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Hits Keep Coming for Mental Health Community in California

Many counties in California have had trouble incorporating mental health care into their programs. The statewide shift that began almost two decades ago continues a rocky path with obstacles more prominent in some counties than others. Sacramento County, for one, was sued over its cuts to outpatient mental health services. The county settled the lawsuit at the end of last year, shortly after a judge issued a preliminary injunction to halt the cost-cutting move.

Statewide, the funding picture looks dim. According to a recent study by the National Alliance on Mental Illness, mental health care allocations went down $587 million in California over the past two years.

The state’s mental health system stands to lose another $861 million this year. This time, the state isn’t cutting directly; instead, it’s redirecting cash from Proposition 63 — a voter-approved fund to expand mental health services.

On top of all of that news, the state wants to shift an even larger share of health services to the county level, and a big chunk of that is mental health care.

Mental health care has the potential to be an expensive service, both immediately and in an ongoing capacity. It often involves long-term care, which spreads cost out over a long period of time. It also can mean involuntary treatment, which quickly runs up large bills.

“We’re talking about providing services to those who are uninsured, providing institutions for long-term care for the mentally ill, and also providing involuntary treatment,” Pat Ryan, executive director of the California Mental Health Directors Association, said. “It’s among the most expensive services, because the most serious needs can be the most expensive.”

For a county health system that has been seriously squeezed in its efforts to take care of indigent services, all of that can be a scary prospect.

Yet, according to mental health experts, it also might give counties the flexibility to treat mental health conditions in a more integrated way — and that might end up providing better, more efficient care to a population that sorely needs it.

‘Closing the Loop’

California’s first mayor realignment of health care services in 1992 shifted responsibility for many mental health care services from the state to the counties. That shift primarily involved non-entitlement mental health programs, such as the Institutions for Mental Disease and state hospitals.

In exchange for taking on the implementation of and responsibility for so many services, the counties in 1992 began receiving money from the state in the form of a dedicated share of the vehicle license fee, as well as part of a half-cent sales tax.

This year, a similar move is taking place — this time, completing the shift in responsibility by moving the entitlement programs, such as Medi-Cal specialty mental health programs, to county control. Medi-Cal is California’s Medicaid program. The cash to fund the realignment of services this time around comes from the tax extensions Gov. Jerry Brown (D) hopes to have voters approve in a June ballot initiative.

“It’s really closing the loop,” Ryan said. “The state originally realigned non-entitlement programs to the counties, and this transfers the remaining [entitlement] programs to counties. If it all goes through, the counties now will be responsible for all community-based mental health programs.”

There are a couple of major differences this time around, though.

The first is, unlike the 1992 shift, there is no dedicated source of funding for a shift to county responsibility. Assuming the measure does make the June ballot and assuming California voters approve tax extensions, those extensions would direct money toward paying the counties to take over the state’s mental health entitlement programs.

For now.

Those tax extensions — if approved — would expire in five years, and no one knows exactly what the funding source would be after that time.

“That is the big question,” Ryan said. “That’s what the counties and state are talking about right now. They have an obligation to replace that money, possibly with general fund money, but they haven’t yet named a [future] revenue source.”

There also is concern among health care providers that the state may offer the counties less money than it costs to provide care, Ryan said, and that is being negotiated as well.

What About That $861 Million?

On top of fighting in court to maintain mental health coverage and fighting in the Legislature to secure a reasonable and dedicated source of revenue, mental health advocates are struggling to absorb the loss of $861 million — the amount being shuffled away to help state officials close a $25 billion budget deficit.

“The biggest hit for mental health services is the redirection of $861 million in Prop. 63 funds,” Ryan said.

Ever since California voters passed the Mental Health Services Act (MHSA, established by Prop. 63) in 2004, there have been attempts to move the money from it, Ryan said, including a ballot initiative in 2009 (Proposition 1E). The MHSA generates funds through a 1% tax on Californians with annual incomes of more than $1 million.

The intent of the MHSA was to expand and improve current service levels in the mental health community, and the latest budget plan calls for diverting $861 million from that fund to pay for mental health services the state already is obligated to provide. It is money that the state owes to counties, independent of the MHSA funding.

“The problem with what they’re doing,” Ryan said, “is that they’re diverting that money to pay for the state’s obligation, which is a violation of the act.”

It is a one-time diversion, to fund three mental health entitlement programs the counties will now take responsibility for: the early, periodic screening, diagnosis and treatment program (EPSDT); Medi-Cal mental health managed care; and special education mental health services. The state has said that the money it generates from the tax extensions actually will exceed the money it’s diverting — in effect honoring the intent of the act, by eventually replacing that $861 million and using it for mental health program expansion. Ryan said people in the mental health community have no idea whether those extension dollars will fully cover the money being diverted now.

“The state continues to have an obligation to pay with existing revenue sources,” she said.

The deadly part of this awkward math equation, Ryan said, is what happens if the tax extension measure doesn’t pass, or doesn’t make the ballot in the first place.

“They’re taking that money regardless of whether or not realignment happens,” Ryan said.

And in that case, she said, the end point of this could be a familiar one.

“There are lots of people who have the most to lose and be the most upset if that happens,” Ryan said. “If the state ends up just taking that money without a revenue source to replace it, I’m sure it will be challenged in court.”

Better Care?

Putting aside the $861 million diversion and looking at the larger mental health care picture in California, Ryan said, there may be a major benefit to shifting responsibility and money to the county level.

“A lot of the actual work is already being done at the county level, and this move could give the counties a lot more flexibility,” she said.

And that might allow the counties to streamline current systems, once it’s all under the county umbrella. “We could become more efficient and effective,” Ryan said. “I wouldn’t say it’s been as efficient as it could be.”

How the new money will be distributed in the counties, and even how much that dollar figure will be, is a key issue that still is being worked out, she said. Because the state ultimately is responsible for this care, it remains to be seen what happens when a particular county is not able to meet those guidelines.

“It’s going to be a lot of juggling of risk and responsibility,” Ryan said.

If everything develops the way it could, then it’s possible that mental health care would be better integrated into the health system and that people would get more of the care they need, Ryan said.

“That’s if there is growth in the revenue source, if we’re able to protect our Prop. 63 money. If the money goes to counties with the extension, if there are firewalls around the mental health money.”

Ryan acknowledged that that’s a lot of ifs.

But it would be worth a strong try, she said.

“I think we know a lot more now than we used to know, and we’ve had a lot of successes. No one is planning or expects to go backwards,” Ryan said.

“If we have the flexibility we need, and the real-life programs are given sufficient resources to be able to manage everything, then over time we will see improvement in people’s lives,” she said. “We’re hoping we’ll be able to manage the whole system, and continue community-based, recovery-oriented care that works for as many people as possible.”


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