Mental Health Industry And Medicaid

The Effects of Medicaid Cost Cutting within the North Carolina Mental Health Industry

Chapter 1

The Mental Health System in the state of North Carolina has fought for years to retain funding for the mentally ill. As with many parts of this nation, however, this state has turned away from the needs of the mentally. There has always been a connection between overcrowding within the prisons and revolving doors of the area emergency rooms. The State chose to cut costs and with this, the funding from Medicaid for mental health programs has dissipated. Medicaid was created to be the family-in-need-family-friendly source of funding for various mental health programs. A review of Medicaid cuts over the past two years reveals that there has been an increase in homelessness, substance abuse, and institutionalization due to the lack of funding for mental health needs. Various Mental Health Agencies, practitioners, families, guardians, and advocates have protested these cuts to local Management Entities and the State Mental Reform Committee. Without hard evidence, however, this fight has fallen on deaf ears. The purpose of this research is to determine how the cut in Medicaid has affected the mental health population in a negative manner and why the cut costs have been handed over to other programs, such as building prisons, which itself is caused by the Medicaid cuts to begin with. This research will also discover why the number of hospitalizations for the mentally ill increased since the cost cutting of funds and programs went into effect. Lastly I will discuss what positives, if any, exist and what negatives exist because of the cost cutting measures.

To understand the cost cutting measures taken on by the state of North Carolina in regards to Medicaid, it is necessary to understand this funding program in its entirety. Medicaid is a health care program aimed at the low and moderately low income families in NC and the United States as a whole.

This program pay for not only mental health services, but long term care and short term care as well as dental and vision. The 2004 Kaiser Family Foundation report reported that Medicaid covers 17% of all personal health care spending, finances 17% of hospital care, 12% of physician and other professional services, 17% of prescription drug spending, and nearly half of all nursing home care. It is important to understand, however, that low income families only make up a small percentage 30% of Medicaid spending. The elderly and people with disabilities comprise one-quarter of beneficiaries and consume 70% of Medicaid spending for services (Kaiser 2004). In North Carolina Medicaid gives coverage to over 1.5 million people with the largest percentage of coverage belonging to the elderly and disabled. The economic woes of North Carolina have been largely blamed on the rising costs of Medicaid and insurance coverage as well. When the burden of Medicaid spending was shifted to individual states, NC was not prepared for this.

In the beginning of 2005, the North Carolina Department of Health and Human Services announced that Mental Health Programs, along with their Legal Management Entities, would experience a reduced budget of 28 million dollars for that year.

A large portion of the cuts came from the reduction in rates for various programs in the mental health field such as community supports. This program was created for qualified professionals to work one-on-one with consumers in their home and in the community to assist them in living more independently. This program was used to help reduce the number of unnecessary institutionalizations of patients with illnesses that were being non-compliant with meds, or having episodes of mania, etc (Davis 57). NC Secretary of State Odem stated that “We believe that this rate change, coupled with other changes, will make certain that the right people are receiving the right services at a cost that ensures that taxpayer dollars are well spent.," The cuts, however, let to an increase in hospitalizations and emergency room visits by consumers with mental health illnesses skyrocketed. Consumers who would otherwise be able to live with their mental illness in a more positive manner within the community were forced into a sense of isolation and misunderstanding. These cuts harmed these consumers with serious disorders by not allowing them the same abilities to become linked to wraparound services, as medically necessary (Davis 57). Wraparound services include therapies, medication management, community supports, and other programs geared towards this population’s well-being.

When the state government followed the ideals of the federal government in regards to the reductions of spending for the Mentally Ill it reached to children and the developmentally disabled as well. It