Medicaid Largest U.S. Payer for Mental Health Services, Study Finds

Medicaid programs pay for more mental health services in the United States than private insurance, Medicare or other state and local programs, according to a study published Tuesday in Health Affairs, CQ HealthBeat reports (CQ HealthBeat, 3/29). The study, funded by the Substance Abuse and Mental Health Services Administration, found that total U.S. spending on mental health services between 1991 and 2001 increased 73% to $104 billion (Rapaport, Sacramento Bee, 3/29).

The report also included the following findings:

Public funding paid for 63% of mental health services in 2001, up from 57% in 1991;

Public sources paid for 76% of substance abuse treatment in 2001, compared with 62% in 1991;

Public spending for mental health services and substance abuse treatment in 2001 totaled $67.4 billion, compared with $36.3 billion in private spending;

Prescription drug spending for mental health patients increased an average of 17.1% annually between 1991 and 2001, while spending for all prescription drugs increased 12% during that time period; and

The share of mental health spending going to inpatient services declined 12 percentage points to 28% during the study period.

According to the report, the decrease in mental health inpatient services spending might be attributable to new psychotropic drugs, the increasing frequency of treatment, closure of psychiatric hospitals and cost pressures of managed care.

SAMHSA Administrator Charles Curie said, "Mental health and substance abuse treatment services spending accounts for a sizeable portion of the health care economy. ... Overall, we have seen a decline in inpatient spending and a shift to public financed care. As we continue to work to improve the community-based services available to people in need, it is clear the public sector is now the major financial driver" (CQ HealthBeat, 3/29). The study is available online. This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.