Recession Hits States' Mental Health Budgets

The shooting of Rep. Gabrielle Giffords in Tucson led to fresh scrutiny of gaps in the nation's mental health system.

With the spotlight fading some, the National Alliance on Mental Illness, an advocacy group, took a look what's been happening to mental health spending at the state level. The group found that states cut $1.8 billion, or about 8 percent, from their total mental health budgets from 2009 to 2011.

The cuts are compromising an already frayed system, according to NAMI's report out today. And the reductions come as demand for community-based services is actually going up in most states, according to the National Association of State Mental Health Program Directors.

Since 2010, states have cut or plan to cut 3,930 state psychiatric beds, which represents more than 8 percent of capacity, according to NASMHPD Research Institute data.

And NAMI executive director Michael Fitzpatrick says the latest cuts — affecting emergency and long-term hospital treatment, mental health case workers and crisis teams — stand to make things much worse. "People end up involved in the criminal justice system, living in homeless shelters and going to the emergency room," he said.

Thirty-two states and the District of Columbia have cut their mental health budgets since 2009. The budget ax in Kentucky was the most severe, cutting 47.5 percent of the budget. Alaska was second at 35 percent.

Health services haven't fared as badly as some other budget items. "States are making budget cuts across the board, and few areas are exempt," says Stacey Mazer, senior staff associate at The National Association of State Budget Officers. "If anything, due to the financial aid from the Recovery Act funds, education and Medicaid tend to be areas that are cut last after" other government functions, such as administrative services, accounting and parks.

But Kevin Martone, president of NASMHPD, says that "because mental health services have traditionally been paid for out of state general revenues, the impact of the downturn in the economy has been more devastating on these services than to other safety net services for general healthcare." State general funds, which are administered by state mental health authorities, represent 40 percent of total state support for mental health services. Medicaid, the joint federal-state health insurance program for low income people, makes up another 46 percent.

Martone adds that while "other safety net health providers such as community health centers received infusions of federal stimulus dollars that mental health did not receive while the demand for services increased."

And Medicaid services are due to be on the chopping block as well in many states. Medicaid received a temporary increase in federal funding from the stimulus package, which has helped to fill a growing hole in many state budgets. But that extra funding is set to expire on June 30. Mental health budgets are particularly vulnerable in the next budget cycle, because many of the services are technically "optional" benefits under federal Medicaid rules and can therefore be cut.