Blog - States Robbing from Peter to Pay Paul with Mental Health Cuts

Author:

Tim Hiller

July 20, 2010

Issue Areas:

Prevention & Wellness, Vulnerable Populations

In a previous post, I came down hard on Congress for failing to extend Federal Medical Assistance Percentage (FMAP) aid as expected in order to prevent states from having to cut dental expenses. Now a July 19th article from stateline.org highlights other Medicaid cuts being enacted by cash strapped states in effort to balance their budgets and the severe consequences of these cuts on perhaps our nation’s most vulnerable population---the mentally ill.

In Arizona:

To fill a $1 billion hole in its 2011 budget, Arizona slashed this year’s budget for mental health services by $36 million — a 37 percent cut. As a result, advocates say 3,800 people who do not qualify for Medicaid are at risk of losing services such as counseling and employment preparation. In addition, more than 12,000 adults and 2,000 children will no longer receive the name-brand medications they take to keep their illnesses in check. Other services such as supportive housing and transportation to doctor’s appointments also will be eliminated.

In Illinois:

In Illinois, where Democratic Governor Pat Quinn is trying to bridge a $13 billion budget gap, a proposed mental-health budget cut of $91 million was reduced to $35 million after patients and practitioners protested at the governor’s mansion earlier this month. Even so, advocates say more than 70,000 people, including 4,200 children, are in danger of losing basic community services, which may result in more instances of hospitalization. The cuts come on the heels of a court settlement requiring the state to transfer 4,500 severely mentally disabled patients out of nursing homes and into community residential facilities following a string of rapes and assaults on elderly residents.

I’m very sympathetic to the tough situation that many states have been put in by the failure of Congress to pass FMAP. But what Arizona and Illinois, and many other states are doing here is absolute madness from a policy perspective. Just about any other cost saving idea would have been better.

Consider Arizona. It’s very dubious whether they will end up saving a red cent. In fact as the stateline.org article points out:

By slashing these programs, experts say the state will force more people to use emergency rooms or end up in the criminal justice system, which will cost [Arizona] more.

How much more? It’s hard to say because these things aren’t an exact science. Yet, it’s easy to see how quickly the cost of a low income, mentally ill person without any access to care can add up for the state. And this common sense conclusion is borne out by data coming from Maine. A study from the University of New England, outlined in a recent op-ed by its author Thomas McLaughlin, concluded that indigent mentally ill citizens with access to care through Medicaid have a lower cost to the state than those without:

For the past four years, I have been working with Shalom House and Preble Street on a project to assess the costs associated with housing, social services and homelessness.

We collected data on 262 individuals with mental illness across the state. These data provide a clear picture of the costs associated with managing people who are homeless (the majority of whom are mentally ill) through emergency service systems as compared to MaineCare...

When people in the study had MaineCare, their overall mental health care costs were reduced by 57 percent, about a $325,000 savings over the six-month study period. The reason for this is that people were shifted from the more expensive psychiatric in-patient care to less-expensive community-based outpatient services. Psychiatric hospitalizations decreased 58 percent, resulting in a $360,000 savings. Emergency room cost savings were 14 percent, or nearly $25,000. Data analysis also demonstrated cost savings in jail nights, shelter stays and ambulance usage. All told, there was a $1,348 average cost savings per person.

The obvious conclusion is that if more mentally ill people received MaineCare over a longer period of time, much greater cost savings would be realized.

Essentially Arizona, Illinois and every other state which follows this path will have shifted 10 dollars from Peter, now almost guaranteeing that they will have to pay Paul 15, 20 or more dollars later when the devastating results of cutting off care for the mentally ill come to roost. This is not deficit reduction. Cutting off poor, mentally ill people from their medications, support systems and treatment options is short-sighted and dangerous.

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