Full Implementation of Olmstead Would Benefit Health Care Reform and the Economy

In its 1999 Olmstead decision the Supreme Court ruled that under the Americans With Disabilities Act (ADA), public services for people with disabilities must be provided in the most integrated setting possible, giving them the opportunity to live independently in the community and not segregated in institutional settings. The ruling has been called the Brown v. Board of Education for people with disabilities. In observance of the tenth anniversary of Olmstead, the Bazelon Center for Mental Health Law has released a report describing the dramatic impact on health care reform and the enormous cost savings that would result from full implementation of Olmstead principles.

Still Waiting … The Unfulfilled Promise of Olmstead is a call to action to advocates, policy makers, and the public. It summarizes the context in which the Olmstead ruling was made and describes its inadequate implementation, which is evidenced by continued segregation of large numbers of people with mental illnesses in psychiatric hospitals, board-and-care homes, nursing facilities, and other institutions. Because states take varied approaches to compiling data, precise figures are not known. However, in 2006 about 528,000 adults and children resided at some point in state hospitals and other residential mental health facilities, with a median length of stay among adults of 869 days. It is currently estimated that more than 500,000 people with mental illnesses other than dementia live in nursing homes, and even more remain segregated in group homes and other congregate settings. The report notes that nearly all of these individuals could live independently in the community with adequate services, such as supportive housing, illness self-management and recovery, case management, and crisis residential services.

The report presents results from a range of studies to show that implementing Olmstead is sound economic policy. For example, the annual cost of housing an individual in an institutional setting in New York City ranges upward from $60,000, compared with $22,500 for independent housing with a full range of supportive services for a person with a serious mental illness. The cost of serving a person in supportive housing is half the cost of a shelter, a fourth of the cost of incarceration in prison, and a tenth of the cost of a state hospital bed, according to other studies. Investments in treatment and parole services could save states $4.1 billion, the report notes. Every dollar spent on community-based drug treatment avoids $18 in state spending.

An in-home crisis intervention program for psychiatric patients found that nearly 81% could be treated at home. This approach would result in substantial savings, the report notes. In 2007 the average Medicare payment for a home health day was $137, compared with $1,447 for a hospital day and $325 for a day in a skilled nursing facility. Systems of care for children have been found to reduce inpatient hospital days, saving an average of $2,777 per child. Multidimensional-treatment foster care for troubled youths saved $43.70 in residential treatment costs for every dollar spent.

To more fully implement Olmstead principles, each state must determine the number of people with disabilities served in unnecessarily segregated settings and the community-based services that would be necessary to support their reintegration and recovery. States must then shift funding from institutions to community-based services. Changes in federal policies would be required, the report notes. Medicaid resources continue to be more readily available for institutional care than for community services: nursing home care is fully covered, as are hospital and residential programs for children, the report notes. The Medicaid home- and community-based services that most people with disabilities want are optional for states. The waiver programs under which such services are provided receive far more limited and tenuous funding and are liable to be cut when states face economic downturns.

The report emphasizes the importance of promoting Supreme Court and other judicial nominees who have an understanding of and intention to uphold Olmstead and the ADA. It recommends that advocates take Olmstead "back to court" by vigorously pursuing claims and litigation. It calls for health care reform to include incentives that adequately address the needs of people with serious mental illnesses—coverage of rehabilitation, peer support, and case management. The report lists specific recommendations for Congress and federal and state agencies: passage of the Community Choice Act, which would make a package of home- and community-based services a mandatory Medicaid service for persons who would otherwise be served in institutional settings; expansion of Medicaid eligibility to childless adults up to at least 150% of the poverty level; and aggressive enforcement of current requirements for screening individuals before nursing home placement to avoid inappropriate Medicaid expenditures and "dumping" of people with mental illnesses who should be served in the community.

The 20-page report ends with descriptions of "pockets of progress," including the Housing First model pioneered by Pathways to Housing in New York City. It is available on the Bazelon Center's Web site at www.bazelon.org .