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The hidden costs of mental health cutbacks

Amy Higgins

States are stumbling when it comes to taking care of their mentally ill residents. Between 2009 and 2011, cuts to non-Medicaid state mental health spending totaled more than $1.8 billion, and deeper cuts are expected for 2011 and 2012, according to a March 2011 report by the National Alliance on Mental Illness (NAMI).

Additionally, Medicaid’s increased federal funding will expire on June 30, 2011, which could leave more Americans with mental illnesses in a lurch. Those who get health insurance through their jobs and those who have private insurance still may have some coverage. But health insurance companies sometimes consider mental health coverage (often called “behavioral health” coverage) to be in a separate category from medical coverage — and therefore impose separate limits on mental health services that patients can receive.

Even if such cuts save money for state governments, cutting spending for mental health has high hidden costs, according to the NAMI report, as the responsibility is simply transferred to emergency rooms, law enforcement agencies and homeless shelters.

NAMI reports that one in 17 Americans lives with a serious mental illness like schizophrenia, major depression or bipolar disorder. Despite these staggering numbers, states are closing their doors to the mentally ill in staggering numbers. The report, titled “State Mental Health Cuts: A National Crisis,” reveals some of the problems various states face.


Between 2009 and 2011, Illinois cut $113.7 million from its mental health budget — 15 percent of its overall state budget for mental health care. According to Christopher Larrison, professor of social work at the University of Illinois, these cuts will make the state’s already inadequate funding even worse.

In an article for the university’s website, Larrison expressed his concern that rural areas would suffer the most. If community health centers in rural areas (where residents already have few options for the mentally ill) go under, those who live there likely will go untreated, even if they have serious conditions like schizophrenia. Hospitals and law enforcement agencies already at the “breaking point” would have to pick up the slack.


There was a time when Ohio had one of the top mental health systems in the country, according to the NAMI report. But after several years of significant budget cuts, thousands living with serious mental illness are unable to access care in their communities. Ohioans either are ending up homeless or in hospitals and jails, which ends up costing their communities more than preventive care would. Ohio cut $57.7 million from its mental health budget between 2009 and 2011.


The Grand Canyon State cut $108.4 million in general funds from its mental health budget between 2009 and 2011 — 23 percent of its overall state mental health budget, according to NAMI. This cut reduced its services to about 14,000 Arizonans living with mental illness and eliminated things like case management, brand-name medications, support groups, housing allowances and transportation subsidies for those living with serious mental illness.

Overall damage

California cut the most mental health dollars from its budget — about $587 million. At 47 percent, Kentucky made the largest cut based on percentage of its overall state mental health budget between 2009 and 2011. At 35 percent, Alaska made the second largest cut, and South Carolina and Arizona tied for third place at 23 percent.

In a 1999 mental health report, then-U.S. Surgeon General David Satcher pointed out that major depression is the leading cause of disability in developed nations, including the United States. Manic depression, schizophrenia and obsessive-compulsive disorder rank near the top as well, he said. The biggest costs of mental health budget cuts are, therefore, not financial — suicide ranks as one of the leading preventable causes of death, according to the surgeon general’s report, making mental disorders “tragic contributors to mortality” in the United States.

Eliminating patient beds, crisis services and community supports, according to the NAMI report, is a “penny wise and pound foolish strategy” that will cost states more money in the long run because of costly emergency room treatments, diversion of law enforcement personnel and correctional costs that inevitably will follow.

Health Insurance by State

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