I. Historical Context

On our streets and within our cities, a person’s chance of becoming homeless has increased dramatically even just in the past couple of years. Rising housing costs and widening economic inequality of our nation’s current landscape has negatively impacted job stability, and job instability negatively affects a person’s housing retention. According to the National Alliance to End Homelessness, homeless counts are at a record high: “The United States experienced an unprecedented rise in homelessness, driven by the nation’s affordability crisis. Homelessness increased 18 percent, from 653,104 people during the 2023 Point-in-Time (PIT) Count to 771,480 people during the 2024 PIT.” The Cicero Institute’s 2026 estimates show that over 40% of unsheltered people battle substance abuse disorders, a rate nearly 10 times higher than the general population. The institute also found that over 20% of adults experiencing homelessness have a serious mental illness like schizophrenia or bipolar disorder. When combined with substance use disorders, the behavioral health issues affect approximately two-thirds of the unsheltered population. To combat these rising rates, the U.S. Department of Health and Human Services’ recently announced more than $700 million in funding to address mental illness conditions, substance use disorders, and homelessness. To evaluate the advantages and disadvantages of this new funding, we must investigate the historical context of housing, addiction, and mental health policy as a whole.

A. Early History

The federal government’s involvement in housing policy began in the 1930s as a direct response to the Great Depression. As the economy collapsed, expansive job losses led to an epidemic of bank foreclosures and mortgage defaults that ultimately brought the housing market to a standstill. Because of this, the federal government stepped in to insure long-term mortgages and stabilize the banking sector. According to the National Low Income Housing Coalition, President Franklin D. Roosevelt’s administration created the Federal Housing Administration (FHA) via the National Housing Act of 1934, creating public housing to clear dilapidated urban “slums” and provide safe, affordable housing for working-class citizens in need. As contextualized, federal housing policy has, in the past, focused primarily on expanding housing infrastructure and stabilizing the economy. 

B. Recent History

In addition to early history, we must also peer into relatively recent policy initiatives in order to understand modern influences on federal housing policy, and how they contextualize the HHS’ newfound initiative. Federal policy has been heavily dominated by a “Housing First” approach, defined by the HEARTH Act of 2009. This model provided housing assistance without preconditions, meaning people were not required to achieve sobriety, participate in addiction treatment, or seek employment to receive and maintain permanent housing. This prioritized placing homeless people into permanent supportive housing as quickly as possible, believing that stable shelter was the necessary foundation to begin to address underlying mental health or substance use disorders. According to the Cicero Institute in 2026, approximately 90% of federal homelessness funding, specifically through the Department of Housing and Urban Development’s (HUD) Continuum of Care grants, was allocated for the renewal of this type of permanent low-barrier housing programs. Examined by Shelterforce’s reporting on affordable housing in 2026, this approach supported harm-reduction policies aimed at preventing deaths caused by overdose and the transmission of diseases rather than mandating immediate abstinence from substances, or even institutionalization. Previous funding, such as the aforementioned program, initially excluded faith-based organizations from certain grants due to a commitment to prioritizing long-term housing and voluntary, science-backed treatments, an approach that conflicts with the abstinence and spirituality-focused transitional health programs spearheaded by many faith-based recovery centers, chronicled by the New York Times in 2026. This funding could signal a historical shift away from Housing First into approaching severe mental illness and addiction as root causes, rather than side effects, of the homelessness crisis in the United States; this includes by removing the secular barriers to allow faith-based organizations to benefit from grants.

C. The “Great American Recovery Initiative”

One major component of this funding is The Great American Recovery Initiative, a mechanism through which funding will be distributed. Originating on January 29th, 2026, President Donald Trump signed an executive order establishing it as a coordinated federal effort to combat substance use disorder and addiction in the U.S. It was created to align previously isolated federal programs, housing, and labor systems into a singular, collective response. As listed by Becker’s Behavioral Health in 2026, the program has five central goals: to establish a federal task force co-led by HHS, to coordinate addiction response across federal agencies, to set national goals and track progress, to drive awareness and expand treatment access, and to engage local and private sector partners. This was created in response to escalating substance use, addressed but not fully expanded earlier in this brief. Historically, federal policies often treated addiction through a strictly criminal or punitive lens; a “tough-on-crime” era ranging from the early 1900s through the peak of the War on Drugs in the 1980s and 1990s treated substance use as an offense to be punished rather than a chronic health condition to be treated. An example of this era includes policies such as the Anti-Drug Abuse Act, further entrenching harsh penalties disproportionately impacting marginalized communities. Because this program potentially prioritizes targeting the marginalization itself, it could represent a policy shift to parallel addiction treatment with other chronic medical conditions, an initiative that is relatively unprecedented given historical context.

This historical evolution emphasizes just how changed the horizon of housing, substance abuse, and mental healthcare could be with new funding shifts and policy purposes. In addition, it highlights broader questions regarding the proper approach to root solvencies of prevalent public health issues rather than solely prioritizing harm reduction.

II. Current Policy Changes/Effects

The Safety Through Recovery, Engagement, and Evidence-based Treatment and Supports (STREETS) program is a $96 million initiative managed by the Substance Abuse and Mental Health Services Administration (SAMHSA) within a broader $708.7 million federal behavioral health package. STREETS is designed as a high-intensity pilot program, which prioritizes assistance for local communities through creating an effective street-based involvement that is quick and coordinated; in particular, for unhoused individuals who face mental illness challenges, substance use disorders, or co-occurring conditions. The program explicitly prohibits the use of "Housing First" models, which provide permanent housing without requiring treatment as a precondition. Furthermore, it strictly bans funding for controversial harm-reduction services, including safe injection sites and needle exchanges, as it prioritizes treatment-first approaches instead.

The massive $708.7 million package is distributed across multiple behavioral health priorities in order to effectively address both localized crises and broader infrastructure. To begin with, the largest allocated portion is $238.6 million in funds, which will directly assist and strengthen the 988 Suicide & Crisis Lifeline's local call and chat capacities. Then another portion, $223.1 million, is apportioned to expand the footprint of Certified Community Behavioral Health Clinics (CCBHCs) in underserved areas. The remaining funds are spread between the $96 million STREETS program, an $80 million allocation for substance use prevention and drug courts, and over $70 million, which goes directly toward mental health services, childhood trauma, as well as mobile crisis teams. While the $612.7 million in funding primarily supports existing healthcare systems nationwide, STREETS is more closely aligned with local communities by coordinating healthcare providers, courts, and law enforcement to deliver services collaboratively. 

Operating over a four-year period, the STREETS program provides funding to selected communities. Each of the eight pilot communities will receive up to $3 million annually, totaling $12 million per site over four years. These communities will be selected by SAMHSA through a competitive application process. During the selection process, SAMHSA will evaluate cities, counties, and Tribal organizations based on their readiness to coordinate services across healthcare, courts, and law enforcement. To maintain their funding, participating communities must demonstrate measurable progress in recovery, self-sufficiency, public safety integration, and long-term sobriety. Furthermore, federal metrics prioritize participants' progress toward recovery rather than simply whether they remain housed while continuing to struggle with addiction.

The Great American Recovery Initiative reflects this structure by fundamentally shifting its focus to the intersection of homelessness and healthcare. Rather than emphasizing housing supply, the initiative frames homelessness as being closely linked to severe mental illness and substance addiction, identifying these as primary drivers of the street crisis. Local law enforcement and specialized courts play central roles within this framework by serving as diversion agents, directing individuals into mandated treatment programs instead of traditional jail sentences. Additionally, faith-based organizations are positioned as key community partners. Because many faith-based recovery programs require complete sobriety, they were previously excluded from certain federal grants that supported harm-reduction approaches. Under this new initiative, they are once again eligible to receive federal funding to provide abstinence-based recovery services.

III. Stakeholders and Early Responses

The announcement of the $700 million package, driven by an executive order passed on July 4th 2025, has fueled a widespread uncertainty among those working in the health and substance abuse sector along with leadership from at the local and national levels. Supporter organizations, primarily consisting of the Republican party, conservative leaning groups, and organizations like Citygate Network that to homelessness, heavily favor the initiative because it aligns strongly with their priorities. Faith based networks view the program’s explicit inclusion of religious providers as an opportunity to expand their services utilizing federal funding. Moving past the program’s backing, a multitude of organizations and their leaders have expressed significant uncertainty over whether these methods will successfully address underlying issues. Opponents, such as the National Coalition for the Homeless (NCH), strongly criticize the initiative for treating homelessness as a  “problem of personal behavior” and undermining the effectiveness of harm-reduction focused treatment, a foundational, widely accepted approach to treatment, with HHS Secretary RFK Jr. claiming it “doesn’t work,” rather than addressing structural root causes like “the lack of affordable housing, wage stagnation and racial inequities”. As NCH Executive Director Donald Whitehead noted in December, “Most people experiencing homelessness are not dealing with severe mental illness or addiction,” but are instead “workers, parents, seniors, youth, and people priced out by an economy that no longer matches wages to housing costs”. Despite this deep polarization over the most effective path to tackling this homelessness crisis, bipartisan agreement exists regarding the necessity of funding infrastructure and vital programs addressing mental health, substance abuse, and homelessness in the country.

The financial stakes of this initiative are high, requiring the Attorney General alongside the Secretaries of HHS, HUD, and Transportation to distribute and appropriate funds appropriately based on community needs. Major financial stakeholders include local and larger faith-based groups gaining grant access. Additionally, organizations that utilize harm-reduction in treatment plans also have a notable stake in the program’s overall shift in treatment priorities. Because the administration has directed SAMHSA to ensure grants are barred from programs employing harm reduction and housing-first responses, such as safe injection sites or needle exchange programs, essentially have a stake in the pilot failing. Meanwhile, other officials have raised concerns regarding implementation of the program. The director of justice policy and initiatives at the National Alliance on Mental Illness, Shannon Scully, highlighted that the numbers simply “just doesn’t add up”, emphasizing that deep federal cuts to broader substance abuse and mental health funding, leaving communities without the actual beds or resources necessary to tackle homelessness. These implementation worries are further exacerbated by erratic federal funding behavior. National health councils like the National Health Care for the Homeless Council, heavily criticized HHS after the agency abruptly cut $2 billion in federal mental health grants, only to reinstate them within 24 hours without any explanation, casting serious doubts on the stability of compliance requirements and funding for these services in general.

If the eight pilot communities show positive outcomes after their evaluation cycles, advocacy for national expansion will likely be led by conservative policymakers and Secretary RFK Jr. Convincing skeptical lawmakers to secure increased funding will require copious amounts of evidence. This necessary data will likely have to include sustained, long-term outcomes, showing positive recovery rates and a reduction in the amount of people on the street (or, street encampments). Furthermore, officials will likely demand proof that HHS’s “treatment first” approach can be realistically sustained, and yields better results than already established housing-first and harm reduction efforts before expanding the program nationally.

IV. Perceived Benefits

The increased allocation of funding for mental illness conditions, substance use disorders, and homelessness has the potential to generate an array of benefits. Specifically, the STREETS program improves mental health treatment by expanding street-based outreach teams that connect those experiencing homelessness with evidence-based behavioral health services. Some of these health services include medication-assisted treatment (MAT), psychiatric stabilization, crisis intervention and peer support.  In turn, these initiatives allow for access to accurate and timely diagnoses, substance use treatment and psychiatric care, all of which support improved mental health outcomes by providing vulnerable populations with essential treatment and support services. Additionally, the program provides several services that work to benefit access to prevention centers. The initiative directly targets both individual and structural barriers that hinder public service interventions, such as lack of transportation, distrust in institutions and limited awareness of available resources.  Rather than having to travel, the program will “reach people where they are, with assertive outreach and treatment and services that fit their individual needs” as noted in the official SAMHSA Notice of Funding Opportunity (NOFO) for the streets program. As a result, homeless individuals may experience increased access to prevention centers. Moreover, it is through the street-based outreach teams that the program can develop long-term relationships through building trust and providing the necessary information to those experiencing homelessness. These efforts are further strengthened by the coordination and involvement of local government, health and housing providers, law enforcement and the courts to connect with and support vulnerable populations.

The STREETS program also contributes to the longevity and growth of employment opportunities as well as stimulation of the economy. According to the World Health Organization, due to the 12 billion working days that are lost annually as a result of depression and anxiety, costing the globe an estimated US$1 trillion, there is an evident impact of poor mental health on economic prosperity. Therefore, improving the health of the population yields several advantages and opportunities. Specifically, a healthier work force stimulates the economy by boosting daily workplace productivity, reducing healthcare costs and enabling more people to work, increasing the labor supply. In addition, employees that are both mentally and physically fit on the average experience fewer sick days, induced job-productivity and prolonged working years. Collectively, focusing on the health of the population strengthens human capital, which leads to a more productive workforce that promotes economic growth and stimulates the economy. For those reasons and more, the administration argues street-based engagement works more effectively than housing first typically does. According to the National Alliance to end Homelessness, Trump passed an executive order titled "Ending Crime and Disorder on America's Streets," in 2025 to mark a shift in federal policy that aims to end "support for ‘housing first policies”. The administration argues housing first policies underemphasize accountability and fails to adequately promote recovery, self-sufficiency and treatment. Conversely, the support for street-based engagement is built off the administration’s immense support for a "treatment first” model, as noted by secretary Scott Turner that expressed “The ‘housing first’ experiment failed Americans by warehousing the vulnerable without results”. As a result, the administration's support for street-based engagement over housing first is because of STREETS alignment with the administration's broader policy objectives that endorse immediate intervention and sustained engagement. 

Similar to the administration, there are certain cases in which law enforcement and courts are involved in health-focused initiatives. Such actions are notably crucial for uniting the gap between public health and public safety. Typically, police and judicial systems play the role of critical first points of contact for vulnerable populations, which in turn diminishes recidivism and allows for individuals to connect to prolonged behavioral healthcare. The case for the involvement of law enforcement and courts lies in their frequent interactions with vulnerable populations, and as such, their ability to divert those from incarceration into treatment. There are several existing frameworks that are continuously employed by the law enforcement, such as the Crisis Intervention Training (CIT) that train law enforcement to act as first responders who divert those enduring severe mental health or substance use crises towards community-based care. Moreover, along with the involvement of third parties, re-including faith-based organizations (FBOs) are also viewed as beneficial by supporters. This is due to established deep community integration that such organizations hold. Supporters believe that the involvement of FBOs in social services increases the social safety net, leverages those existing neighborhood networks and connections, and provides comprehensive care to underserved populations. These existing community relationships may improve service delivery. Ultimately, the STREETS program will produce numerous benefits that will induce the long-term quality of life of Americans both economically and socially. The increased access to treatment can reduce mental illness and addictions, followed by a decline in homelessness as well as the enhancement of employment and productivity opportunities that benefit the economy and its stimulation. In time, a healthier population will strengthen human capital, support economic growth and strengthen communities as well as public safety. However, it is also necessary to acknowledge the program's potential limitations, such as implementation challenges, funding constraints, and most notably, the administration's reduced emphasis on other programs that have been shown to have beneficial impacts on homelessness, such as Housing first. Therefore, while STREETS presents significant prospects to improve public health and social outcomes, its long-term effectiveness relies significantly on its ability to accommodate, rather than entirely replace, existing evidence-based homelessness programmes. 

V. Potential Drawbacks

The additional $700 million dollars catered to addressing mental illnesses, homelessness, and substance use disorders will likely come at a cost, however. Between STREETS and Housing First programs, a major gap between their beliefs exists: whether or not housing should be provided regardless of a person’s sobriety levels. As such, the conflicting interests have led to concern that Housing First services will be first on the chopping block, along with harm-reduction programs and non-profits because of the government’s narrowed federal funding and stricter eligibility requirements.

In turn, the decreased amount of aid will disproportionately and negatively impact numerous populations including those who are unhoused or struggle with addictions because of their reliance on said services. While the probability of funding for harm-reduction services and non-profits remain high, it would be unsurprising if the amount of money allocated were to be lowered. In that scenario, it would become more difficult for both sides: medical professionals are unable to properly help those in need and people who use drugs withdraw more for fear of their lifestyle dramatically changing. Although critics have regularly argued that Housing First encourages continued substance use, a study from PubMed discovered such programs actually did the opposite. Housing stability improved with a great amount staying in their housing quarters for over 18-24 months away from streets and shelters. Not only that, harm-reduction services, which regularly provide fentanyl and xylazine test strips, sterile water and syringes, and overdose hotlines, have also shown positive results. For one, readily available syringes stopped the spread of infectious-diseases, like HIV and hepatitis C, according to the CDC. Medical professionals worry that with less funding, people who have relied on harm-reduction services may retreat from health services because they aren’t ready to stop using drugs immediately, leading to more people accessing drugs under much more dangerous conditions without medical help nearby.

Nevertheless, the biggest question that has been left unanswered is whether this additional 700 million dollars will be enough to thoroughly address the wide scale of mental illnesses and addiction nationally. Current evidence suggests otherwise. Even without the creation of STREETS, set to use 96 million dollars, current programs have yet to sufficiently help all communities in need, let alone with the possible funding cutbacks. SAMHSA has reported that among the 61.5 million with a mental illness and the 48.4 million with a substance use disorder, only 1 in 5 adults received assistance. Nonetheless, HHS’s spending plans are well-intentioned; even if the problem cannot be fixed on a national scale, the money is enough to be a temporary intervention in today’s society. 

VI. Future Policy/Outlook

What would success look like at the end of the 4 year cycle for the STREETS program? Given that the program aims to address the issue of homelessness in conjunction with severe mental illnesses and substance abuse, simply looking at statistics related to rehoming of such individuals is insufficient, as such numbers fail to grasp the reality in which the provision of housing is a short-term fix to the long-term disorders or issues that such people suffer from. Rather, as STREETS is primarily a community-oriented program, the HHS may use metrics such as volunteer engagement numbers, as well as the number of individuals enrolled in community treatment programs targeted at addressing substance use disorders and mental illness conditions. Additionally, figures related to public safety such as changes in crime rates, alongside long-term sobriety and housing retention rates could provide another viewpoint from which the wider impact of the program could be assessed. Most crucially however, success for the STREETS program is dependent on increased community-wide cooperation, as through this program, parties such as local governments, health and housing providers, law enforcement, and the courts must work together to change their overall approach towards improving the behavioral health of their community. Success for this program must therefore be evaluated on a well-rounded, balanced basis.

As the STREETS program drastically changes the approach that many states have historically taken towards homelessness by prioritising both behavioural treatment and housing, due to homelessness mainly being an issue addressed at the state level, the policy response to this program will vary between states. For example, as community-oriented programs (such as community violence intervention programs, in response to gun violence) tend to be adopted at a quicker rate by blue states or cities, it is likely that such blue states will be more open to this shift in policy, especially as they are backed by the similar experience and resources needed to implement this program. Moreover, as red states have been proven to have a lower expenditure on policing per capita compared to blue states, some red states may find it difficult to implement such programs due to a lack of manpower in areas such as law enforcement. However, this is not to say that the implementation of STREETS will be smooth sailing for blue states; rather, it may prove to be a greater challenge for many of them. Due to the explicit prohibition of “housing first” policies as well as harm reduction services by the programs, which are policies widely adopted by blue states, such states’ local governments now face a dilemma, as they debate whether to forfeit federal grant funding, or to completely overhaul their current policies and programs in regards to homelessness for the sake of capturing grant funding. Meanwhile, red states such as Colorado have been recently implementing legislation to condition state-funded housing for the homeless on participation in addiction treatment or mental health services, in a “work first” approach. This approach is further reinforced by the STREETS initiative, which seeks to shift responsibility for the homeless from the centralised state government to the wider community as a whole. 

Given that this program only funds a very select number of communities, the results of its implementation will be key to its potential future expansion. However, considering current federal budget constraints, and the relatively untested nature of the program’s approach , securing support from lawmakers for increased funding for this STREETS program may prove to be a challenge. Regardless, the program provides a different “work first” approach to homelessness, and when compared to the more traditional “housing first” policies, the pilot may offer policymakers an opportunity to evaluate whether a treatment-first model produces stronger outcomes than existing approaches.

VII. Acknowledgement

The Institute for Youth in Policy wishes to acknowledge Michelle Young for editing this policy brief.

VIII. References

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