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Medicaid: Challenges Beneath The Surface

Medicaid And Mental Health: Be Careful What You Ask For

Abstract

 
Medicaid has had an enormous impact on the shape and impact of public mental health care. Medicaid mental health policy has expanded access, fostered consumerism, and created incentives for expansion of community-based providers. It also has dramatically changed the economic rules governing public mental health care, leading state governments to alter their behavior. The result has been a tilting of public mental health care toward Medicaid-covered people and services.

Medicaid pays for a broad range of acute and long-term mental health care services. These range from acute hospital services, to psychosocial rehabilitation services, to a range of psychotropic medications. Medicaid spending on treatment of mental disorders accounted for about 20 percent of total mental health care spending in the United States in 1997.¹ At the same time, care of people with mental disorders is claiming an increasingly large portion of all Medicaid resources. For example, in Michigan and New Jersey, Medicaid beneficiaries using mental health services made up more than 20 percent of total beneficiaries in 1995.² Medicaid made total payments of $159.9 billion in 1997 and vendor payments of about $125 billion; 14.4 billion of this was for mental health care and $16.7 billion was for treatment of all mental and addictive disorders. This means that treatment costs for people with mental health/substance abuse (MH/SA) problems were 12–13.4 percent in vendor payments and 9.5 percent in total spending.³

Medicaid pays for mental health care primarily for two distinct populations: people enrolled in Temporary Assistance for Needy Families (TANF) and those enrolled in Supplemental Security Income (SSI). It serves as a typical health insurance program for TANF recipients, who have somewhat higher rates of treatment for mental disorders than the general population (Exhibit 1). For SSI, Medicaid provides financing for a key set of services for people with severe and persistent mental disorders (including general medical care). Medicaid therefore serves different functions for the two populations.

The linking of Medicaid to SSI in 1972 allowed Medicaid to develop a central role in the provision of care to a large segment of severe and persistently mentally ill people. Medicaid introduced an insurance-like mechanism for paying for mental health care to a mental health delivery system dominated by public mental hospitals. Some psychiatric patients had a choice of providers for the first time. Also, the economic calculus for state governments changed with respect to financing of mental health care.

Medicaid’s role in the mental health safety net is a relatively new development. SSI’s enrollment of people with mental disorders began its dramatic expansion in 1984, when new disability evaluation criteria were introduced by the Social Security Administration.⁶ Medicaid’s changing role has helped to realign the division of labor between the historical government provider (and payer) of last resort, state mental health agencies, and the state-federal Medicaid program, with its ties to insurance. One outcome of this realignment was a speeded-up deinstitutionalization process and a lesser-known phenomenon of moving psychiatric patients from one set of custodial institutions to others, referred to as trans-institutionalization. In this paper we report on Medicaid’s impact on the financing of and treatment for mental disorders. We focus on access to treatment, the services used in treatment, and the behavior of state and federal governments.

Medicaid And Mental Health: Some Facts

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Spending. In 1971 Medicaid spent approximately $1.6 billion on mental health care, or 11.9 percent of all mental health spending and 21 percent of government spending.⁷ In 1987 it spent $6.5 billion. By 1997 the corresponding figure was $16.7 billion (the 1971 figure included treatments for addictive disorders). As noted above, this amounted to nearly 20 percent of all spending, and 35 percent of public spending, for treatment of MH/SA disorders. In real terms (inflating 1971 dollars by the Consumer Price Index, or CPI), mental health spending in Medicaid grew by a factor of 2.6, or $10.3 billion, in 1997. The growth in Medicaid spending on MH/SA disorders between 1987 and 1997 accounts for roughly 10 percent of the overall growth in program spending.

Eligibility categories. Data from a ten-state study of MH/SA spending within Medicaid in 1994 highlight the differences in the populations served by Medicaid (Exhibit 1).⁸ The 23.9 percent rate of MH/SA use for SSI beneficiaries reflects the high prevalence of mental disorders in that population. Also, people who use MH/SA services make disproportionate claims on all categories of Medicaid spending. MH/SA spending by SSI beneficiaries accounts for 12.5 percent of all health care spending for the SSI population. Moreover, the total health bill for MH/SA users in the SSI eligibility group makes up nearly 34 percent of the total spending for these enrollees. In fact, Medicaid spending by MH/SA users among SSI beneficiaries accounts for roughly 16 percent of total Medicaid outlays in the ten states (data not shown). The low rate of MH/SA use for children (5.8 percent) reflects the large number of very young children: 46 percent of people under age twenty-one were under the age of five. Again, children who use MH/SA services are relatively more expensive in terms of both their health spending (19.9 percent of category spending) and their mental health spending (11.8 percent of category spending). Similar patterns appear for the other two eligibility categories.

Severity of illness. Medicaid serves a disproportionate number of people with severe mental disorders in addition to addressing a set of disorders commonly found in private insurance.⁹ Thus, among adult enrollees in the ten-state Medicaid study, nearly 17 percent of MH/SA users had a diagnosis of schizophrenia or another psychotic disorder, 15 percent were diagnosed with major depression, and 33 percent had less severe forms of depression and anxiety disorders.

Minority makeup. It is well known that Medicaid serves the poor and as a result disproportionately serves members of minority groups. This is also true for MH/SA disorders. For example, in the ten-state study it was reported that 53 percent of enrollees treated for an MH/SA condition were white, 38 percent were African American, and 3 percent were Hispanic. The overall Medicaid composition was 46 percent white, 43 percent African American, and 5.8 percent Hispanic.¹⁰

Specialty care. Medicaid is a key revenue source for specialty mental health care providers. Medicaid provides 18 percent of state mental hospital revenues, 27 percent of general hospital psychiatric services revenues, and 24 percent of revenues for community-based providers such as community mental health centers (CMHCs). Nursing homes also receive substantial payments for mental health care.¹¹

Prescription drugs. Medicaid also pays for prescription drugs. Psychotropic drugs have offered dramatic improvements in the capacity to treat a number of major disorders safely and effectively. In particular, new generations of antidepressants (selective serotonin reuptake inhibitors, or SSRIs) and antipsychotic drugs have improved side-effect profiles and offered greater safety and ease of administration. Greater adherence to treatment regimens is the result. A dramatic increase in spending on psychotropic drugs has also accompanied the innovations in treatment. Between 1991 and the third quarter of 2000 there was a twelvefold increase in spending on psychotropic drugs in Medicaid (non-Medicaid HMO), after general inflation is adjusted for (Exhibit 2). This dramatic growth was driven largely by a fivefold increase in purchases of antidepressants, a fourteenfold increase in spending on antipsychotic agents and mood stabilizers, and a fourteenfold increase in spending on stimulants (much of it for treatment of attention deficit hyperactivity disorder, or ADHD).¹²

View larger version (11K): [in this window] [in a new window]   EXHIBIT 2 Medicaid Reimbursements For Major Psychotropic Drugs, Millions Of Dollars (Undeflated), Quarterly Data 1991–2000

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When the federal government created Medicaid, it was designed as a multi-faceted insurance program, to provide coverage for low-income families and people with disabilities and long-term care for poor elderly and disabled Americans. State mental hospitals were viewed as custodial institutions and were the largest component of mental health spending during the 1960s. As a consequence, the federal government did not want to assume the responsibility of paying for people treated in state mental hospitals. In the 1960s paying for care in state mental hospitals might have added about $1.8 billion in spending to the Medicaid program, which in 1967 spent $2.3 billion (a potential 78 percent increase). Therefore, the regulations governing Medicaid prohibited Medicaid payments to institutions of mental disease (IMDs) for people ages 22–64. This means that a person eligible for Medicaid can have the costs of inpatient psychiatric care in a general hospital psychiatric unit reimbursed but not inpatient care provided in a state mental hospital. Clearly this policy encourages care in general hospitals and discourages use of state mental hospitals. The IMD rule also means that states have difficulty qualifying for home and community-based waivers that depend on budget-neutrality. Savings on institutional care in IMDs cannot be counted in the budget-neutrality formula when estimating the cost impact of alternative home and community-based mental health services.

Medicaid pays for a broad array of treatments for mental disorders: mandatory services such as prescription drugs, physician services, inpatient care, nursing home care, and laboratory services, plus a large number of optional services that most states choose to pay for. These services typically include psychologists’ services, case management, clinic services, personal care, and rehabilitation. When properly bundled, these services include most of the components of existing evidence-based mental health treatments. As noted above, the rapid diffusion of the newest psychotropic drugs in the Medicaid system has greatly expanded the capacity to treat enrollees with mental illnesses. We next review some specific impacts associated with Medicaid’s coverage of mental health services.

Expanded coverage. First and foremost, Medicaid has continuously expanded insurance coverage for poor people with mental disorders. For example, data from the National Medical Care Expenditure Survey (NMCES) and the Medical Expenditure Panel Survey (MEPS) show that in 1977 Medicare and Medicaid paid for the care of about 19 percent of people with schizophrenia, 15 percent of those with depression, and 11 percent of those with a substance abuse disorder. By 1996 these programs served 63 percent of people with schizophrenia, 16 percent of those with depression, and 22 percent of those with substance abuse disorders.¹⁴

Increased use of services. Medicaid has been associated with a general increase in use of mental health services over the period 1970–2000. Data from NMCES and MEPS indicate that the percentage of the adult population receiving treatment for a mental disorder rose from 5.2 percent in 1977 to 7.7 percent in 1996. The rate of treatment for mental disorders grew for all categories of insurance coverage (including people without insurance). The growth in access, as measured by utilization rates, for Medicaid and Medicare enrollees was particularly notable, increasing from 10.5 percent in 1977 to 17.7 percent in 1996.¹⁵

State cost shifting. As noted above, Medicaid altered the economic circumstances of states seeking to serve low-income populations with mental disorders. State government choices about meeting these populations’ mental health needs are constrained by factors such as income in the state, the size of the public mental hospital system, the availability of other publicly funded providers, federal Medicaid rules, Medicaid matching rates, and the amount of private insurance in a state. Direct state spending on mental health care can be expected to be reduced by generous federal matching rates and the availability of care in settings funded by Medicaid (such as nursing homes). Rational state responses to the introduction and expansion of Medicaid could be expected to result in cost shifting.¹⁶

Existing evidence is consistent with the expectation of cost shifting. States’ responses to such incentives can be characterized by the phrase: "If it moves, Medicaid it."¹⁷ A study of states in the mid-1970s shows that the state matching rate in Medicaid was positively correlated with the per capita direct state spending on mental health care.¹⁸ The inference is that as the on-budget costs to the states rise, states are less aggressive about driving services toward Medicaid reimbursement. Another study found that as a state’s number of nursing home beds per capita grew, the level of direct state spending on state mental hospitals fell.¹⁹ In this case, the implication is that nursing homes offered a setting that was reimbursable by Medicaid that could serve the elderly, who made up a large segment of people treated in state mental hospitals in the 1960s and 1970s.

Deinstitutionalization. William Gronfein studied the forces that explained the rate at which psychiatric patients were deinstitutionalized during the 1960s and 1970s.²⁰ He found that the cost-shifting opportunities offered by Medicaid were the factors with the largest impact on the rate of deinstitutionalization. Medicaid impacts dominated the effects of the CMHC program and innovations in pharmacological treatment of severe mental disorders. During 1955–1965 the populations of public mental hospitals fell by about 1.5 percent per year. Following the introduction of Medicaid, they fell at a rate of 6 percent per year.

Expanded use of community-based services. The growth in use of mental health care coupled with the reduction in the reliance on services provided and financed by the state imply an expansion in other types of services. This has occurred. For example, the four areas of mental health services that have grown most since the 1960s have been private psychiatric hospitals, general hospital psychiatric units, community-based providers (CMHCs, free-standing clinics, and partial-hospitalization programs), and prescription drugs.²¹ General hospital psychiatric units, community-based providers, and prescription drugs are also services where the growth in Medicaid spending has been especially pronounced. The consequence has been an overall reduced reliance on public mental hospitals for the care of low-income populations with mental disorders and expanded use of community-based services for all populations. These are generally consistent with the aspirations of public mental health policy for most of the past fifty years.

Unexpected And Unintended Consequences

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There have been some less salutary responses to the design and evolution of the Medicaid program in the mental health sector. Many stem from states’ energetic responses to the rules of the Medicaid game. Others arise as a consequence of rigidities in service definitions and price distortions in supply.

Costs shifted to federal government. Recognizing Medicaid’s cost-shifting opportunities, states have aggressively pursued policies that would maximize the amount of federal matching funds obtained. This has had a number of consequences. Recall that state-operated public mental health systems are made up of a mix of public and privately owned (nonprofit) providers that tend to serve both Medicaid enrollees with mental disorders and low-income uninsured people not eligible for Medicaid. Services to non-Medicaid clients are paid for through state grants and contracts with providers. One state response has been to shift existing community-based mental health funds to services that can be applied to the state obligation to match federal dollars. For many years this increased the total funding of mental health care while only requiring modest increases in state general fund outlays for mental health services.²² The difficulty with this strategy is that it reduces the funds available to serve other low-income uninsured populations with major mental disorders. For example, 32 percent of Oregon’s 1995 mental health budget was made up of state general funds for indigent care, separate from any Medicaid funds. By 2000 its mental health budget had nearly doubled. The state dollars devoted to Medicaid matching of federal funds had almost tripled, while the state funds for indigent care had fallen to 19.5 percent—a modest increase in nominal funds over 1995 and essentially flat funding in real terms.²³

Georgia offers another example. In 1986 its Medicaid match requirements for mental health services accounted for 15 percent of all state mental health spending. By 1996 they made up nearly 35 percent. It is important to note that in Oregon there were expansions of coverage to the uninsured, while in Georgia no such major initiatives were undertaken. In interviews, numerous other state mental health agencies report new rigidity with respect to funding non-Medicaid services.

The consequence in these cases is that "Medicaiding it" means shifting costs to the federal government and possibly shifting expenditures away from low-income uninsured people who are not eligible for Medicaid. This includes many people with severe mental disorders who do not qualify for SSI and those with less severe disorders that nevertheless create much impairment.

"Creative" use of DSH program. Another aspect of state "gaming" of Medicaid relates to the interaction of the IMD policy and the disproportionate-share hospital (DSH) payments. The Omnibus Budget Reconciliation Act (OBRA) of 1981 required states to take account of the situation faced by hospitals with a disproportionate share of low-income patients with special needs. This enabled more Medicaid funds to be channeled to certain hospitals.²⁴ It is clear that states had a very strong incentive to use DSH payments to fund state mental hospitals that were previously largely funded by state general funds. Beginning in 1990 states began claiming state mental hospital services for DSH payments. DSH payments rose dramatically. By using this mechanism, states were able to successfully circumvent the IMD exclusion from Medicaid. Not all states were equally effective in using the DSH mechanism. By 1992 thirty-one states received less than $1 per capita from DSH payments, while a few states collected $20–$35 per capita.²⁵ These dynamics provide an example of policies that distort programmatic choices, encourage policymakers to game the system, and result in unfair allocations of aid, in that DSH payments were unrelated to the mental health needs of the low-income populations in the states.

Prices set below private market levels. Finally, since Medicaid does not rely on demand-side cost sharing to control use and spending, state Medicaid programs have tended to control spending by setting prices below private market levels. Those prices limited the number of providers willing to accept reimbursement. Hence, payment levels are low, and quantity of care is constrained by available supply. This constrains choice for enrollees and limits spending. Low prices have been particularly significant for outpatient care. The ability to set low prices for hospital care has been constrained by litigation and congressional action (the Boren Amendment)—that is, Medicaid programs were directed to set hospital payments in relation to costs. One consequence of low ambulatory care prices is that office-based psychiatrists treat very few Medicaid enrollees with mental disorders. Another consequence is that limited outpatient supply and greater availability of institutional providers has traditionally made inpatient care a relatively attractive option for treating people with severe mental disorders. Until the early 1990s Medicaid programs devoted substantial shares of their mental health spending to inpatient care.

Managed Behavioral Health Care And Medicaid

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Managed care has become a central institutional feature of Medicaid nationwide. In 1999 about half of Medicaid beneficiaries were enrolled in managed care.²⁶ As of 1998 thirty-six states were operating or had received approval for a Medicaid waiver program for managed behavioral health care (MBHC) programs (MH/SA together). Managed care for MH/SA treatment has evolved differently from general managed care arrangements.²⁷ Behavioral health care is frequently "carved out" from general medical services for the purposes of financing and managing treatment.²⁸ MBHC carve-outs separate the insurance function for MH/SA care from general medical care and contract separately to manage those risks. There are two major types of MBHC carve-outs in Medicaid: (1) where the state Medicaid agency directly contracts with a single carve-out vendor to managed MH/SA care; and (2) where health plans enter into subcontracts with a carve-out company. When states directly carve out with a single MBHC vendor, it may also result in attenuating the adverse selection that arises in competitive markets for health plans that are typically in use in most state Medicaid managed care programs.

Greater flexibility in service mix. MBHC programs in Medicaid attend to some of the traditional difficulties with mental health care. In particular, by delegating management of care to a specialty vendor, there is often greater flexibility in the mix of services than would typically be the case in traditional Medicaid programs. For example, in Massachusetts it was determined that there was an excessive reliance on inpatient care, especially for treatment of substance abuse disorders. The MBHC carve-out program, in conjunction with the state Medicaid agency, invested in expanding residential and day treatment programs to develop viable alternatives to inpatient care. This means that some distortions created by administered supply prices in Medicaid can be reduced through the flexibility given to specialty carve-out programs to manage MH/SA treatment resources.

Saves money. Specialized managed care programs for MH/SA care in the context of the Medicaid population have almost always saved money. Studies of the implementation of MBHC arrangements in Colorado, Massachusetts, North Carolina, Tennessee, and Utah all show the ability of such programs to reduce Medicaid spending on MH/SA care.²⁹ These savings (in the range of 15–40 percent) have typically been accomplished by reduced reliance on inpatient care, reduced fees paid to providers, and reduced duration of outpatient treatment.

Access and equality effects. Massachusetts, Colorado, and North Carolina have achieved greater efficiency in the use of MH/SA care dollars while maintaining or improving quality of and access to care. This was the case when the evaluations examined the status of vulnerable populations such as children and adults with schizophrenia. There also have been some monumental failures where vendors collapsed financially, care was reduced, and the sickest people were especially disadvantaged.³⁰ In other cases, although there was no dramatic decline in care, there is some evidence that people with schizophrenia fared worse under MBHC.³¹

Reshaped Public Mental Health Systems

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The combination of state actions to "Medicaid" mental health financing along with the move to managed care generally and MBHC carve-outs specifically have resulted in a reshaping of the political and administrative dynamics of many public mental health systems. The enthusiasm for shifting costs to the federal government has more tightly linked state mental health expenditures to Medicaid, and as a result federal policy, than at anytime in U.S. history. As states devote a higher portion of their mental health funds to meeting Medicaid match requirements, states’ ability to maintain or expand MH/SA programs for a growing population of low-income uninsured people is becoming increasingly constrained. Thus, the consequence of the growth in Medicaid spending for mental health over the past thirty years appears to be a reduction in the discretionary funds for states to attend to the traditional safety-net function of the state mental health agency. There is as yet little direct evidence of large reductions in services to people with no insurance because of budget shifts to Medicaid. One recent paper suggests that uninsured people with severe mental illnesses were less likely to obtain specialty mental health care than otherwise similar insured people.³²

Privatization. The desire to manage care and to delegate the task to managed care companies serves to essentially privatize many functions that were historically the responsibility of state mental health agencies or other state government departments.³³ Carve-out companies in many cases either have altered the network of providers known as the public system or have led to a restructuring of provider organizations that were key players in the public mental health system. In Massachusetts the network of inpatient providers was greatly changed by the carve-out company, while in Colorado provider organizations joined with managed care firms to create MBHC organizations to obtain Medicaid contracts. In many states it is the MBHC vendor that has state-of-the-art information systems for tracking Medicaid (and in some cases public mental health system) patients. The result is that state mental health and Medicaid agencies are increasingly removed from direct management of the "system," which affects the political dynamics of mental health policy. For example, in Maryland newly emergent local mental health authorities (called "core service agencies") needed to redefine their role in financing services. When the state contracted for administrative services only (ASO) with an MBHC company to manage the finances of the public mental health system, including Medicaid, the core service agencies gave up some of their responsibilities for funding and administering local services. A surprising result is that in many states the mental health agency has a much more limited role in defining the mental health programs for low-income people with mental disorders than it did just fifteen years ago. It is striking that a consequence of the successes in using Medicaid to expand financing of MH/SA care is that the public agency with specialized expertise in those matters is increasingly taking a secondary role in regulating and managing public resources for treating people with mental and addictive disorders.

Diminished role for state agencies. The diminished role of state mental health agencies poses several difficulties. First, many state Medicaid programs have little expertise in the area of mental and addictive disorders. If the mental health care buying power and managerial responsibility are shifted to the state Medicaid program, the fit between program design and population treatment needs may be misaligned. This may be reflected in part by the vast variation in state-level mental health care policies in Medicaid and the tenfold differential in psychiatric hospitalization rates across states.³⁴ Moreover, in choosing to use MBHC carve-outs to allocate mental health resources, the state has increasingly become a contracting and regulatory agency. The monitoring and regulation of managed care carve-out organizations is important for quality assurance, obtaining value in purchasing, and political accountability. There often is a gulf between the location of regulatory functions and the substantive and political expertise with mental health issues.

Less money for the uninsured. Public mental health systems have traditionally been the provider and payer of last resort for people with severe mental disorders and also for people with other forms of mental and addictive illnesses that cause distress and impairment. The funding of state mental health systems has provided access to some care for low-income people with mental disorders. It is unfortunate that a likely consequence of Medicaid growth has been to shift funds away from the care of a population that in many respects closely resembles Medicaid enrollees. This aggravates the problem of the uninsured, since people with mental disorders are overrepresented in this population.³⁵

There is a fairness problem created by setting up boundaries that are variable across state systems and only partially related to the basic health circumstances of low-income people. In the past, Medicaid has addressed similar problems of special populations through targeted program expansions. This can be viewed as a state problem related to funding of state mental health systems, or it could be linked to the larger problem of people without health insurance. The consequences of not attending to these issues are different for mental health care because of the linkages of MH/SA disorders to homelessness and the criminal justice system.

The New Policy Challenge

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All available evidence shows that Medicaid has made enormous contributions to expanding access to mental health care for low-income populations. It also has created consumer choice for low-income people with mental disorders and has promoted community-based treatment for people with mental and addictive illnesses. Mental health care in the United States is unquestionably better because of the Medicaid program than it was thirty-five or even fifteen years ago. The program designers largely intended these positive outcomes.

Harder to anticipate was the economic behavior of state governments in the years following enactment of Medicaid. States’ mental health planners saw Medicaid as a source of financial relief to public mental health systems that were coping with rapidly growing demands for service, new treatment technologies, and limited state funds. They rationally adopted practices that would maximize federal funds for the purpose of expanding public mental health programs. Unfortunately, a consequence of unleashing the cost-shifting forces was to distort the structure and financing of mental health care to dramatically favor one low-income population over another and one set of services (those conforming to changing definitions of reimbursable services) over all others. The result has become acutely visible as Medicaid match has come to dominate all other forms of state mental health spending and funding loopholes have been closed.

The new policy challenge for Medicaid mental health policy is to address the fairness and accountability problems that have resulted from states’ having "Medicaided" mental health care in the United States. President Bush’s new Freedom Initiative’s Commission on Mental Health offers a forum to wrestle with designing the next generation of Medicaid mental health policy.

Editor's Notes

 
Richard Frank is the Margaret T. Morris Professor of Health Economics, Department of Health Care Policy, Harvard Medical School, in Boston. Howard Goldman is professor of psychiatry at the University of Maryland School of Medicine, in Baltimore, where he codirects the Center for Mental Health Services Research. Michael Hogan is director of the Ohio Department of Mental Health in Columbus.

The authors gratefully acknowledge financial support from the John D. and Catherine T. MacArthur Foundation. They also are grateful to Rena Conti for able research assistance and to Sherry Glied, Audrey Burnam, Pam Hyde, Risa Elias, and the reviewers for many constructive suggestions.

NOTES

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1. R.M. Coffey et al., National Estimates of Expenditures for Mental Health and Substance Abuse Treatment, 1997, Pub. no. SMA-00-3499 (Rockville Md.: Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, 2000).
2. MEDSTAT Group, Medicare, Medicaid, and Managed Care Analyses Project, SAMHSA Contract Report no. 280-95-0011 (Washington: MEDSTAT, December 2000).
3. See Coffey et al., National Estimates; and Centers for Medicare and Medicaid Services, cms.hhs.gov/charts/medicaid/2tchartbk.pdf, Figure 2.2 (20 November 2002). It should be noted that the National Health Accounts figures for total Medicaid spending were higher than the vendor payments ($159.9 billion in 1997).
4. Social Security Administration, Statistical Supplement to the Social Security Bulletin, Pub. no. 13-11700 (Washington: U.S. Government Printing Office, 1999), Tables 5.D5 and 7.F1.
5. D.C. Stapleton et al., "Econometric Analyses of DI and SSI Application and Award Growth," in Growth in Disability Benefits: Explanations and Policy Implications, ed. K. Rupp and D.C. Stapleton (Kalamazoo, Mich.: Upjohn Institute, 1998).
6. J. Bound and T. Waldman, "Accounting for Recent Declines in Employment Rates among the Working Aged Men and Women with Disabilities," Journal of Human Resources 37, no. 2 (2002): 231–250.
7. D.S. Levine and D.R. Levine, The Cost of Mental Illness 1971, NIMH Report Series B, no. 7 (Rockville, Md.: SAMHSA, 1975), Table 1.
8. J.A. Buck, K. Miller, and J. Bae, Mental Health and Substance Abuse Services in Medicaid, 1994, Pub. no. (SMA)00-3284 (Rockville, Md.: SAMHSA, 2000). The ten states are Alabama, Alaska, Delaware, Georgia, Kentucky, Mississippi, Montana, New Jersey, North Dakota, and Vermont.
9. D.D. McAlpine and D. Mechanic, "Utilization of Specialty Mental Health Care among Persons with Severe Mental Illness: The Roles of Demographics, Need, Insurance, and Risk," Health Services Research 35, no. 1 (2000): 277–292.[Medline]
10. Buck et al., Mental Health and Substance Abuse Services in Medicaid.
11. Data for this paragraph come from R.W. Manderscheid et al., "Highlights of Organized Mental Health Services in 1998 and Major National and State Trends," in Mental Health, United States, 2000, ed. R.W. Manderscheid and M. Henderson (Washington: U.S. GPO, 2001).
12. Data are from Centers for Medicare and Medicaid Services (CMS) reports from the Medicaid Rebate Program.
13. See "Federal Medical Assistance Matching Rates by State for Selected Fiscal Years," CMS Office of the Actuary, 2001, www.cms.gov/charts/medicaid/2tchartbk.pdf, Figure 2.7 (20 November 2002).
14. S. Glied et al., "Spending, Utilization, and Insurance for Mental Health Care, 1977–1996" (Working paper, MacArthur Foundation Health Policy Network, 2001).
15. Ibid., Note 11.
16. R.G. Frank and T.G. McGuire, "Economics and Mental Health," in Handbook of Health Economics, ed. A.J. Culyer and J.P. Newhouse (Amsterdam: North Holland, 2000).
17. M. Hogan, "The Erosion of SMHA Funding: An Unintended Consequence of Reform," (Unpublished presentation, Ohio Department of Mental Health, Columbus, 2001).
18. R.G. Frank, "A Model of State Expenditures on Mental Health Services," Public Finance Quarterly 13, no. 3 (1985): 319–338.
19. R.J. Michael, "Bureaucrats, Legislators, and the Decline of the State Mental Hospital," Journal of Economics and Business 32, no. 3 (1980): 198–205.[Medline]
20. W. Gronfein, "Incentives and Intentions in Mental Health Policy: A Comparison of the Medicaid and Community Mental Health Programs," Journal of Health and Social Behavior 26, no. 2 (1985): 192–206.[Medline]
21. McAlpine and Mechanic, "Utilization of Specialty Mental Health Care"; and CMS reports from Medicaid Rebate Program.
22. C.A. Taube, H.H. Goldman, and D.S. Salkever, "Medicaid Coverage for Mental Illness: Balancing Access and Costs," Health Affairs (Spring 1990): 5–18
23. Glied et al., "Spending Utilization, and Insurance."
24. See R.G. Frank and T.G. McGuire, "Health Care Financing Reform and State Mental Health Systems," in Health Policy, Federalism, and the American States, ed. R.F. Rich and W.D. White (Washington: Urban Institute Press, 1996).
25. Ibid.
26. CMS, National Summary of Medicaid Managed Care Program and Enrollment, www.cms.gov/charts/medicaid/2tchartbk.pdf, Figure 3.1 (20 November 2002).
27. R.G. Frank et al., "Some Economics of Mental Health Carve-Outs," Archives of General Psychiatry 53, (October 1996): 933–937.[Abstract]
28. S. Findlay, "Managed Behavioral Health Care in 1999: An Industry at a Crossroads," Health Affairs (Sep/Oct 1999): 116–124.
29. J.J. Callahan, et al., "Mental Health/Substance Abuse Treatment in Managed Care: The Massachusetts Medicaid Experience," Health Affairs (Fall 1995): 173–184; C.F. Chang et al., "Tennessee’s Failed Managed Care Program for Mental Health and Substance Abuse Services," Journal of the American Medical Association 279, no. 11 (1998): 864–869; [Abstract/Free Full Text]J.B. Christianson et al., "Utah’s Prepaid Mental Health Plan: The First Year," Health Affairs (Fall 1995): 160–172; J.W. Hausman et al., "Managed Mental Health Care Experience in Colorado," in Managed Behavioral Health Care: Current Realities, Future Potential, ed. D. Mechanic (San Francisco: Jossey-Bass, 1998); B.J. Burns et al., "Managed Behavioral Health Care: A Medicaid Carve-Out for Youth," Health Affairs (Sep/Oct 1999): 214–225; and J. Bloom et al., "Mental Health Costs and Access under Alternative Capitation Systems in Colorado," Health Services Research 37, no. 2 (2002): 315–340.[Medline]
30. For a careful analysis of the failure in Tennessee, see Chang et al., "Tennessee’s Failed Managed Care Program," Note 24.
31. W.G. Manning et al., "Outcomes for Medicaid Beneficiaries with Schizophrenia under a Prepaid Mental Health Carve-Out," Journal Of Behavioral Health Services Research 26, no. 4 (1999): 442–450; and J.P. Morrissey et al., "Service Use and Health Status of Persons with Severe Mental Illness in Full Risk and No Risk Medicaid Programs," Psychiatric Services 23, no. 2 (2002): 293–298.
32. McAlpine and Mechanic, "Utilization of Specialty Mental Health Care."
33. J.M. Donohue and R.G. Frank, "Medicaid Behavioral Health Carve-Outs: A New Generation of Privatization Decisions," Harvard Reviews of Psychiatry 8, no. 5 (2000): 231–261.
34. Manderscheid et al., "Highlights of Organized Mental Health Services."
35. McAlpine and Mechanic, "Utilization of Specialty Mental Health Care."

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