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Psychiatric Times. Vol. 21 No. 8
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Budget Cuts Continue to Threaten State Medicaid Programs

William Kanapaux
August 1, 2004

Advocates' Coalition

The APA, NAMI and NMHA are working together to get the message out on a state-by-state basis that Medicaid needs to fund mental health care treatment and supports.

All stakeholders in the system must look beyond their short-term self-interests and realize that the most seriously mentally ill have a range of medical, social and housing-related needs, Muszynski said. To that end, the organizations have been developing a joint agenda for protecting public mental health care systems against further Medicaid cuts. "We need more resources, and that's got to become a focused agenda item," he said. "There are many facets of need and service requirements that these people face."

The system is undermedicalized, Muszynski explained, and it cannot provide quality care to people who have medical conditions if physicians aren't treating them. Patients run the risk of being misdiagnosed or underdiagnosed. However, that is not to say that other components of the system do not play an important role.

Miller stated that Medicaid-funded community-based services are a necessary part of the equation. "Access to services is critically important to helping patients adhere to their medications, ensure effective treatment and help them deal with the everyday things in life."

His message to state lawmakers is, "Little or no real savings, even in the short run, will result from Medicaid cuts that limit medication choice and services for people with mental illness." As people suffer serious episodes because of a lack of services, it will result in immediate short-term costs to the Medicaid budget through increased visits to emergency departments, rehospitalizations and crisis management services, as well as create additional long-term costs through increased incarceration and homelessness.

However, with the loss of the one-time federal assistance, which totaled $10 billion for Medicaid and another $10 billion to help defray costs in other health care programs, the fear is that states will arbitrarily cut services and programs in the fiscal year beginning July 1.

Shrinking Systems

During the financially flush 1990s, states with budget surpluses expanded their optional Medicaid populations by increasing income limits on eligibility, often to 200% of the federal poverty level. States are now cutting eligibility to 150% of the federal poverty level or lower. That leaves uninsured and underinsured low-income residents having to rely on safety-net providers who are already overwhelmed and struggling to stay afloat.

States were trying to avoid reducing eligibility during the first two years of the funding crisis but had to cut eligibility in 2003 and 2004, Malik said. About half the states have cut eligibility.

Another source of cuts for states is optional Medicaid services, an area that can hit mental health care services hard. Texas, for example, cut mental health counseling services out of the Medicaid benefit, limiting beneficiaries to medication checks, according to Malik. "This puts a terrible burden on psychiatrists because people come in for a med check when they really need a counseling session."

Children have been protected from cuts to an extent because more of them are in the mandatory service population, and the Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) program requires that a certain level of services be provided. However, Malik said, many times those requirements are not enforced and, even though children's Medicaid services are protected from cuts, state-based children's mental health care funding has been cut over the last four years in almost every state.

It's hard to say which of the Medicaid cuts is most critical to the mental health care system because there is no way of knowing which one will cause the system to collapse, Malik said. "That's really what our concern is. Every single piece of this is critical to the entire system."

States are going to have to make a commitment to making sure that people have access to the services they need and that service providers have adequate support, Malik said. "It's a matter that states have got to prioritize mental health services in a way that they have not done in the past."

Advocates face an uphill battle, as competing interests argue for a greater share of shrinking state budgets. Primary and secondary education in particular is a priority area for most state legislatures.

Last November, NAMI established the Campaign for the Mind of America. Its primary purpose, Miller said, is to highlight the gaps and fragmentation in mental health care systems and advocate increased funding and greater coordination of mental health care services. It is also linking broader social issues, such as overcrowding in jails and emergency departments, to the need for mental health care system reform at the state level. The campaign is working with organizations such as the American College of Emergency Physicians, the National Association of Counties, the National Association of County and City Health Officials, the Society of Adolescent Medicine, and the National Association of Social Workers.

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