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Fall 2018 Daniels & Ritter/229
HOW HEALTH CARE POLICY AND LAWS HAVE
IMPACTED MENTAL HEALTH DELIVERY
Mental Health care has gone through significant changes in the 20th and
21st century. Early in the 20th century, treatment consisted of
institutionalizing patients. In the 1960s, legislation dismantled the notion of
institutionalism in favor of community-based treatment. The introduction of
psychotropic medication to treat the more severe mentally ill helped promote
community-based care even further. However, with funding and
reimbursement rates decreasing while regulations continue to increase,
resources such as mental-health provider shortages left many patients
vulnerable to exclusion from mental health resources.
During the 20th century, mental illness treatment consisted of
institutionalizing patients. In the 1960s, legislation dismantled
institutionalism in favor of community-based treatment.1 Although the
change was considered revolutionary, more regulations, coupled with
strategies to reduce fiscal deficits have created unforeseen consequences.2
According to Alakeson, Pande & Ludwig, access to community-based
resources has decreased due to reduced state spending. Also, a lower
reimbursement rate from Medicaid discourages community behavioral health
services. The only option for many patients is to seek care in the emergency
rooms. Patients endure long stays in the emergency departments waiting on
state sponsored beds.3 These prolonged waits lead to uncompensated care
and increased tax payer burden for state sponsored hospital utilization.4
*M.D., Texas A&M University – Central Texas.
**D.B.A., J.D., M.B.A., Associate Professor of Accounting, Texas A&M University – Central
1 Pub. L. No. 88-164 (1963).
2 Jeneen Interlandi, A Madman In Our Midst, N.Y.TIMES, June 24, 2012, at H2.
3 Vidhya Alakeson, et al., A Plan to Reduce Emergency Room ‘Boarding’ Of Psychiatric
Patients, 29 HEALTH AFFAIRS 1637, 1637-42 (2010).
4 Impact of Proposed Budget Cuts to Community-Based Mental Health Services, HEALTH
MGMT. ASSOCIATES, 1-2 (2011), http://txcouncil.com/wp-content/uploads/2017/02/Impact-of-
230/Vol. XXVIII/Southern Law Journal
America’s prisons are crowded with mentally ill patients,5 and homeless with
schizophrenia live on America’s streets.6
Medical care in the United States (US) is complex, and fragmented.
Physicians and hospitals must wade through a plethora of regulations directly
or indirectly to deliver the health care. For example, Larrat, et al., state that
clinicians have to consider the type of insurance coverage for each patient
while managing their patients. Insurance company coverage, both public and
commercial is dictated by federal regulation. Over the years, insurance
companies have had to adapt to changes in the federal initiatives.7
II. 20TH CENTURY HISTORY OF MENTAL HEALTH LAW & POLICY IN
THE UNITED STATES
The roots for early 20th Century institutions for the commitment of the
mentally ill and early legislation probably began about 1848 with a woman
named Dorothea Dix.8 She was an advocate for the indigent mentally ill who
had been incarcerated in jails and prisons.9 She appealed to the United States
Congress to support a “12,225,000 Acre Act.”10 This act would have paved
the way for “relief and support of the indigent curable and incurable
insane.”11 It passed Congress but President Franklin Pierce vetoed it because
he could not find any authority in the Constitution that allows the Federal
Government to provide public charity.12
Although this act was vetoed, her activities led to the building of many
new state mental health hospitals.13 At the time Ms. Dix was advocating,
there was approximately one public psychiatric bed for every 5000 persons.
By 1955, there was approximately one public psychiatric hospital bed
available for every 300 persons in the population.14
5 H. Richard Lamb & Linda E. Weinberger, The Shift of Psychiatric Inpatient Care from
Hospitals to Jails and Prison, 33 J. AM. ACAD. PSYCHIATRY L. 529, 529 (2005); Bonita M.
Veysey & Gisela Bichler-Robertson, Prevalence Estimates of Psychiatric Disorders in
Correctional Settings, NAT’L COMM’N ON CORR. HEALTH CARE, 57-64 (2002).
6 E. Fuller Torrey, How to Bring Sanity to Our Mental Health System, THE HERITAGE FOUND.,
2 (Dec. 19, 2011).
7 E. Paul Larrat, et al., Impact of Federal and State Legal Trends on Health Care Services, 37
P&T 218, 218 (2012).
8 Joseph D. Bloom, “The Incarceration Revolution”: The Abandonment of the Seriously
Mentally Ill to Our Jails and Prisons, 38 J.L. MED. & ETHICS 727, 727 (2010).
9 Id.; see also Torrey E. F., How to Bring Sanity to Our Mental Health System, CTR. FOR POL’Y
INNOVATION, 2 (2011), http://thf_media.s3.amazonaws.com/2011/pdf/CPI_DP_02.pdf.
10 Bloom, supra note 9, at 727.
13 Torrey, supra note 10, at 14.
Fall 2018 Daniels & Ritter/231
Following President Pierce veto, the Federal Government did not
assume responsibility for a national health system or mental health until
shortly after World War II.15 The states had the major responsibility for the
care of the seriously and chronically mental ill. Prior to the mid-20th century,
many of these patients received care in large state mental hospitals.
According to Accordino, et al.,16 by the 1930s and World War II,
conditions in these state run mental facilities had deteriorated. The Barden-
Lafollette Act of 1943 mandated that patients with mental illness receive
federal and state rehabilitation/vocational rehabilitation services. This opened
the door for vocational services. Furthermore, as more and more servicemen
were diagnosed with service related psychiatric problems, the military
experimented with new and different treatment modalities. A few of the
advances that were developed by military psychiatrists include group insight
therapy, sedation and hypnosis. In the civilian community, many outpatient
community practices grew over the next few years as psychiatrist left state
mental hospitals to provide therapeutic treatment in private and community
practices. Responding to these changes, national policy grew out of the need
for community treatment for people with mental illness leading to the
passage of another legislative act. The National Mental Act of 1946 allowed
the federal government to provide grants to states to support existing
outpatient treatment centers or build programs where none existed.
The above act, coupled with the Vocational Rehabilitation Act of 1948
which allowed further vocational rehabilitation services, catalyzed the
growth of outpatient clinics. By 1954 there were approximately 1,234
community clinics in the US. Another change occurred that would help shape
policy in the 1960s. Psychiatric pharmaceuticals hit the market in the 1950s.
Medications such as chlorpromazine, imipramine, iproniazid helped improve
treatment of the mentally ill resulting in additional reductions of the number
of people receiving treatment in state mental hospitals.17
President Kennedy in his 1963 Presidential message on mental illness
described the plight and horrific conditions that these patients endure in state
mental hospitals.18 In his message he called for a replacement of institutions
with comprehensive community programs to provide outpatient care, day
treatment and rehabilitation. He noted that there were 800,000 patients in the
various state facilities.19 He described antiquated, vastly overcrowded and
15 Bloom, supra note 9, at 727; see also Accordino, et al., Deinstitutionalization of Persons
with Severe Mental Illness: Context and Consequences, 6 J. REHAB. 16 (2010).
16 Id. at 16.
18 John F. Kennedy, Special Message on Mental Illness and Mental Retardation, THE WHITE
HOUSE (Feb. 5, 1963), http://archive2.jfklibrary.org/JFKPOF/052/JFKPOF-052-012/JFKPOF-
19 Id. at 1.
232/Vol. XXVIII/Southern Law Journal
shamefully understaffed conditions for which death is the only hope of
release. A bill was introduced into Congress before his death that was later
signed by President Johnson.20 This legislation started the slow but eventual
dismantling of state mental hospitals and created the community mental
health center movement
Dr. Bloom, who was a psychiatric resident in 1963, described the intent
of this legislation and the community mental health center movement as
follows: “Each mental health center was to have inpatient, outpatient and
partial hospitalization services, a 24 hour walk in service for immediate care.
The institutions that housed such large numbers of mentally ill individuals
were slated to be closed and hospitalization would take place in the
community mental health center’s inpatient service.”21 According to Bloom22
and Koyanagi,23 there was a promise of funding that would flow to
communities, to hospitals or nonprofit community agencies.
Several more legislative efforts continued to change the landscape of
mental health services provided by or at the federal state levels. The
Community Mental Health Centers (CMHC) Act funded initiatives for
professional training for community health workers, to improve research in
community health methodology and to improve quality of existing programs
until newer community health centers could be opened. These efforts
increased community health centers throughout the states while
simultaneously leading to reduction in state hospital beds because of the
increasing abundance of these centers. Despite federal efforts, many state
hospitals remained open but provided inadequate and below standard care. In
response, the CMHC Act was amended in the 1970s which mandated that
centers evaluate their own services. The federal government passed the
Omnibus Budget Reconciliation Act 1981 which ended federal funding of
community treatment for patients with severe mental illness. This action
effectively shifted the financial burden for deinstitutionalization back to the
states and this took effect when the country was experiencing economic
recession. However, one federal policy change, State Mental Health Planning
Act of 1986, did provide some federal support for community health
provider’s services. This act provided funding that allowed community
health providers to receive reimbursement from Medicare and Medicaid.
Accordino, et al., describe the 1990s as a positive time for people with
mental illness because of the growth of networks of community-based
20 Bloom, supra note 9, at 728.
23 Chris Koyanagi, Learning from History: Deinstitutionalization of People with Mental
Illness as Precursor to Long-Term Care Reform, KAISER COMM’N ON MEDICAID AND THE
UNINSURED 5 (2007).
Fall 2018 Daniels & Ritter/233
providers coupled with changes in reimbursement by Medicare and
Medicaid. However, rising cost of health care caused managed care
companies to find ways to limit their cost by either reducing the total number
of people utilizing services or reducing cost of each service unit to the
III. STATE RESPONSE TO FEDERAL MANDATES
During this era of deinstitutionalization and growth of community
health services, each of the 50 states created some form of parity legislation.
However, the laws developed varied considerably. As of April 2015, the
National Conference of State Legislatures divided these laws into three
1. Mental Health “Parity” or Equal Coverage Laws. The states that
created these laws intended to require insurers to provide the same
level of benefits for mental illness as they issue for physical illness.
However, the laws under this category would vary between states.
Using the example from the NCSL, Arkansas provides a broad
coverage for mental illness while other states limit coverage to
specific biologically based mental illness (p. 1).
2. Minimum Mandated Mental Health Benefit Laws. These states may
require certain levels of insurance coverage for mental illness, but
they allow discrepancies in the types of benefits they offer. For
example, insurance carriers may limit the amount of clinical visits,
may have different co-payments, deductibles and annual limits. It
the state law is not specific, insurers may require co-payments as
high as 50 percent of the visit cost and/or require the beneficiary
meet a separate deductible before mental health visit will be
3. Mental Health “Mandated Offering Laws. These laws are different
from the other two because they do not require benefits be provided
at all. However, they can either require that an option of coverage
for mental illness be provided by the insurer or if the benefits are
offered they must be equal. In the first option, if the coverage is
accepted, the beneficiary will be required to pay an additional or
24 Accordino et al., supra note 16, at 17.
25 Richard Cauchi, et al., Mental Health Benefits: State Laws Mandating or Regulating, NAT’L
CONF. OF ST. LEGISLATURES (Dec. 30, 2015), http://www.ncsl.org/research/health/mental-
234/Vol. XXVIII/Southern Law Journal
States with Mental Parity or Equal Coverage Laws are Arkansas,
Connecticut, Delaware, Hawaii, Idaho, Illinois, Maryland, Minnesota, New
Jersey, Oklahoma, Rhode Island, South Dakota, Vermont, Virginia, West
Virginia, and Wyoming. States that have Minimum Mandated Mental Health
laws are Alaska, Iowa, Kansas, Maine, Massachusetts, Michigan, Missouri,
Montana, Nebraska, Nevada, North Dakota, Oregon, Pennsylvania, Texas,
and Wisconsin. States that have mandated offering laws for mental illness
include Arizona, Colorado, Florida, Georgia, Kentucky, New Mexico, New
York, Utah, and Washington. The remaining states have a combination of
According to Regier, et al., the federal government’s effort to reduce
states various parity laws seems to originate following the 1961 Joint
Commission report on Mental Illness and Health.27 Following this report
Presidents Kennedy and Johnson promoted equal treatment of physical and
mental disorders. The Federal Employees Health Benefits program did adopt
these standards from 1967-1982. Then for some strange reason the Office of
Personnel Management allowed variations in the levels of benefits offered
for mental health plans. This allowed a shift of patients with the greatest need
and greater resources to purchase plans that offer better mental health
benefits. For others without the means, choices were limited to what they
could afford. With the 1980s, managed care emerged in an effort to control
cost which changed benefit management and the way inpatient and outpatient
care was reimbursed. By the 1990s, managed behavioral health organizations
sought to control cost by establishing networks of contracted preferred
provider panels that limited the supply of clinicians, provided preferred
provider panels clinicians with referrals if they agreed to discounted fees or
capitated payments, and required physicians in the network to justify medical
necessity for treatment services.28 Also, due to exemptions from state law,
employers with less than 50 employees did not have to provide equal
coverage for some mental disorders.29
IV. 21ST CENTURY MENTAL HEALTH POLICY CHANGES
AND THE PPACA
Recent legislation has attempted to create parity across insurance
carriers. In 2008, federal Law attempted to ensure that patients with
insurance for mental health would receive the same benefits that they had for
26 Id. at 4-11.
27 Dean A. Regier, et al., Parity and The Use of Out of Network Mental Health Benefits in the
FEHB Program, 27 HEALTH AFFAIRS 70, 71 (2008).
28 Id. at 71.
29 Id. at 70.
Fall 2018 Daniels & Ritter/235
medical care and surgery.30 Otherwise known as the Paul Wellstone and Pete
Dominici Mental Health Parity and Addiction Equity Act of 2008 or
MHPAEA, its requirements became effective for commercial group health
insurance plans on October 3, 2009.31 It requires equal application for
insurance deductibles, co-payments, out of pocket expenses, coinsurance,
covered hospital days and covered out-patient visits. Unfortunately, it
exempts businesses with less than 50 employees.32 According to Gold33 and
NCSL,34 November 8, 2013 marked another improvement in federal policy.
On that day, Health and Human Services Secretary Kathleen Sebilius,
announced new rules that enhanced the power of the 2008 mental health
equity law. The new rules required doctors and insurers to treat mental illness
the same as physical illness.
On March 23, 2010, President Obama signed into law the Patient
Protection and Accountable Care Act (ACA). This law is supposed to
“increase access, promote quality and improve the efficiency of our complex
and fragmented patient care effort.”35 The changes addressed by Secretary
Sebilius only affected the private insurer’s obligations.36 In April 2015,
regulations were released to ensure the same level of equity for Medicaid and
Children’s Health Insurance Plan (CHIP) patients.37 The regulations are
intended to prevent plan limitations on coverage such as “certain number of
mental health visits per year.” According to Gold,38 this rule will approve
access for over 70 million people on Medicaid and 8 million children
covered by CHIP.
Prior to the Affordable Care Act (ACA), Beronio, et al.,39 stated that
approximately one-third of the beneficiaries covered in the individual market
had no coverage for substance abuse and another 20% did not have coverage
for mental health services. Other services that were unavailable included
outpatient therapy sessions, inpatient crisis intervention or stabilization.
Furthermore, for those who had individual plans that would cover these
benefits, the previous federal parity law did not mandate these plans should
30 Kirsten Beronio, et al., Affordable Care Act will expand Mental Health and Substance Use
Disorder Benefits and Parity Protections for 62 Million Americans, DEP’T OF HEALTH & HUM.
SERVS., 29 (Feb. 2013), https://aspe.hhs.gov/system/files/pdf/76591/rb_mental.pdf.
31 Mental Health Benefits, supra note 26.
33 Jenny Gold, Rule Proposed On Providing Mental Health ‘Parity’ In Medicaid Program,
KAISER HEALTH NEWS, 1 (2015).
34 Richard Cauchi, supra note 26, at 3.
35 Larrat, supra note 8, at 219.
37 Id. at 220.
39 Beronio, supra note 31, at 1.
236/Vol. XXVIII/Southern Law Journal
ensure coverage for mental health and substance abuse similar to coverage
for medical and surgical care.
The ACA mandated 10 essential health benefits40 which must be
included in plans sold on the exchanges41 for all new individual and small
group plans as well as new Medicaid coverage. These 10 core benefits were
designed to mirror the benefits that are part of a typical employer-sponsored
health plan.42 The core benefits are: ambulatory services, emergency
services, hospitalization, maternity and newborn care, mental health and
substance use disorder services including behavioral health treatment,
prescription drugs, rehabilitative services and devices, laboratory services,
preventive and wellness services and chronic disease management and
pediatric services including oral and vision care.43
V. IMPACT ON THE COMMUNITY
However, Garfield, et al., notes that there is a coverage gap associated
with the ACA regulations.44 One of the provisions of the ACA is the
expansion of Medicaid to most of the low income Americans with incomes
below the 138 percent of the federal poverty level.45 Although the intent was
for this to be a national benefit, the Supreme Court in June 2012 made this
provision optional for the states.46 This ruling affected four million people in
the 22 states which did not expand Medicaid.47 Of note, states that did not
expand Medicaid tend to be the areas with the largest uninsured populations,
accounting for 89% of people in the coverage gap.48 Most of the coverage
gap exists in the southern states and Texas is one of the states that opted
out.49 Nationally, the uninsured are represented by minorities such as non-
white Hispanics 43% and 27% are black.50 Close to 18% of the uninsured
40 Id. at 2-4; see also Tom Emswiler, Essential Health Benefits: Mental Health and Substance
Use Disorders Advocacy, COMMUNITY CATALYST (Oct. 2012),
41 Ann Carrns, Understanding New Rules That Widen Mental Health Coverage, N.Y. TIMES
(Jan. 9, 2014), http://www.nytimes.com/2014/01/10/your-money/understanding-new-rules-
42 Emswiler, supra note 41, at 1.
43 Id. at 2.
44 Garfield, et al., Health Reform and the Scope of Benefits for Mental Health and Substance
Use Disorder Services, 61 PSYCHIATRIC SERVS.1081, 1082 (2010).
47 Id. at 1-2.
48 Id. at 2.
Fall 2018 Daniels & Ritter/237
report their health as fair to poor. Garfield51 and Wilper52 indicated that
several studies show that these individuals are less likely than their insured
counterparts to seek and receive preventive care as well as services for
chronic diseases. Furthermore, when they do seek medical care, the
uninsured often face higher medical bills as they tend to have more severe
illness when they present for care. No doubt, some of the 47.5 million
Americans mentioned by Beronio53 that lacked health insurance prior the
implementation of ACA now have some insurance that guarantees parity.
However, he also reported that 25% of the uninsured adults have a mental
health condition or substance use disorder.54
As mentioned above, Texas is one of the opt-out states. The impact of
the ACA and coverage gap on Texas was studied recently by Marks, et al.,
on behalf of Rice University’s Baker Institute and Episcopal Health
Foundation.55 In a news release by Brian Sasser, Director of Communications
for the Episcopal Health Foundation , he reported that Hispanics and women
in Texas showed the largest percentage of reductions of uninsured between
2013 and 2015, 38% and 32% respectively.56 Prior to ACA implementation,
Hispanics had the lowest rates of coverage, 39.1% in Texas.57 By 2015, the
uninsured rate decreased to 24.3%. Similar reductions in uninsured were not
associated with Black Texans. In 2013, 16.5% of the black population was
not insured. By 2015, the percentage showed a modest change to 15.8%,
reflecting a decrease of 4.5%.58 Texans at or below 138% of the federal
poverty level (FPL) and individuals who did not complete high school
experienced the lowest decreases in the rates of uninsured. However, the rate
of uninsured is twice as high for Texans below 138% of the FPL than
Americans as a whole. This difference is likely because most states have
expanded their Medicaid programs while Texas has not.59 Overall the
uninsured rate for Texans fell from 24.6% to 16.9%.60 Despite more covered
lives, Texas still lags behind other states and holds the distinction of being
the state with the highest percentage of uninsured residents as well as the
51 Id. at 3.
52 Wilper, et al., Hypertension, Diabetes, and Elevated Cholesterol Among Insured and
Uninsured U.S. Adults, HEALTH AFFAIRS, 28(6), W1156 (2009).
53 Beronio, supra note 31, at 2.
55 Elena Marks, et al., Issue Brief #12: Change in Insurance Status of Adult Texans by
Demographic Group as of March 2015, RICE U., THE EPISCOPAL HEALTH FOUND., 2 (2015).
56 Id. at 1.
57 Id. at 4.
58 Id. at 3.
59 Id. at 5.
60 Vivian Ho & Elena Marks, Issue Brief #11: Effects of the Affordable Care Act on Health
Insurance coverage in Texas as of March 2015, RICE U., THE EPISCOPAL HEALTH FOUND., 2,
238/Vol. XXVIII/Southern Law Journal
lowest rate of change 31% decrease compared to 43% decrease for the rest of
It is estimated that there were 26,956, 958 Texans as of July 1, 2014.
Based on the rates above, 4,555,725 Texans remain uninsured. “Nationally,
46.4% of adults experience mental illness in their lifetime and 26.2% of
adults experience mental illness annually.”62 If 25% of these Texans have a
mental illness, it follows that 1,138,931 uninsured Texans will experience
some form of mental illness each year. Of these, 4.3-6.2% or approximately
68,000 Texans will have serious mental illness.63 Based on these percentages,
Bell County, with an estimated 2014 population of 322,817,64 would expect
1.5 seriously mentally ill uninsured patients per day to seek help in its
Emergency Rooms. One Bell County Hospital admitted an average of 1.6
uninsured mentally ill patients per day to its Emergency Room from
February 2014 to September 2014.65
Emergency rooms across the nation experience the Mental Health crisis
every day. It is interesting to note the effect of State policy initiated Medicaid
cutbacks on Emergency Room utilization. For example, Oregon reduced its
scope of benefits, initiated stricter premium enforcement and implemented
co-payment policies to state sponsored medical plans in 2003.66 Lowe, et al.,
published the effects Oregon State Medicaid changes to outpatient
psychiatric benefits had on emergency room utilization. Before the cutbacks
41% emergency room psychiatric visits were by Oregon Health Plan
beneficiaries. After the cutbacks, their visits dropped to 31%. During this
time period, the uninsured population visits rose from 16% to 23%.67 Part of
the decreased Emergency Room use by Medicaid beneficiaries may be due to
the decreased enrollees. Oregon noted enrollees dropped from 103,000 to
51,000 by late 2003.68 The authors suggest that the increase in uninsured
patients visiting the Emergency Room, who were also noted to have a greater
tendency towards behavioral health conditions, was related to the shift from
insured to uninsured status. They noted a 173% increase in drug related ED
visits, a 106% increase in psychiatric visits, and an 82% increase in alcohol
61 Id. at 2-3.
62 Crisis Point: Mental Health Workforce Shortages in Texas, HOGG FOUND. FOR MENTAL
HEALTH, 4 (2011).
63 William Reeves, et al., Mental Illness Surveillance Among Adults in the United States, 60
MORBIDITY AND MORTALITY WKLY. REP. 1, 2 (2011).
64 Bell County, The Episcopal Health Found., 1, (2015)
65 Ross Gaetano, Emergency Department Statistics, Spreadsheet. Mentally Ill Disposition Data
From a Bell County Hospital 1-2 (2015).
66 Robert A. Lowe, et al., Impact of Medicaid Cutbacks on Emergency Department Use: The
Oregon Experience, 52 ANNALS EMERGENCY MED. 626, 626 (2008).
67 Id. at 629.
68 Robert A. Lowe, et al., Changes in Access to Primary Care for Medicaid Beneficiaries and
the Uninsured: The Emergency Department Perspective, AM. J. EMERGENCY MED., 36 (2006).
Fall 2018 Daniels & Ritter/239
related Emergency room visits. One other observation was interesting
because it may confirm similar observations above regarding the severity of
medical illness among the uninsured. They observed that hospital admission
among the uninsured was lower compared to the insured, but the adjusted
odds of an Emergency Room visit leading to hospitalization increased 50%
after the cutbacks.69
According to Caffrey70 and Friedman, et al.,71 one goal of the ACA is to
reduce Emergency Room utilization by Medicaid recipients. Taubman, et al.,
demonstrated Emergency Room usage actually increased for newly enrolled
beneficiaries.72 They identified a 34% increase by individuals in ED
utilization and noted increased number of multiple visits by 41%.73
Friedman, et al., speculate that many of these new enrollees have “pent up”
demand for care and a high burden of chronic disease.74 They also present
several alternatives to reduce Emergency Room use, however, the pertinent
alternative discussed for mental health involved the expanding the medical
home model. Patient centered medical homes provide care coordination, case
management, extended hours and walk in visits.75 Their emphasis on
prevention and post-acute care has been shown to be effective in reducing
ED usage.76 Although findings from Friedman, et al., or Reid et al did not
specify that reductions in ED use for mental health was equivalent to visits
by typical medical patients, there is no reason why the medical home
principal could not be applied to mental health care. Friedman, et al., noted
that ACA provides funding to support providers that develop similar homes
for patients with severe mental health conditions and that 16 states have
adopted similar programs.77
ACA legislation has not improved care provided in the community for
the uninsured population. In addition, community-based safety nets are
underfunded and limited.78 The only option for many is to seek care in the
emergency rooms.79 Jail cost for mentally ill individuals “cost taxpayers
69 Lowe, supra note 67, at 629 & 639.
70 M.K. Caffrey, NEIJM Authors Seek Solutions to Keep Medicaid Clients out to the
Emergency Department, AJMC, 1, (2015).
71 Ari B. Friedman, et al., No Place to Call Home-Policies to Reduce ED Use in Medicaid, 372
N. ENG. J. MED. 2382, 2382 (2015).
72 Sarah L. Taubman, et al., Medicaid Increases Emergency-Department Use: Evidence from
Oregon’s Health Insurance Experiment, 343 SCIENCE,263, 265 (2014).
74 Friedman, supra note 72, at 2383.
75 Id. at 2384.
78ACEP Psychiatric and Substance Abuse Survey, AM. C. EMERGENCY PHYSICIANS,1-2 (2008).
79 Impact, supra note 4, at 4-5.
240/Vol. XXVIII/Southern Law Journal
almost three times as much as jailing other inmates ($137 vs. $45 per day).”80
The national average for a jail stay for a mentally ill individual cost an
average of $11,629 per stay.81 Because they represent untreated patients with
an acute episode their care results in significant uncompensated care
averaging $986 per emergency room visit as well as an increased tax payer
burden for the use of state sponsored hospital care of $401 per day.82 Without
access to primary care or psychiatrist, patients who are considered a danger
to themselves and require hospitalization are held in Emergency Rooms
under Emergency Detention orders. Alakeson, et al., cite the 2008 American
College of Emergency Physicians (ACEP) survey that found 79% of the
Emergency Room medical directors believed that their Emergency Rooms
boarded psychiatric patients.83 The authors stated that mentally ill patients in
Georgia may wait several days for an inpatient bed in one of the state’s
psychiatric hospitals.84 In Texas it is not unusual for mentally ill to board in
the Emergency room for 4 days waiting on a state sponsored hospital bed.85
The Bell County hospital, reported uninsured mentally ill patients waited for
an Austin State Hospital bed between 3.6 – 5.4 days.86 Boarding is not
unique to these two states; Cunningham, et al., reported waits for many hours
or days waiting for inpatient services in Boston and Orange County.87
Emergency Room experience for the uninsured mental health patient in
Georgia is similar to what mental health patients in Texas experience. Yet,
Texas Governor Abbott vetoed a bill that would have allowed emergency
departments to hold mentally ill patients for four hours if the physician
believes the patient is a danger to self and others.88 The reason(s) for this
veto was not made known in the article. In Texas alone, 2347 people died by
suicide in 2006 and according to Cauchi, et al., the majority of the suicides
results for untreated or undertreated mental illness.89 The number of patients
who may have committed suicide after leaving the Emergency Room was not
80 Id. at 3.
83 Alkenson, et al., A Plan to Reduce Emergency Room ‘Boarding’ of Psychiatric Patients, 29
HEALTH AFFAIRS 1637, 1637 (2010).
85 Eric Dexheimer, Defendants Fill, Linger in State’s Mental Health Facilities, AM.-
STATESMAN, 4, May 27, 2012.
86 Spreadsheet, supra note 66.
87 Peter Cunningham, et al., The Struggle to Provide Community-Based Care to Low-Income
People With Serious Mental Illness, 25 HEALTH AFFAIRS 694, 697 (2006).
88 Morgan Smith, Scientology Group Urged Veto of Mental Health, THE TEX. TRIB., July 14,
89 Richard Cauchi, supra note 26, at 3.
Fall 2018 Daniels & Ritter/241
Over time, the criminal justice system has absorbed increasing numbers
of people with mental illness who are unable to obtain community-based
mental health management. Over half of the prisoner’s had some form of
mental health issues as estimated by a study published by the Bureau of
Justice.90 The data based on personal interviews with State and Federal
prisoners in 2004 and local jail inmates in 2002 suggested that mental illness
is present 56% among state prisoners, 45% among federal prisoners and 64%
for local jail inmates.91 Over 74% of the state prisoners and 76% of local
inmates with mental illness had the dual diagnosis of substance dependence.
Up to 63% of State prisoners with mental illness use controlled substances
before their arrest compared to 49% without mental illness. State prisoners
with mental illness were twice as likely to have been homeless prior to their
arrest compared to those without mental illness. The range of mental
disorders includes major depressive or manic symptoms and psychotic
disorder symptoms with delusion and hallucinations.92 State and Federal
prisons are more likely to treat their offenders than local facilities. This
occurs because State and Federal facilities hold offenders who are sentenced
to serve more than 1 year in prison.93 Surprisingly, more women than men
have mental health problems. It is estimated that 73% women compared to
55% males had mental health conditions in State prisons.94 White inmates
tended to have higher incidence of mental health problems compared to
blacks, or Hispanics. In State prisons white were 62%, compared to 55%
blacks and 46% Hispanics. Other available facts showed that violent criminal
record was more prevalent among inmates who had a mental health record
and State prisoners with mental health problems had longer sentences.95
Satlin blames the incarceration of mental health persons on a lack of
community mental health services.96 She notes that states across the nation
have cut $4.35 billion from mental health services in the prior three years. In
FY 2010 and FY 2011, multiple adult mental services were cut from State
Mental Health Agencies. Eleven states cut crisis services, 12 cut targeted
case management, 12 cut Peer Support services, 11 cut prescriptions, 16 cut
housing, 17 cut day services, 24 cut clinic services, 26 removed workforce
90 Alana Satlin, Mental Illness Soars in Prison, and Jails While Inmates Suffer, HUFFINGTON
POST (Feb. 4, 2013), https://www.huffingtonpost.com/2013/02/04/mental-illness-prisons-jails-
91 Doris James & Lauren Glaze, Mental Health Problems of Prison and Jail Inmates, BUREAU
OF JUST. STAT. SPECIAL REP., DEP’T OF JUST., 1 (Dec. 14, 2006),
92 Id. at 2.
93 Id. at 3.
94 Id. at 4.
95 Id. at 7-8.
96 Satlin, supra note 94, at 1.
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development and 35 removed state long term inpatient service.97 Satlin also
noted that State hospitals have also been forced to reduce services.98 These
actions have led to curtailment of services and treatment centers. Torrey
reported that State mental hospitals at their peak census in 1995, held
558,922 patients.99 By 2014, they held approximately 35,000 patients.100
Ironic, because she also reported that there are 356,000 inmates with serious
mental illness in prisons and jails.101 Now, there are 10 times more people
with mental health symptoms in prisons and receiving treatment in prisons
than there are in state mental institutions.102 This fact is counterintuitive to
the original intent in the 1963 Public Law 88-164 to deinstitutionalize people
with mental illness.
The financial cost of reducing community health services and State
hospitals shifted the cost to the criminal justice system. A business case
analysis presented by the Bazelon Center for Mental Health Law noted that it
cost $31,000 a year to incarcerate a person in Wayne County Michigan.103 In
contrast, it would only cost $2,165 per year to enroll the person in a case
management program or $9,029 per year per person if enrolled in an
Assertive Community Treatment. If they could maintain program such as
these, thereby avoid incarceration, the report states Michigan could save $5
to 8 million annually.104
Michigan is not alone. Texas shoulders a sizable financial burden for the
mental health patients it holds in its prisons and state hospitals. During FY
2009-2011, Texas reduced its mental health expenditure by 3% or $27.6
million.105 Raimer reported more than 864,000 prescriptions, at a cost of $1.1
million, for psychotropic medications were filled for the Texas Department
of Criminal Justice (TDCJ) in FY 2009 and that 80% of patients on the
UTMB-CMC mental health caseload received psychotropic drugs in January
97 Ron Honberg., et al., State Mental Health Cuts: The Continuing Crisis, NAT’L ALLIANCE ON
MENTAL ILLNESS., 5 (Nov. 2011), https://www.nami.org/getattachment/About-
NAMI/Publications/Reports/StateMentalHealthCuts2.pdf; see also Kevin Martone, The
Impact of the State Fiscal Crisis on State Mental Health Systems, NASMHPD RES. INST., slide
3 (Feb. 16, 2011),
98 Satlin, supra note 94, at 1.
99 E. Fuller Torrey, How to Bring Sanity to Our Mental Health System, THE HERITAGE FOUND.,
2 (Dec. 19, 2011), https://www.heritage.org/health-care-reform/report/how-bring-sanity-our-
100 Satlin, supra note 94, at 7.
103 Asking Why, Reasserting the Role of Community Mental Health, JUDGE DAVID L. BAZELON
CTR. FOR MENTAL HEALTH L., 8 (Sept. 2011).
105 Honberg, supra note 98, at appx. 1.
Fall 2018 Daniels & Ritter/243
2010.106 UTMB-CMC spent $1.1 million in FY 2009 just on psychotropic
pharmaceuticals.107 Texas has over 150,000 inmates, with approximately
25,000 diagnosed with some form of mental illness. 62% have the dual
diagnosis of chemical dependence per Langford and Chen.108 They reported
that the TDCJ spent $60 million for mental health services and $172 million
for substance abuse treatment.109
Health Management Associates presented to the Texas Conferences of
Urban Counties that funding community-based programs can save Texas
money, reduce persons with mental illness interactions with the criminal
justice system and provide more effective mental illness treatment.110 Their
findings are very similar to the Bazelon report mentioned above. Mentally ill
inmates stay in the jail longer than the general inmate, probably due to
reduced access to medication and case management which results in
behaviors that are more likely lead to longer incarceration. Community-based
services offer treatment at $12 a day for adults compared to the previously
mentioned $401111 for a State Hospital, $137 per day112 for a jail bed and
$986 per emergency room visit Jail cost of mentally ill persons cost roughly
three times other inmates; $137 for mentally ill inmates is versus $45 for
regular inmates.113 Travis county, Texas reported each of its mentally ill
patients cost them $142 per day and it spends $100,000 a month on
psychiatric medications according to Dexheimer.
VI. IMPACT ON PROVIDERS & PATIENT CARE CENTERS
Health policy has affected the health care workforce. According to Mary
Caffrey reporting for the American Journal of Managed Care, Medicaid
providers have not received an increase in payment for 25 years.114 Nelson
reporting for Missouri Net quotes Mark Bradford with the Ozark
Psychological Association that there needs to be larger network of providers
and that managed care pays so little that Missouri will lose more Medicaid
106 Ben G. Raimer, et al., Health Care in the Texas Prison System: A Looming Fiscal Crisis,
62 TEX. PUB. HEALTH J. 14 (2010).
107 Id. at 5.
108 Terri Langford & Cathaleen Q. Chen, Lawmakers to Examine Rehab of Mentally Ill,
Addicted Inmates, THE TEX. TRIB. (Apr. 22, 2014),
110 Impact, supra note 4, at 5-11.
111 Id. at 3.
112 Id. at 4.
114 Mary Caffrey, Missouri Mental Health Advocate Not Optimistic About Medicaid Managed
Care, AM. J. MANAGED CARE NEWS, 1 (Jun. 19, 2015), http://www.ajmc.com/focus-of-the-
244/Vol. XXVIII/Southern Law Journal
providers.115 This is not a new concern, Cunningham, et al., stated in their
article that Medicaid has become the single largest payer of mental health
services for low income people accounting for 40% of all public sector
spending for mental health in 2001.116 This is due to the change, largely
promoted by federal legislation and funding, that shifted primary mental
health care from state hospitals to community-based services. However,
concerns have arisen because states are trying to cut Medicaid budgets even
with the generous federal matching funds associated with the ACA mandates.
States recognizing their role of increasing financial responsibility with the
expansion have been wrestling with finding ways to reduce expenditures by
reducing other packages such as dental care or organ transplants.117
Cunningham, et al., found in their study across 12 communities and
interviews with over 1000 health care leaders that gaps in services for low
income seriously mental ill persons exist with residential services.118
Residential services that were in short supply included housing, group
quarters, and transitional shelters. It was noted that lack of housing resulted
in patients being kept in institutions longer than necessary. Inpatient
psychiatric acute care beds was lacking in many communities. State, county
as well as private psychiatric hospitals sharply declined during the 1990s,
even though outpatient capacity did not increase at the same pace to care for
the patients released to the community. Shortages of outpatient care
psychiatrists were of concern to the respondents, and they noted that
psychiatrist like their non-psychiatrist physician colleagues were seeing
fewer Medicaid patients. Low reimbursement from Medicaid accounted for
the most cite reason there is a psychiatrist shortage and reduced outpatient
The only constant in this world is change. Change is the constant for
health care reform. However, changes brought about by health care reform
have not improved the mental health care delivery system. Significant gaps
in coverage have left many uninsured without mental health care. Decreased
state funding has created barriers to care for community-based health clinics.
115 Alisa Nelson, Missouri House Panel Hears Testimony on Move to Statewide Managed
Care, MISSOURINET (Jun. 18, 2015), https://www.missourinet.com/2015/06/18/missouri-
house-panel-hears-testimony-on-move-to-statewide-managed-care; Pub. L. No. 88-164
116 Cunningham, supra note 88, at 694.
117 Affordable Care Act Implementation: How is it Affecting the Health Care Workforce?,
ROBERT WOOD JOHNSON FOUND., 2 (Apr. 7, 2011).
118 Cunningham, supra note 88, at 696.
119 Id. at 698.
Fall 2018 Daniels & Ritter/245
Closing state hospitals during the federal deinstitutionalization only resulted
in shifting acute mental illness care to emergency rooms. Emergency rooms
are facing increased wait times and boarding of psychiatric patients while
they wait for placement in the remaining but inadequate number of state
hospitals. The criminal justice system is burdened with the shifting trend
towards incarceration of mentally ill people because people are unable to
access community-based centers that are inadequately funded and staffed.
Psychiatrist and their associations are concerned about decreasing
reimbursement, are unwilling to accept any new Medicaid patients and
remain skeptical about the ACA mandated federal and state health care
exchanges. Recent ACA legislative efforts to improve parity has not resolved
the basic need to fashion a method that provide appropriate, efficient, quality
mental health care in a cost-effective manner that is the same across state
lines and to all financial classes of patients. The new administration is
attempting to change the ACA and the impact of new legislation remains to
be seen. Until appropriate legislation is created that is agreeable to all states
and can be provided by all health insurance carriers to all Americans, all the
other problems considered in this paper will continue to persist. Maybe the
only constant is not change; maybe the only constant is the government
cannot effect change that will equally provide mental health coverage to
everyone who needs it.