Existing research demonstrates that mean health care costs incurred by those experiencing homelessness are high. However, high mean health care costs mask the fact that a sizeable number of people experiencing homelessness incur low costs and that very high costs are driven by a minority of the homeless population. This paper examines health care costs estimated from two Australian surveys of those experiencing homelessness undertaken by the authors. It demonstrates three important findings.

First, higher health care costs are most strongly associated with diagnosed mental health disorders, followed by long-term physical health conditions.

Second, having a current drug or alcohol dependency, but no diagnosed mental health disorder or long-term physical health issue, is not associated with higher level health care costs.

Finally, higher health care costs are incurred by those with long periods of rough sleeping. The findings of this research provide a significant economic argument for government intervention to break the cycle of homelessness as they reveal significant potential savings to effective interventions for homeless people with diagnosed mental health disorders and long-term rough sleeping.