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National Alliance on Mental Illness
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 Medicaid: States in Crisis

 Another Perfect Storm

Several forces have collided – economic, political, social and demographic – that are likely to impact the financing and delivery of needed services for mentally ill patients.

The acceleration of Medicaid spending growth, fueled by rapidly escalating health care costs, has attracted the close attention of both federal and state federal policymakers. At the core of this tension are deteriorating economic outlooks and declining revenue which have strained state budgets, and the federal budget also is in deficit. Due to the sputtering economy over the last 18 months, the number of people who have become eligible for Medicaid has dramatically increased which has placed more pressure on policymakers to implement short-term solutions to control their spending liabilities.

In essence, 50 perfect economic storms are being churned up in the states threatening basic health care services for the most vulnerable populations, including people with severe mental illnesses. The combination of these economic forces and the solutions being contemplated has the potential to severely undermine the basic tenet of the Medicaid program, which is to provide comprehensive and affordable health coverage, services and benefits to eligible lower-income populations. The implications for people with mental illnesses who are served by Medicaid could be devastating as coverage and benefits for mental health services are curtailed in order to control state government bottom line costs.

The threat to mental health services is beginning to play itself out at the state level with a tidal wave of initiatives to limit Medicaid expenditures for prescribed drugs. Most states have recently implemented several initiatives to control prescription drug spending in Medicaid, such as formularies, fail-first initiatives and prior authorization programs. It is likely that antipsychotic and antidepressant medications are going to be scrutinized and targeted for cost containment and utilization strategies employed by Medicaid agencies. The implications for mental health care are clear. The devastating consequences of obstructing access to medications cannot be understated. Advocates will need to highlight to policymakers the implications of denying or delaying care to patients and the potential economic results.

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