It is mind-boggling how backwards American policies are. As we chronicled, some hospitals and insurer are waking up to the fact that giving housing to the chronically ill homeless is cheaper than having them make heavy use of emergency rooms, who if they take Federal funds, are require to accept all comers.
Mind you, this is hardly a new observation. Malcolm Gladwell outlined the problem in a 2006 New Yorker article, Million Dollar Murray:
[Reno bicycle cop Patrick] O’Bryan and [his partner Steve] Johns called someone they knew at an ambulance service and then contacted the local hospitals. “We came up with three names that were some of our chronic inebriates in the downtown area, that got arrested the most often,” O’Bryan said. “We tracked those three individuals through justone of our two hospitals. One of the guys had been in jail previously, so he’d only been on the streets for six months. In those six months, he had accumulated a bill of a hundred thousand dollars—and that’s at the smaller of the two hospitals near downtown Reno. It’s pretty reasonable to assume that the other hospital had an even larger bill. Another individual came from Portland and had been in Reno for three months. In those three months, he had accumulated a bill for sixty-five thousand dollars. The third individual actually had some periods of being sober, and had accumulated a bill of fifty thousand.” The first of those people was Murray Barr, and Johns and O’Bryan realized that if you totted up all his hospital bills for the ten years that he had been on the streets—as well as substance-abuse-treatment costs, doctors’ fees, and other expenses—Murray Barr probably ran up a medical bill as large as anyone in the state of Nevada.
“It cost us one million dollars not to do something about Murray,” O’Bryan said….
In the nineteen-eighties, when homelessness first surfaced as a national issue, the assumption was that the problem fit a normal distribution: that the vast majority of the homeless were in the same state of semi-permanent distress. It was an assumption that bred despair: if there were so many homeless, with so many problems, what could be done to help them? Then, fifteen years ago, a young Boston College graduate student named Dennis Culhane lived in a shelter in Philadelphia for seven weeks as part of the research for his dissertation. A few months later he went back, and was surprised to discover that he couldn’t find any of the people he had recently spent so much time with. “It made me realize that most of these people were getting on with their own lives,” he said. Culhane then put together a database—the first of its kind—to track who was coming in and out of the shelter system. What he discovered profoundly changed the way homelessness is understood. Homelessness doesn’t have a normal distribution, it turned out. It has a power-law distribution. “We found that eighty per cent of the homeless were in and out really quickly,” he said. “In Philadelphia, the most common length of time that someone is homeless is one day. And the second most common length is two days. And they never come back. Anyone who ever has to stay in a shelter involuntarily knows that all you think about is how to make sure you never come back.”
The next ten per cent were what Culhane calls episodic users. They would come for three weeks at a time, and return periodically, particularly in the winter. They were quite young, and they were often heavy drug users. It was the last ten per cent—the group at the farthest edge of the curve—that interested Culhane the most. They were the chronically homeless, who lived in the shelters, sometimes for years at a time. They were older. Many were mentally ill or physically disabled, and when we think about homelessness as a social problem—the people sleeping on the sidewalk, aggressively panhandling, lying drunk in doorways, huddled on subway grates and under bridges—it’s this group that we have in mind. In the early nineteen-nineties, Culhane’s database suggested that New York City had a quarter of a million people who were homeless at some point in the previous half decade —which was a surprisingly high number. But only about twenty-five hundred were chronically homeless.
It turns out, furthermore, that this group costs the health-care and social-services systems far more thananyone had ever anticipated. Culhane estimates that in New York at least sixty-two milliondollars was being spent annually to shelter just those twenty-five hundred hard-core homeless. “It costs twenty-four thousand dollars a year for one of these shelter beds,” Culhane said. “We’re talking about a cot eighteen inches away from the next cot.”
Gladwell then proceeds to describe programs underway in places like Denver, to get the chronically homeless off the street, to stabilize them. Even with giving them housing and caseworkers, the cost was one-third of having them on the street. Some might be able to work, which would further lower program costs.
My impression is these municipality-based programs never got very far, despite the obvious economic benefits, and Gladwell anticipated why:
That is what is so perplexing about power-law homeless policy. From an economic perspective the approach makes perfect sense. But from a moral perspective it doesn’t seem fair. Thousands of peoplein the Denver area no doubt live day to day, work two or three jobs, and are eminently deserving of ahelping hand—and no one offers them the key to a new apartment. Yet that’s just what the guy screaming obscenities and swigging Dr. Tich gets. When the welfare mom’s time on public assistance runs out, we cut her off. Yet when the homeless man trashes his apartment we give him another. Social benefits are supposed to have some kind of moral justification. We give them to widows and disabled veterans and poor mothers with small children. Giving the homeless guy passed out on the sidewalk an apartment has a different rationale. It’s simply about efficiency.
And there’s an additional layer of arbitrariness: who gets helped. There are far more people eligible for programs like these than the Denvers of the world were prepared to support.
So fast forward to the latest incarnation of housing the homeless to reduce medical costs. Instead of being driven by cities, health providers are launching some programs. For the most part, they are far more explicit that the goal is to save money and they accordingly expect the time they will house someone to be shorter. For instance, we reposted a Kaiser Health News story on how Denver Health was building “transition housing” for patients it could not legally discharge because “they have no safe place to go.” Denver Health is building a small number of units for them. Here’s the math:
It costs Denver Health $2,700 a night to keep someone in the hospital. Patients who are prime candidates for the transitional units stay on average 73 days, for a total cost to the hospital of nearly $200,000. The hospital estimates it would cost a fraction of that, about $10,000, to house a patient for a year instead.
Bloomberg tonight has an in-depth treatment of insurer UnitedHealth’s housing experiments. UnitedHealth gets nearly 20% of its revenue from acting as an outsourced Medicaid provided, at rates of $500 to $1000 per head, covering 6 million participants. But the most expensive ones, like Murray, are the ones on the street.
UnitedHealth wooed Jeffrey Brenner, a doctor who has spent most of his career working with the poor, and a recent recipient of a MacArthur fellowship for his efforts. From Bloomberg:
[In Phoenix] Brenner is using UnitedHealth’s money to pay for housing and support services for roughly 60 formerly homeless recipients of Medicaid, the safety-net insurance program for low-income people….
Brenner shows me data on a patient named Steve, a 54-year-old with multiple sclerosis, cerebral palsy, heart disease, and diabetes. He was homeless before UnitedHealth got him into an apartment. In the 12 months prior to moving in, Steve went to the ER 81 times, spent 17 days hospitalized, and had medical costs, on average, of $12,945 per month. In the nine months since he got a roof over his head and health coaching from Brenner’s team, Steve’s average monthly medical expenses have dropped more than 80%, to $2,073.
After testing the idea in Phoenix, Milwaukee, and Las Vegas, UnitedHealth is expanding Brenner’s housing program, called MyConnections, to 30 markets by early 2020…
Brenner aims to reduce expenses not by denying care, but by spending more on social interventions, starting with housing. How to do it is still largely uncharted. “I don’t think we’ve figured any of this out,” he says. “We’re at a hopeful moment of recognizing how deep the problem is.” A trip to any big-city ER reveals the magnitude of the challenge.
I strongly urge you to read this article in full. It contains a lot of insightful detail about how emergency rooms deal with the homeless and chronically ill, and how the housing/social service programs operate. And it keeps returning to the grim point that it pays in economic terms only to help the most messed up:
On average about 60 members are enrolled in the Phoenix sites at any given time. Once a week, Brenner and his team get on the phone to evaluate potential candidates—anywhere from 2 to 14 people whose names have surfaced in UnitedHealth’s data. They want patients who are homeless and whose medical spending exceeds $50,000 annually, with most of that coming from ER visits and inpatient stays. People living on the streets with less extreme medical costs may need a home just as much, but it doesn’t pay for UnitedHealth to give them one.
This is yet another indicator of social breakdown, that the intermediate formal and informal social safety nets have broken down to such a degree that the many people who need less help and are better candidates for getting their lives back on track won’t also get the assistance they need.