Heading Off ‘Nightmare Scenario’

These are perilous times to be mentally ill and indigent in America. As states around the country face unprecedented budget deficits—and money has to be found somewhere—all too often governors and legislators are giving in to the temptation to cut funding for the treatment of mental illness. If this process continues, the result will be untold morbidity for persons with mental illness and the decimation, perhaps for decades, of the mental health system. At this critical time, psychiatrists, family members and other advocates, and patients need to band together to make sure that this nightmare scenario does not come to pass.

Medicaid is a particular target. In most states, Medicaid is the largest or second-largest line item in the state budget, on average accounting for 15 percent to 20 percent of all state expenditures. Moreover, with states having been encouraged by the economic boom of the 1990s to lower eligibility requirements and expand the range of services covered by Medicaid, costs to the states have been increasing at double-digit rates. So the fact that Medicaid is in the crosshairs should come as no surprise.

Unfortunately for people with mental illness, when Medicaid is cut, they bear a disproportionate burden. Medicaid pays for more than 20 percent of all mental health treatment in the United States, accounting for about 10 percent of Medicaid costs. Since persons receiving SSI as a result of disability qualify for Medicaid, and nearly a quarter of that group utilize mental health (including substance abuse) services, the Medicaid-covered population is enriched with persons dependent on mental health care for their continued well-being.

As reported in the last issue of Psychiatric News, Oregon is the poster child for the viciousness of its cuts in Medicaid-funded services for persons with mental disorders. Faced with a substantial projected budget deficit, and a citizenry that soundly defeated a proposal to raise taxes last November, Oregon has proposed some of the most drastic cuts of any state in its Medicaid program. Last month, in an action that attracted front-page coverage from the New York Times, Oregon announced that 100,000 people covered under its “standard” Oregon Health Plan Medicaid program (about a quarter of the total Medicaid population) would lose coverage for all prescription drugs as of March 1. Although termination of the pharmaceutical benefit would be a problem for people with many medical conditions, for people with mental illness it all but guarantees a return to psychosis, depression, mania, severe anxiety, and other crippling conditions.

After a national outcry, Oregon backed down a bit, declaring that money had been found to continue the prescription drug benefit until June 1. But the subsequent news coverage generally ignored the fact that another staggering cut in the program had not been rescinded. As of March 1, the same 100,000 Oregonians with “standard” Medicaid coverage no longer had coverage for any outpatient mental health or substance abuse services. Only dental services were treated similarly. So now any one of the 100,000 Medicaid enrollees can see a dermatologist for eczema and even get a prescription for steroid cream filled. But if a Medicaid enrollee suffers from schizophrenia and depends for his or her stability on visits to a psychiatrist for prescription of medication and individual therapy, that person is just out of luck.

I can think of no example of continued discrimination against persons with mental illness that is more barbaric than this action by the state of Oregon. And on behalf of APA and its members (and in cooperation with our Oregon district branch), I wrote to the governor and to the leaders of the legislature to let them know just how unacceptable their approach is. Although changes to this outrageous policy are most likely to be brought about by protests from the voters of Oregon themselves, the reaction to the coverage by the New York Times suggests that exposing Oregon’s leaders to the opprobrium they deserve may be of some help.

Meanwhile, every other state in the country is considering or has already implemented Medicaid cuts this year. Massachusetts provides a typical example. In response to a budget gap of about the same magnitude as Oregon’s, Massachusetts has thrown 50,000 people off the Medicaid rolls entirely, and the for-profit carveout responsible for managing mental health benefits has informed clinicians and facilities that all payments will be cut approximately 3.5 percent—previous contractual obligations notwithstanding. Moreover, the Medicaid program has announced that a psychiatric formulary will be created that contains only one nongeneric drug in each medication class. Special authorization will be required for approval of any other nongeneric medications.

The negative impact of these changes on patients are obvious. For those thrown off the Medicaid rolls entirely, the doors of private offices and clinics will be closed to them, with their only recourse—when things get bad enough—being hospital emergency rooms. Patients on medications that are not included in the new formulary may be compelled to place their stability at risk by shifting to a new medication. For many, particularly those with psychotic disorders, the prospect of shifting from the green pill that they have taken for the last 10 years to a blue one may be impossible for them to tolerate. In the end, the result of these cost-cutting efforts will be only more suffering and expensive hospitalizations.

What may be overlooked, however, are the effects of Medicaid cutbacks on the precariously balanced systems of treatment for psychiatric illnesses. With outpatient care already often a losing proposition for hospitals and community mental health centers, unilateral cuts in reimbursement may simply lead to clinic closures, leaving displaced patients nowhere to turn. General hospital psychiatry units are similarly endangered entities in many hospitals, since they often lose money already and, even when they do not, occupy space that could be used for more profitable medical/surgical services. Many of them will close as well. This effect will be compounded by the large reductions in the Medicaid rolls. Being dropped from Medicaid is not a cure for mental illness. These patients will still turn up at emergency rooms and require acute admissions. Without any coverage, however, the hospitals will simply have to absorb the costs of care—a further disincentive to maintaining psychiatric units.

And let’s not forget the impact on psychiatrists in all this. For patients with urgent needs, we may have to continue seeing them, even without reimbursement. The states know this and cynically shift the costs of care to the mental health professions—especially psychiatry—and to the facilities in which they work. When limited formularies are introduced, psychiatrists are faced with the prospect of untold, uncompensated hours on the telephone and completing forms to try to get access for their patients to the medications that they need. Medicaid systems, looking to discourage such efforts, have every reason to make the process as time consuming and burdensome as possible.

APA’s Board of Trustees received an extensive briefing on the Medicaid situation at its March meeting and asked the Council on Advocacy and Public Policy to work on a coherent strategy to oppose these cuts. In the meantime, it is incumbent on all of us to let our elected representatives know just how angry we are about the disproportionate impact of these budget-balancing efforts on persons with mental illness. The moral philosopher John Rawls declared that a sine qua non of a just society was its commitment to ensuring that its most favored members did not benefit at the expense of those least well off. It is up to us to insure that our states live up to that standard of fairness. ▪