Research consistently demonstrates a strong link between homelessness and poor health outcomes. Despite this evidence, interventions designed to address homelessness, like the Canada-Ontario Housing Benefit or highly supportive housing, frequently encounter resistance because of their cost. Canada and its provinces and territories operate with limited public resources, so cost considerations are important. However, these discussions typically overlook the substantial costs of inaction (which are usually ignored or assumed to be negligible).
To assess this assumption in the context of healthcare, we recently published a study in BMC Health Services Research measuring the healthcare costs associated with homelessness in Toronto. We linked the data of a large, representative cohort of people experiencing homelessness in 2021 and 2022 to health administrative databases held at ICES. We then compared these to the healthcare costs of housed and low-income housed individuals matched to the unhoused group by age and sex.
What did we learn?
- High healthcare cost disparities: Individuals experiencing homelessness incurred an average of $12,209 in public healthcare costs, compared to $1,769 for housed individuals and $1,912 for low-income housed individuals. This includes costs for acute care and psychiatric hospital admissions, emergency department visits, outpatient care by physicians and publicly covered prescriptions.
- Hospitalizations don’t tell the whole story: Fewer than 15% of the unhoused group had any hospitalization-related costs. A recent CIHI report highlighted the disparity in hospitalization costs of people experiencing homelessness. While our results agree that disparities in hospitalizations are important, the majority of healthcare costs for most people experiencing homelessness actually occur outside this space, and account for the largest portion of overall healthcare cost disparities.
- Disparities aren’t just about comorbidities, mental health or substance use: Even after adjusting for comorbidities and the presence of mental health or substance use issues—significant drivers of healthcare costs—the costs for unhoused individuals remained ~6 times higher than the housed group. The belief that healthcare costs associated with homelessness is merely the result of mental health or substance use disorders is simply untrue. While these co-occurring issues are significant in this population, they don’t explain away most of the stark cost disparities we observed.
- Increasing cost disparities over time: Mean healthcare costs for people experiencing homelessness increased by nearly 100% since the early 2010s, far outpacing inflation (approximately 24%) and increases in Ontario’s per capita healthcare spending (around 42%).
What does this mean?
In 2022, Toronto’s shelter system served over 20,000 individuals, about half of whom were considered chronically homeless. Using this to estimate (quite conservatively) that the year-round population experiencing homelessness in Toronto is about 10,000 people, our data suggests homelessness in Toronto could be causing excess healthcare costs -adjusted for comorbidities and mental health/substance use issues- of between $69.8 million and $99.7 million annually.
It’s crucial to note that this estimate only accounts for excess costs incurred during active homelessness, though. Research suggests that while overall healthcare costs decrease after homelessness ends, they don’t necessarily return to pre-homelessness levels. Individuals, especially those with a history of chronic homelessness, often require ongoing healthcare for physical and mental health issues resulting from their time without stable housing.
So, to capture the full financial “costs of inaction” on homelessness, we would need to combine the current study’s estimate of excess healthcare costs with excess costs among those with a history of homelessness. Then we would need to expand this Toronto-based estimate to Ontario (or better yet, Canada). Finally, we would have to add in similar excess costs from other highly affected sectors—like police, justice, social services, and direct service providers like emergency shelters and drop-in centers.
When everything is accounted for, the cumulative excess financial costs of “business as usual” are likely staggering. It is this total that should be the benchmark against which we measure the cost of investments needed for effective intervention.
The bottom line
Even if financial considerations were a valid reason to tolerate homelessness in Canada (they are not), the cost of inaction –especially over time- has proven to be very high. It may exceed the costs of investing in increasing affordable housing stock and other solutions. Addressing homelessness is not just a moral imperative; it is a financially sound decision that benefits individuals and society.