I'm assuming that if the government helps me get a place of my own, it will be subsidized, low income housing. That would be fine with me. My Aunt Mila used to live in such housing, and her sister Becky said it was a nice, clean place. Trust me, if my Aunt Becky says a place is clean, it's clean.
There may be a bigger opportunity here, however. Because of the recent collapse of the residential housing markets, banks now own huge numbers of properties they would love to get off their books. If the government wanted to expand its effort helping people move out of nursing homes to include the elderly generally, more housing would be required. The outlines of a deal to get banks out from under bad debt while acquiring housing necessary to provide maximum personal independence for the maximum number of Americans seem to be apparent. Because most people helped by such a program probably could never buy a home on their own, the approach wouldn't seem to hamper housing's recovery as the people involved wouldn't be part of the market and the properties involved would not re-enter the market.
Will this happen? Probably not. Smarter people than I am are trying hard to bring housing back, and if they haven't pursued the above approach, it's probably because there's a flaw in the idea I don't see. Still, if we want to move away from institutionalizing people in a major way, we will have to get creative about some things, including residential housing.