This Web site is a component of the SAMHSA Health Information Network
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This Web site is a component of the SAMHSA Health Information Network. |
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Section 4: Key Elements of the National Statistical PictureChapter 16. State Mental Health Agency Controlled Expenditures and Revenues for Mental Health Services, FY 1981 to FY 1997Ted Lutterman, M.A.,* and Michael Hogan, Ph.D.* *NASMHPD Research Institute; *Ohio Department of Mental Health Introduction Mental health is unique in health care because mental illnesses are the only set of disorders for which government actually manages a disorder-specific treatment system. The public mental health system is needed because commercial health insurance usually offers only a limited, "shallow" benefit. The public mental health system serves both as a safety net for individuals and as a safety valve for an inadequate private sector response to mental illness. Partially because of its unique structure, the scope and shape of the public mental health system is not well understood by many policymakers in health care. Additionally, unlike other governmental health programs (e. g., Medicare), mental health is fundamentally a State responsibility with State government mental health agencies directly controlling the expenditures of more than 16 billion tax dollars (fiscal year [FY] 1997) for mental health services and the joint State-Federal Medicaid program expending a comparable amount each year on mental health services. Since 1981, the National Association of State Mental Health Program Directors (NASMHPD) and the NASMHPD Research Institute (NRI) have periodically studied the patterns of revenues and expenditures in the public mental health system managed by the 50 State Mental Health Agencies (SMHAs) plus the District of Columbia. This chapter reports on the NRI's latest update of its series of reports on the funding sources and expenditures directly controlled by SMHAs. This FY 1997 report, completed under contract from the Center for Mental Health Services, documents the expenditures of more than $16 billion for mental health services directly controlled by the Nation's SMHAs, plus the expenditure of several billion additional dollars on public mental health services not directly controlled by SMHAs. This new analysis confirms the continued substantial role of SMHAs in the Nation's system of care for people with mental disorders, and sheds new light on some of the broad trends in this unique sector of health care. In the past generation, the States have dramatically reformed their mental health systems, and this report confirms that reform has accelerated during the 1990's, despite the SMHAs' limited revenues. The dramatic changes in public mental health systems began in the community mental health era of the 1960's and 1970's. This period witnessed a new emphasis on community care and movement away from State psychiatric hospitals as the primary providers of care and treatment. State reforms became more focused in the 1980's following development of the Community Support Program (CSP) approach. CSP promoted a new understanding of serious mental illness as long-term disorders requiring ongoing but flexible community-based treatment and support services. The CSP approach became the organizing framework for reforms in the States. This era also saw a return of mental health leadership to the States (with President Ronald Reagan's "New Federalism" approach) and better Federal financial support for reform. Significantly, the increased Federal support was not primarily through dedicated mental health programs, but through changes that made Social Security and Medicaid supports more accessible and relevant to people with mental illness. This approach facilitated change, but made the task of managing State systems more complex because of the need to integrate many unrelated Federal and State funding streams. This report shows how States have accelerated their reforms during the 1990's. SMHA expenditures for inpatient care decreased from 53 percent of all SMHA expenditures in 1990 to 41 percent in 1997. States accomplished this significant shift despite the fact that total SMHA revenues (adjusted for inflation) actually declined 7 percent from 1990 to 1997. SMHAs reduced State hospital expenditures by 29 percent in constant dollars between 1990 and 1997. By cutting State psychiatric hospital expenditures, SMHAs increased community mental health investment by 86 percent during this same period, an increase of 29 percent above inflation. The data, however, suggest that there may be limits to what States can do in reform. The fact that overall SMHA revenues have declined precisely during the period that SMHA reforms have increased is sobering. The evidence also suggests that the decline in SMHA revenues resulted from mental health's declining share of overall State expenditures. From 1990 to 1997, SMHA expenditures declined from 2.12 percent to 1.8 percent of overall State government expenditures, a 15 percent decline in mental health's budget clout. This trend means that the reduction in SMHA expenditures relative to inflation is entirely due to a reduction in mental health's share of State revenues. It may be that, due to success in reform, SMHAs are no longer generally viewed as significant problems or priorities within State government. Given a continued pattern of reductions in private mental health coverage and expenditures, this trend is alarming. Recent reports and concerns about individuals with mental illnesses in jails and prisons may signal that the safety net is stretched too thin. We hope that this latest review of SMHA revenues and expenditures is helpful to policy makers, managers, and advocates in understanding the crucial and evolving role of the States in orchestrating mental health care. In reviewing these results, readers will be impressed by several major continuing trends: (1) the continuing crucial role of SMHA managed services as the Nation's mental health safety net, (2) the continuing variability among the States, (3) the broad scope of changes made by SMHAs during the 1990's (e.g., moving resources from hospitals to communities), and (4) an emerging trend that shows declining SMHA revenues relative to inflation and as a proportion of overall State budgets. These trends all have significant policy implications that will require continued attention in the years ahead. Method/Sources of Data This study marks the seventh in a series of reports on the mental health expenditures and revenues directly controlled by all SMHAs. The reports all use the same basic format for compiling data on actual expenditures by SMHAs for mental health services. The reader should not assume that the expenditures and revenues reported here include all expenditures for or capture all the variability in mental health services within the public mental health system. The responsibilities and organization of mental health services vary significantly from State to State. Many SMHAs fund community care managed by local governments (e.g., county-based organizations) or designated local agencies, while a few directly operate some or all community mental health services. Some States have merged Medicaid funds with SMHA funds to contract for managed mental health care with responsibility for managed care primarily in the SMHA or in the Medicaid agency. These types of organizational and policy variations can account for major differences among States in mental health spending controlled by the SMHA. Our focus is primarily on the funds for mental health services over which SMHAs have direct managerial control or responsibility. These SMHA-controlled expenditures usually include State general funds, State special appropriations, Federal Mental Health Block Grant funds, Medicaid, Medicare, first-/third-party revenues to SMHA-operated programs such as State psychiatric hospitals, other Federal funds (such as research and demonstration grants), State-required local government "matching" funds, and various first-and third-party funds. Medicaid mental health revenues/expenditures controlled by the Medicaid agency, if different from the SMHA, are not included. Also excluded from the definition of SMHA control are significant funds from non-SMHA sources received by entities that the SMHA may fund but not directly operate. These types of funds may include local mental health revenues and first-and third-party funds received by many community programs, including Medicaid funds that do not flow through the SMHA. By focusing on "SMHA-controlled expenditures," the authors recognize that this report does not depict all mental health spending in a State. However, a valid comparison of the resources directly available to the SMHAs in each State is provided. The methodology for this effort involved compiling actual (rather than estimated) revenues and expenditures under the direct control of the SMHA. The use of actual rather than estimated figures is a cornerstone of valid and reliable reporting. Without reference to specific financial reports depicting actual expenditures, it is difficult, if not impossible, to both verify figures and have an accessible database for follow-up and/or analysis. The database that constituted the foundation for the study was predicated on the development and completion of 10 table shells. Based upon revenue and expenditure figures recorded in each State's archival database, dollar amounts reflecting the State's revenues and expenditures were utilized to complete each cell in the tables. Definitions for the terms contained on the table shells were developed by project staff working with an advisory group of State mental health finance experts and were put into a "glossary" that provided the States and project staff with uniform definitions of terms that corresponded to the row and column headings on the table shells. Separate tables were used to classify SMHA-controlled expenditures for disability programs other than mental health. States vary in the ways they apportion statutory responsibility for mental health, mental retardation, alcohol abuse, drug abuse programs, and other disability programs. SMHAs that also have responsibility for these other disabilities have expenditures beyond those reflected in the mental health revenue and expenditure tables. In addition to the compilation of data about mental health expenditures controlled by SMHAs, information was gathered reflecting total expenditures of all community-based programs in the State that receive funds from the SMHA. These figures show the expenditures of all funds received by these programs, including those received from the SMHA and additional funds that are collected directly by the local programs and thus are not under the control of the SMHA. These tables are important, since in many State mental health systems, the local programs may receive more than half of their revenues from sources outside the SMHAs control. In FY 1997, 42 States had information systems that allowed them to supply the information required for these supplemental tables. Data Compilation and Editing Process The project utilized two primary means for accumulating and depicting data: (1) analysis and coding of State revenue and expenditure data; and (2) followup discussion with appropriate SMHA officials to clarify items in the State's database, request supplemental budget documents, and/or request review of allocations made to the various table cells. Generally, the following steps were followed to obtain final revenue and expenditure figures:
The close relationship between the NRI and each SMHA was particularly important for conducting the study. Any project seeking to account for literally billions of dollars could not achieve an accurate portrayal of such funds in the absence of dialogue between project staff and SMHA contact persons. This dialogue (via letter, e-mail, fax, and phone) served to ensure the data received from SMHAs were accurate and as complete as possible. Data for some cells in the tables could not be obtained. Some SMHAs did not have an accounting system for FY 1997 that portrayed the allocation of revenues/expenditures using the Project's glossary and table formats. Findings In FY 1997, SMHAs directly controlled the expenditures of more than $16 billion for mental health services to individuals with mental illnesses (Figure 1). This is an increase of 14 percent from FY 1993 SMHA-controlled mental health expenditures and an overall increase of 33 percent since FY 1990. However, when SMHA-controlled expenditures are adjusted for inflation, expenditures decreased 2.2 percent since FY 1993 and are down more than 7 percent from FY 1990. Over the 17-year period from FY 1981 to FY 1997, SMHA expenditures increased 164 percent in current dollars, but decreased by 7 percent in inflation adjusted "constant" dollars, due entirely to the decline in constant dollar funding during the 1990's. Shifting Funds From State Psychiatric Hospital Inpatient Services to Community-Based Mental Health Programs Despite the relatively flat level of inflation-adjusted SMHA expenditures for mental health services described above, a major shift in the types of services funded by SMHAs has occurred. This study documents the progress over the past 35 years in building comprehensive community mental health systems and reducing the role of State psychiatric hospitals. State mental health systems are now spending substantially more on community services than institutional services. In FY 1997, States spent significantly more on community mental health services (56 percent) than on State psychiatric hospitals (41 percent). The pattern of overall public mental health spending shows an even more substantial preference for community spending, as most non-SMHA controlled resources spent entirely on community care. As Figure 2 shows, this is a major change in the allocation of resources from earlier years. In FY 1981, community mental health programs received only 33 percent of SMHA-controlled expenditures, while State psychiatric hospital inpatient services accounted for 62 percent. In FY 1993, the previous report on SMHA spending documented that expenditures for community programs matched or slightly exceeded State psychiatric hospital inpatient spending for the first time. This trend toward community services accelerated over the past 4 fiscal years as SMHA substantially increased spending on community mental health services by $2.1 billion or 31.1 percent from FY 1993 to FY 1997. SMHAs now control the annual expenditure of nearly $9. 1 billion to provide community-based mental health services to persons in need. In FY 1997, SMHAs expended almost $6. 6 billion on inpatient services in State psychiatric hospitals, an actual dollar decrease of $266 million (3.9 percent) from FY 1993 levels. This is the first documented decrease in State psychiatric hospital spending after years of slowing growth. When State psychiatric hospital spending is controlled for inflation, State psychiatric hospitals decreased by 17.5 percent from FY 1993 to FY 1997, while inflation-adjusted community mental health expenditures increased 12.6 percent over this period. The decrease in State expenditures for State psychiatric hospital inpatient services is consistent with the findings of the NRI's State Mental Health Agency Profiles System, which has documented the closing or merger of 40 State psychiatric hospitals during the 1990's, and the Center for Mental Health Service's Annual Census of State and County Psychiatric Hospitals, which found a 39 percent reduction in psychiatric hospital residents between 1990 and 1997. A Continuing Pattern of State and Regional Variation The $16.1 billion in expenditures controlled by SMHAs in FY 1997 amounted to over $60. 59 for every civilian resident in the United States that year. The median State— the point at which 25 States were above and 25 States were below— was Missouri, with expenditures of $56.38 per capita in FY 1997. However, as Figure 3 demonstrates, a wide variation occurred among States in their SMHA-controlled spending. In FY 1997, SMHA-controlled expenditures varied from more than $112 in New York to a low of $23 in Tennessee. These examples of variance in revenue and expenditure patterns are linked to the wide variability in organizational pattern and structures among the States. One of the reasons Tennessee's overall SMHA spending appears low, for example, is that most mental health resources in Tennessee have been assimilated into a managed care effort controlled by the State's Medicaid program, and therefore these resources are not part of the SMHA budget. Tennessee's State Medicaid agency expended over $320 million in FY 1997 for mental health services provided by its behavioral health waiver. An analysis of relationship between the geographic region of the country in which a State is located was conducted to reduce some of the wide variation in State mental health expenditures. For example, Figure 4 shows that the States with the highest expenditures are concentrated in the northeastern and northwestern regions of the country, while States in the southern part tend to spend the least. One historical cause of these patterns is that State psychiatric hospitals developed in the 19th century, in the more populated States (especially those east of the Mississippi River). Since a significant portion of resources now devoted to community mental health care has been reallocated from State psychiatric hospitals, and since the data tend to suggest a reluctance of State legislatures to significantly increase funds for mental health, higher resource levels have persisted in States that developed State psychiatric hospital structures earlier. Table 1 displays regional averages for mental health spending. This table shows that SMHAs in New England ($91.07) and Mid-East ($90.37) have the highest per capita expenditures for mental health, while States in the South Atlantic ($50.08) and South Central ($38.53) regions have the lowest per capita expenditures. In the Northeast and Mid-East regions, every State in the region has per capita expenditures for mental health above the U.S. average, while every State in the South Central region has per capita expenditures below the U.S. average. Although considerable variability exists in SMHA spending, there is also a pattern of reduced variation among the States within geographic regions. For historic, political, and cultural reasons, patterns of revenues and expenditures within regions are more comparable, and perhaps provide a better basis for comparisons. These regional analyses demonstrate the importance of looking at a State's mental health expenditures within the context of its region. In the Northeast and Mid-East regions, every State in the region has per capita expenditures for mental health above the U.S. average, while every State in the South Central region has per capita expenditures below the U.S. average. Regional trends also exist regarding the level of SMHA-controlled expenditures for mental health services dedicated to community mental health services or State psychiatric hospital-inpatient services. Figure 5 shows the percentage of SMHA-controlled mental health expenditures for community mental health services. This map shows that most of the States with a high percentage of their SMHA expenditures devoted to community mental health care tend to be located in the western half of the country. States in the South Atlantic (51 percent), South Central (50 percent), and Mid-East (48 percent) regions have the highest expenditures on State psychiatric hospital inpatient services. States in the Mountain (72 percent), Far West (72 percent), New England (62 percent), and Great Lakes (60 percent) regions all expend more than 60 percent of their SMHA-controlled funding on community-based programs. Figure 6 shows that States in the New England and Mid-East regions of the United States tend to spend more than average on both hospital and community mental health services, while States in the South Central region spend less than average on both State psychiatric hospital and community mental health services. States in the Far West and Mountain regions tended to expend more than average on community-based services and less than average on State psychiatric hospital inpatient expenditures. An analysis of regional differences in trends also helps explain variations among States in the growth of mental health spending. Figure 7 shows that although SMHA-controlled mental health Figure 4. Total FY 1997 SMHA-controlled per capita mental health expenditures Figure 5. FY 1997 percent of SMHA-controlled mental health expenditures for community mental health services expenditures increased by 14. 2 percent from FY 1993 to FY 1997, there was significant regional variation. States in the Mountain (42.6 percent), Great Plains (34.3 percent), and South Atlantic (25.0 percent) regions experienced the highest increase in expenditures, while States in New England (16.7 percent) and the Mid-East (–5.9 percent) had either low increases or experienced actual decreases. The regions that showed the largest growth in mental health spending (Mountain, Great Plains, and South Atlantic) are among the regions of the United States that had the lowest per capita spending in prior NRI studies of State mental health agency expenditures. Forensic Mental Health Trends Spending on forensic mental health service varies substantially across the States. Forensic services are mental health services provided to persons directed into treatment by the criminal justice system and can include either mental health treatment or a mental health evaluation from the mental health system. In several States, the SMHA is not responsible for any forensic services, since these services are provided by the State corrections agency and local jails. However, in States such as the District of Columbia, Maryland, Missouri, Ohio, Wisconsin, and Wyoming, forensic-related expenditures account for over 14 percent of their total mental health spending. In FY 1997, 39 States were able to report SMHA-controlled expenditures for forensic mental health services. In these States, forensic services accounted for over $1.1 billion or 7.1 percent of total SMHA-controlled expenditures, as shown in Figure 8. Expenditures for forensic mental health services increased by 64 percent from FY 1990 to FY 1997, almost twice as fast as overall SMHA-controlled mental health expenditures (up 33 percent). Since FY 1983, forensic expenditures have increased by 231 percent, nearly twice the increase in total SMHA mental health spending (126 percent). Almost all reported forensic service expenditures were provided in State psychiatric hospitals (96 percent). Among State psychiatric hospitals, forensic service expenditures now account for 17 percent of total mental health expenditures. An increasing portion of all forensic expenditures is devoted to the provision of mental health services to persons either convicted or charged with sex offenses. In FY 1997, seven States reported that more than $32.7 million was expended to provide mental health services to sexual offenders. Future versions of this expenditure series will track the development and growth of expenditures of mental health services for sexual offenders. SMHA-Controlled Expenditures by Type of Mental Health Service In addition to describing State mental health expenditures for State psychiatric hospitals and community programs, this report details expenditures by the specific types of services provided in both hospital and community settings. SMHA-controlled expenditures are depicted by inpatient, residential, ambulatory (including case management, outpatient, partial day, and emergency), and prevention services. Figure 9 shows how SMHA-controlled expenditures for specific services have increased over time. Ambulatory mental health services have increased to $4.8 billion in FY 1997 and now represent 30 percent of total SMHA-controlled spending, an increase from 12 percent of spending in FY 1981. SMHAs' controlled expenditures of $1.6 billion in FY 1997 for residential mental health services, such as group homes, supported housing, and other 24-hour non-inpatient care. Expenditures for residential services have increased substantially to 10.1 percent of total expenditures in FY 1997, up from 3 percent in FY 1981. SMHA-controlled expenditures for inpatient service expenditures decreased slightly to $7.4 billion in FY 1997. Although inpatient services remain the largest single type of service expenditures of SMHAs, inpatient expenditures have dropped from 65 percent of total SMHA spending in FY 1981 to 46 percent in FY 1997. SMHA expenditures for administration, research, and training were $621 million in FY 1997. SMHA administration, research, and training expenditures as a percentage of total SMHA expenditures have decreased from 7 percent in FY 1981 to 4 percent in FY 1997. Due to constraints in reporting of mental health service expenditures by community mental health providers, almost 11 percent of State spending could not be allocated between inpatient, residential, and ambulatory services. Ambulatory mental health services include a broad array of community-based services that are delivered in nonresidential and non-inpatient settings. In FY 1997, ambulatory expenditures totaled $4.76 billion. This report documents that ambulatory expenditures consist of outpatient services of $2.63 billion (55 percent of ambulatory expenditures), partial care/day-treatment services of $491 million (10 percent of ambulatory expenditures), case management services of $865 million (18 percent of ambulatory services), emergency services of $361 million (8 percent of ambulatory expenditures), and "unallocated ambulatory" services of $332 million (7 percent of ambulatory expenditures). State psychiatric hospitals provide a variety of mental health services including inpatient services (91 percent), residential services (2 percent), outpatient services (1 percent), and other ambulatory services (4 percent). In FY 1997, more than $367 million of ambulatory services were provided by State psychiatric hospitals that operated outpatient and other ambulatory services. In several States, the ambulatory services provided by State psychiatric hospitals represent substantial portions of their total State psychiatric hospital expenditures— New York (24 percent), New Mexico (21 percent), Ohio (14 percent), and South Carolina (7 percent). In some States, these ambulatory programs are provided by State psychiatric hospital staff working in outpatient clinics located off the hospital grounds. Community mental health programs also provide a wide range of mental health services including inpatient services (9 percent), residential services (17 percent), prevention services (2 percent), and various ambulatory services (52 percent) which include case management (10.2 percent), outpatient (31.2 percent), partial/day programs (5.8 percent), and emergency (4.2 percent). Due to limitations in the ability of some States to report on community mental health service expenditures, 21 percent of community service expenditures were not able to be allocated to specific services. Several States have reduced their State psychiatric hospital system and instead fund large amounts of inpatient services through their "community" mental health system— Kentucky (40 percent), New Jersey (35 percent), Florida (27 percent), Illinois (26 percent), Oklahoma (25 percent), Louisiana (24 percent), Minnesota (22 percent), and Wisconsin (20 percent). Community mental health programs in these States may provide inpatient services within community mental health centers, or purchase inpatient services from general hospitals or other (non-State-operated) psychiatric hospitals. SMHA-Controlled Expenditures for Psychiatric Medications and New-Generation "Atypical" Antipsychotic Medications New pharmacological agents are being effectively used by SMHAs to treat mental illnesses. However, many of the new-generation medications are substantially more expensive than earlier ones. Most medication costs for individuals with serious mental illness are covered by the Medicaid program and are not reflected in SMHA budgets. However, SMHAs are usually responsible for medication costs in State psychiatric hospitals, and many States have established programs to cover medication costs especially for individuals not eligible for Medicaid. In FY 1997, we began compiling information on the expenditures by SMHAs for medications. In this initial compilation effort, 32 States were able to report expenditures totaling nearly $165 million (1.9 percent of total spending) for these medications. Spending for medications in State psychiatric hospitals accounts for 2.5 percent of total State psychiatric hospital expenditures. An area of particular interest to many States and mental health advocates involves the use of new-generation "atypical" antipsychotic medications for persons with schizophrenia. Twenty States were able to report expenditure data totaling $45 million for the new-generation atypical antipsychotic medications. (Atypical medications include clozaril, olanzapine, risperidone, and quetiapine). Expenditures for atypical antipsychotic medications were depicted for State psychiatric hospitals ($22 million in 18 States) and community programs ($25 million in 14 States). One percent of State psychiatric hospital budgets was expended on these medications in the 18 States that were able to report this data. SMHA-Controlled Mental Health Spending Is Declining in Constant Dollars and in Relation to Other State Government Expenditures Although total SMHA-controlled expenditures for mental health have increased over time, mental health spending has not kept pace with other governmental spending or with inflation. When SMHA-controlled expenditures were examined, controlling for the effects of inflation, 20 States reported that their total SMHA-controlled mental health expenditures have failed to keep pace with inflation since FY 1993. Nationally, inflation adjusted SMHA-controlled mental health expenditures decreased 2 percent from FY 1993 and have fallen 6.6 percent since FY 1981. Figure 10 shows that the percentage of total State government expenditures devoted to the State mental health agencies has decreased over the past 15 years. In FY 1981, SMHA-controlled expenditures for mental health represented 2.09 percent of total State government spending. However, since FY 1983, SMHA expenditures have steadily decreased as a percentage of total State government expenditures; in FY 1997, they represented only 1.81 percent of State government expenditures. If SMHAs had maintained the same level of State contribution at 2.14 percent that they received in FY 1983, they would have received approximately $3 billion more in FY 1997 than they actually received. During the same period that SMHA-controlled mental health expenditures decreased within overall State spending, SMHAs also decreased when compared to other State health and welfare and State corrections expenditures. Figure 11 shows that the growth in State government expenditures for corrections and for other health and welfare programs has consistently outpaced State mental health agency spending throughout the past 15 years. For the 9-year period from FY 1981 to FY 1990, while SMHA-controlled mental health expenditures increased by 99 percent, State expenditures on corrections increased by 239 percent, and State health and welfare expenditures increased 105 percent. During the 1990's, SMHA-controlled mental health resources have decreased even more compared to other State expenditures. From FY 1990 to FY 1997, SMHA-controlled expenditures for mental health increased by 33 percent, while other State government programs increased more quickly. From FY 1990 to FY 1997, corrections expenditures increased by 68 percent, State health and welfare expenditures increased by 50 percent, and total State government expenditures (for all services) increased by 56 percent. These trends may raise significant policy and political concerns. First, they may suggest that the increased efficiency of reorganizing mental health toward community care may have had a negative effect on funding. Second, since community care is often a local responsibility, these data may suggest a cost shift for mental health responsibility from the State to local government in some States. SMHA-Controlled Funding Sources for Mental Health Services In FY 1997, SMHAs reported that they con-trolled or expended more than $16.35 billion for mental health services. As Figure 12 shows, State government's tax revenues contributed more than $11.4 billion (69 percent) of the cost of SMHA-controlled services. The Federal Government, mostly via Federal Medicaid participation, contributed $4 billion (25 percent), first-and third-party payments contributed $822 million (5 percent), and local government (county and city governments) contributed over $95 million (1 percent) of SMHA-controlled mental health revenues. The State governments' contribution of over $11.4 billion for SMHA-controlled mental health services in FY 1997 came mostly from State general funds of $8.6 billion (60 percent of total funds) in FY 1997. State Medicaid funds used to match the Federal Medicaid program accounted for another $1.5 billion (9 percent), and other state funds accounted for an additional $1 billion of the State mental health contribution. From FY 1993 to FY 1997, State government revenues for mental health increased by $808 million, an increase of 7.6 percent. From FY 1981 to FY 1997, State government contributions to SMHA-controlled mental health services increased by $6.4 billion (129 percent). Federal Government funding sources provided 25 percent of all funds expended by SMHAs in FY 1997. Most Federal funds controlled by SMHAs originated from the Medicaid program, which expended over $3.26 billion (20 percent of total SMHA funds) on mental health services at either SMHA-operated or -funded programs. This represented an increase of more than $1 billion from FY 1993 to FY 1997 (Figure 13). Among SMHA revenue sources, Medicaid again had the largest increase of any funding source (up 48 percent). However, it is important to note that these data on Medicaid represent only those Medicaid funds that are "controlled" by the SMHAs. An additional $850 million of Medicaid goes to community mental health programs in 42 States where the SMHA does not administratively "control" the Medicaid revenues (i.e., community mental health providers contract with the State Medicaid agency). Additionally, this study does not account for additional Medicaid payments for mental health services to the many providers and health plans that are not funded by SMHAs, such as Medicaid HMOs, private psychiatric hospitals, most general hospitals, and private mental health professionals such as psychiatrists, psychologists, social workers, and other providers. In analyzing the major funding sources of State psychiatric hospitals, State government sources accounted for 69 percent ($4.9 billion), while Federal sources accounted for 25 percent ($1.77 billion), first-/third-party and other funds accounted for 6 percent ($402 million), and local government funds accounted for 1 percent ($56 million). The major sources of SMHA-controlled funds for community mental health programs were similar to the State psychiatric hospital funding sources: State governments contributed 69 percent ($6.1 billion), while Federal sources accounted for 26 percent ($2.2 billion). In FY 1997 the major sources of Federal funds controlled by SMHAs for community mental health programs were Medicaid at 79 percent ($1.76 billion) and the Mental Health Services Block Grant (MHBG) at 10 percent ($232 million). The major sources of Federal funds at State psychiatric hospitals were Medicaid at 84 percent ($1.5 billion) and Medicare at 12 percent ($219 million). Since Medicaid is the second largest source of funds to SMHAs, States were asked to report which Medicaid options or waivers were used to draw their revenues. Out of a combined total of $4.46 billion State and Federal Medicaid revenues in FY 1997, $841 million (19 percent) came from the rehabilitation option, $451 million (10 percent) was for services under the Inpatient-under Age 21 Option, $375 million (8.4 percent) was for the 1915(b) waiver, $239 million (5. 4 percent) was for inpatient services for persons over age 65, $234 million (5. 2 percent) was for Clinic Option services, and $114 million (2.6 percent) was for COBRA Case Management mental health services. Approximately $980 million (22 percent) was not allocated to any specific Medicaid option or service. Mental Health Block Grant Expenditure Trends Over Time Since the MHBG was created in 1982, it has been an important source of flexible funding for SMHAs to pilot and implement innovative community mental health services. SMHAs have used MHBG funds to develop and implement supported housing, supported employment programs, case management, consumer-run services, assertive community treatment, and other comprehensive community support systems. Successful programs initiated using MHBG funds frequently are expanded and funded using State general revenues or local revenues. Since the passage of the MHBG, SMHA expenditures for community mental health services have increased by more than $7 billion (an increase of almost 350 percent). Congressional appropriations for the MHBG have not kept pace with the increases in SMHA-controlled spending on community mental health services. Since passage of the MHBG, funding has increased only slightly (up 17 percent) from FY 1983 to FY 1997, but in inflation-adjusted dollars, MHBG expenditures have decreased by 49 percent. As a result of the relatively flat Federal funding of the MHBG during a time of unprecedented State spending increases in community mental health programs, the MHBG (which in FY 1983 represented 10.7 percent of SMHA-controlled community mental health expenditures) represented 2.8 percent of SMHA-controlled community expenditures in FY 1997 (Figure 14). The reported expenditures of MHBG funds by SMHAs differ slightly from the Federal Block Grant allotments to States since actual expenditures include "carryover" of funds from one year to another. In FY 1999, Congress appropriated an additional $13.4 million to the MHBG. This and subsequent proposed increases will be reflected in future reports. Total Expenditures of SMHA-Funded Community Mental Health Programs In addition to the data on SMHA-controlled expenditures and revenues described above, this study also compiled information from the States regarding the total expenditures of the programs that the SMHA funds. These tables show both the SMHA-controlled expenditures discussed above and all other expenditures and revenues of these programs. Forty-two SMHAs were able to report FY 1997 data for these community expenditures. Using this broader picture of community mental health expenditures, a total of $11.2 billion was expended in FY 1997 by community mental health programs funded by SMHAs. About 65 percent ($7.3 billion) of the total community expenditures were "SMHA-controlled" and 35 percent ($3.9 billion) were additional funds not counted as SMHA-controlled. As Figure 15 shows, with the addition of these additional community mental health expenditures, total community mental health expenditures of these 42 SMHAs represented 63 percent of mental health expenditures, while State psychiatric hospital inpatient expenditures dropped to 35 percent. The amount of additional community expenditures, determined by counting "non-SMHA-controlled" expenditures, varied by State. Some States (such as Delaware, Hawaii, Idaho, Montana, Nevada, and South Carolina) operate almost all community programs with State employees, and thus have almost no funds that are not controlled by the SMHA. Other States show major increases in their community mental health system when these additional expenditures are included (Iowa [83 percent of community expenditures were "not-controlled by the SMHA"], Indiana [71 percent], Utah [73 percent], Arkansas [67 percent], Nebraska [65 percent], and New York [57 percent]).1 1 For further information about this study please contact Ted Lutterman, Director of Research, at the NASMHPD Research Institute by phone at (703) 739-9333 ext. 21 or e-mail at or mail to NRI, 66 Canal Center Plaza, Suite 302, Alexandria, VA 22314. Expenditure and Revenue data for individual States from this report are available on the NRI website at www.nasmhpd.org/nri. |
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