways and parks, the costs mount for local and state governments. 

Nowhere is this more acute than the state’s public health care system. Medi-Cal covers many homeless people’s escalating health needs as they become sicker while living outside.

The state Department of Health Care Services wants to interrupt the cycle between the street, the hospital, and back again by trying to house the most vulnerable and reduce their health care costs.

The project began in 2016, and is known as “Whole Person Care.” The pilot project is intended to model how Medi-Cal could take a more active role in addressing the state’s homeless crisis. For now, more than two-dozen county level health agency administrators are given state funding with the mandate of providing housing for the so-called high-utilizers who wind up drawing a disproportionately high amount of public services. 

“For any health plan in the United States, the idea of providing housing as part of a health care solution is … You know, 20 years ago, nobody was talking about that,” said John Baackes, the CEO of L.A. Care, which manages Medi-Cal in Los Angeles County. 

Baackes oversees a health agency that insures more than one-fifth of L.A. County’s 10 million residents. That includes tens of thousands of people who are homeless or close to losing their home. His agency also contributed $20 million dollars to the Los Angeles vanguard of Whole Person Care, a program called Housing for Health

“There’s a lesson to be learned that if we invest in social services and safety net services for people who are living and working in poverty, we are going to have less demand on the health care system for those people,” said Baackes. 


A Pomona apartment building that leases units through Housing for Health Photo by Matt Tinoco/KPCC

A RAND Corporation analysis of Housing for Health in 2017 found that for every dollar Los Angeles County invested in the program, it wound up saving $1.20 in reduced health care and social service costs in other county departments. 

“When someone is really vulnerable living out on the street, they are costing a lot of money by visits to the ER, ambulance rides, police intervention,” said Libby Boyce, Housing for Health’s program director. “Obviously it does cost us dollars to provide the services to help them become stable. But there are a lot of people who use a lot of services, and for those, it is cheaper to house them. And it’s the right thing to do.”

Housing for Health provides permanent housing assistance — typically by rental subsidy —  for about 11,000 people, according to Boyce. The program also manages about 2,300 shelter beds and about another 1,000 beds in residential care facilities.

Caseworkers help people accepted into the program find health practitioners in the area they move to who accept public health insurance. They also help the formerly homeless sign up for other public benefits programs they weren’t able to access while they were homeless because they just didn’t have a mailing address.

“I knew I had no money, nowhere to go…”

Ebony Palmer is one of those roughly 11,000 people receiving a rental subsidy through Housing for Health. Only 25, she spent the last several years bouncing around from hotel rooms, to her friends’ floors, until she wound up living in her car with her son. 

Palmer grew up in the California foster system and was adopted by a South Los Angeles family. She fell into prostitution as a teen, which became her main mode of survival. It proved a challenging world to escape.  

“Everytime I tried to stop, someone would call me,” she said. “I knew I had no money, nowhere to go, no food. And, of course, this person’s calling; and, of course, they can help; so, of course, I answer.”

She said she was living in her car when she became pregnant with a second child. It was at this point she looked for help from L.A. County’s homeless service system.

“My mental health was deteriorating. Because of the life I lived, I’m always paranoid, and I’m always anxious,” said Palmer. 

With her history of homelessness and foster care, her criminal record, and the fact that she had one child and another on the way, Palmer had all the markers of what homeless service practitioners would call “high vulnerability.” 

Helping her with stable housing meant not only saving on her potential medical bills if she were to fall into chronic homelessness, but also keeping her young children with their mother and out of county custody.

Within four months of her assessment, a very pregnant Palmer and her then 6-year-old son moved into a two-bedroom apartment in Pomona. Her unit has air-conditioning, running water, and a door she can lock and feel safe behind. The unit rents for about $1,500 month, but she says she pays about $200 — roughly 30% of her current income. The rest is covered by Housing for Health. 

Palmer’s son attends elementary school nearby, and she spends most of her days taking care of her baby. Palmer says she can concentrate on her baby, who is about to turn one, instead of worrying how to pay the rent. 

“Because now I have a budget, and I’ve been saving, and I’ve been planning. So now I’m able to do that. Give her a first birthday party. And I’m really proud of myself,” she said. 

The challenge, as always with homeless services in California, is that the need for assistance far outstrips how much there is to offer. 

“We have, obviously, some tools in our toolbox, but we also need significantly more resources than we currently have to serve every person out there,” said Boyce.

Subsidizing poor people’s rent may keep those lucky enough to get the benefit from falling into chronic homelessness and cycling through the justice and emergency medical systems. But it’s hardly a comprehensive solution to a crisis of inequality that has resulted in millions of Californians surrendering more than half of their income just to keep a roof over their head. 

“We’ve already got more people walking around with vouchers, but there’s no supply to be to for them to go,” said Baackes, the L.A. Care CEO. “So I think the next iteration for us is to think about, well, what can we do about increasing the supply?”

As long as housing costs increase faster than incomes, the system will be left playing catch-up. 

The California Dream series is a statewide media collaboration of CalMatters, KPBS, KPCC, KQED and Capital Public Radio with support from the Corporation for Public Broadcasting and the James Irvine Foundation.

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