Funding for Public Mental Health

California Association of Health Facilities
Behavioral Health

Funding for Public Mental Health
May 9, 2001

California Mental Health Directors Association
2030 J Street
Sacramento, CA 95814-3120
(916) 556-3477
Fax (916) 446-4519
www.cmhda.org

In 1991, California enacted the Bronzan-McCorquodale Act, referred to as "Realignment", in response to the State's $14.3 budget deficit. In the areas of mental health, social services, and health, realignment transferred program responsibilities from the State to the counties' control, altered program cost-sharing ratios, and provided counties with dedicated tax to pay for these changes. The realignment plan was intended to provide expanded discretion and flexibility to counties to expend State funding. Local mental health programs were given much greater autonomy and flexibility in how they designed their mental health systems of care. With funds allocated directly to local governments to provide mental health services, both inpatient and outpatient services increased measurably for patients with severe diagnoses, but declined for those with mild diagnoses. Service design shifted significantly toward case management and rehabilitative services that permit seriously mentally ill persons to maintain their recovery.

Although realignment initially produced a relatively stable funding base, the growth in this base has not kept pace with the growing and booming California economy. As the costs for providing mental health services are escalating, mental health realignment funds less equity adjustments have only increased on average by three percent for the past eight years, reducing the mental health realignment sub-account annual purchasing power by between $50 million and $60 million. Meanwhile, the demand for mental health services has grown significantly more than the increase in population and health care costs. Even today, the public mental health system, only manages to serve fewer than half the persons with serious, disabling mental illness. And, presently over 20 counties are already experiencing shortfalls which require redirection of funding or reductions in levels of service. The Little Hoover Commission's report is accurate in their analysis in stating "clients with limited needs wait until the severity of their symptoms escalate before they can access our services".

Other weaknesses in the system include the lack of Medi-Cal reimbursement for many services that are necessary to support recovery from serious mental illness. Increasing costs include newer psychiatric medications with reduced side effects. Medical care and technology have also increased life expectancies for persons suffering from conditions related to or interacting with mental illnesses such as Alzheimer's or other dementias, head trauma, or AIDS. While primary care of these conditions is not the purview of mental health, mental health is often called upon to provide auxiliary services. Further complicating the picture is the close interaction of alcohol and other drug dependency; both for individuals truly suffering from both conditions as well as those not experiencing serious mental illness, but in need of care from substance induced psychoses. Services for which Medi-Cal reimbursement is not available range from client self-help to acute services provided in freestanding psychiatric hospitals. Diagnostic and preventive services are difficult to find and insufficiently funded for individuals who are not seriously mentally ill. In addition, the destabilization of California's hospital industry has affected mental health treatment services. Increasingly, hospital inpatient care is becoming difficult to find in most counties while pressure mounts to pay more for hospital stays. Counties are routinely arranging for children to be hospitalized at great distances from their homes when beds can be found at all. For some counties the search for adult psychiatric hospital care is just as difficult. Residential care – never in adequate supply in California – continues to disappear while demand grows.

Additional challenges in the system include the needs of the Medi-Cal population, which has become progressively more disabled through the narrowing of federal disability standards and the effects of welfare reform. At the same time these trends have shifted more persons to county indigent (realignment) mental health services. Even Medicare, which is well known for lacking coverage of prescriptions, is very discriminatory against mental illness with few services directed at mental illness and no focus on rehabilitation or provision for case management. In fact, recent federal efforts at cost control have further reduced the public system's capacity to use Medicare in non-hospital settings.

Recent reforms within and related to mental health have often served to increase pressure on mental health base funding. Most reforms come with very detailed and specific requirements to provide services to new persons or in ways beyond existing programs. For instance, mental health programs have expanded to provide targeted assistance to CalWORKs recipients with mental illness, Healthy Families children with serious emotional disturbance, but are generally not able to expand to assure that individuals with a dual diagnosis served by Proposition 36 receive mental health treatment when required. All recent reforms come with expectations of collaboration (and associated costs) with other government programs. While the benefits of these efforts clearly outweigh their un-funded costs, these costs cannot be considered in isolation from the other pressures on mental health base funding. And, each expansion makes more evident the crisis in training and compensation for health professionals. In every part of the state, in hospitals, clinics and community programs, shortages of health professionals are serious, and worse for professionals that have the culture and language skills needed to serve California's diverse population.

On a more positive note, today mental health policy is both a State and national priority, as evidenced by the White House Conference on Mental Health, increased federal support for the National Institute of Mental Health, the U.S. Surgeon General Report on Mental Health and Governor Gray Davis' proclamation in May 2000. Each of these meetings and reports focused on and recognized the tragic consequences of limited access to services and the great potential for individual recovery with appropriate treatment and support.

Notwithstanding the economic recovery in the late 1990's, many programs that were reduced or under funded have not received additional resources. Counties continue to face many fiscal pressures reflecting an economic recovery that has not been uniform. Furthermore, counties have seen a reduction in discretionary money following the shift of property taxes to schools. The result of years of neglect is a severe under-funding of the mental health system. The costs of such limited treatment are significant in human and economic terms.

It is clear that California's mental health system is fragmented and under-funded. Individuals from the State, County and community level with expertise in mental health services and management should be called upon to participate in guiding comprehensive system reforms.

California Association of Health Facilities | 2201 K St., PO Box 537004
Sacramento, CA 95853 | 916.441.6400 | Fax 916.441.6441