Medicaid, health care financing trends, and the future of state-based public mental health services

Abstract

Medicaid now funds more than half of public mental health services administered by states and could account for two-thirds of such spending by 2017. This trend and others represent a major shift in the predominant model by which public mental health services are funded, organized, and delivered. One model is associated with programs administered by state mental health authorities and is characterized by direct funding of designated community providers. This model is being displaced by one associated with state Medicaid programs, which are based on organization and financing methods characteristic of health insurance plans. This shift in models encompasses issues such as administrative authority, funding source, data collection, population served, services provided, and attitudes toward providers and consumers. Failure to understand these changes and their implications will probably have negative consequences.