How Governments have Caused Homelessness
More than 770,000 people in the US experienced homelessness in January of 2024. The causes for this epidemic have a history dating to the 1960s. It’s not just “bad choices,” laziness, or the availability of fentanyl. It’s the result of injurious government policies, along with economic forces that have driven rents out of range for those with modest incomes.
It started with the Community Mental Health Act of 1963, which aimed to replace
outdated state mental hospitals with underfunded community-based treatment centers. This resulted in discharge of 558,000 mentally ill persons, the equivalent to roughly 1.5 million today. In 2023 state psychiatric hospitals had only 36,500 patients, primarily persons with serious mental illness. Estimates vary, but recent data indicate that 20-67% of homeless individuals have a mental health disorder.
Whatever the rationale for the 1963 legislation, the result has been transfer of the mentally ill from institutions to the streets, with states unrealistically expected to fund a replacement. Reversing this trend is hampered by the Institutions for Mental Diseases (IMD) exclusion, a Medicaid policy prohibiting federal funding for services to individuals aged 21-64 in facilities with over 16 beds primarily treating mental diseases, including substance-use disorders.
The IMD exclusion was enacted in 1965 to ensure that states, not the federal government, retained primary responsibility for funding inpatient psychiatric services. Bills to repeal the IMD failed in the three recent Congressional sessions. Politically, alternatives to repeal expanded state access entail a huge federal cost increase.
https://www.postalley.org/2026/01/17/how-governments-have-caused-homelessness/?mc_cid=1327ac5b43&mc_eid=a0c4847065