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Affordable Care Act Fails Seriously Mentally Ill

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There are many provisions Affordable Care Act (ACA, aka "Obamacare") that combined with mental health parity laws will help people with mental health issues get care. For example, the ability to keep a child on a parents' insurance policy until age 26 will help many who develop mental illness before that age.

But there are also provisions in ACA that will make it more difficult for some people with the most serious mental illnesses to get hospital care and will also erode community services. Unfortunately, these provisions of ACA have largely been ignored. They should be fixed.

The Institutes for Mental Disease Exclusion (IMD Exclusion) provision of Medicaid largely prohibits Medicaid from reimbursing states for the treatment of people with mental illness who are between 18 and 65 years old who need long-term hospitalization. If someone with serious mental illness is in a state psychiatric hospital, the state pays for the care. But if someone is discharged, they become Medicaid eligible and the state gets a 50 percent match from the federal government to provide for their care. This causes states to lock the front door and open the back and is the primary reason states are closing psychiatric hospitals. We wrote about the IMD Exclusion in the Washington Post. H.R. 3717, the Helping Families in Mental Health Crisis Act recently introduced by Rep. Tim Murphy takes a step to fix this, but much more needs to be done.

One offset to this federally sanctioned discrimination against people with serious mental illness was the Medicaid Disproportionate Share Hospital (DSH) Payments. These are payments to state hospitals that have a disproportionate share of people living below poverty.

Under ACA the DSH payments go away and the provisions against reimbursing states for long-term hospital care stay in place. Medicaid payments to hospitals with a high percentage of publicly insured and uninsured patients will be cut on the theory that expansions in health insurance coverage under the ACA will lower uncompensated costs.

According to the National Association of State Mental Health Program Directors this could erode the ability of people with serious mental illness to get care.

Due to these ACA provisions requiring DSH payment cuts, safety net hospitals could see reductions of close to $22 billion from 2014 to 2021

DSH payments are a significant source of Medicaid funding for state psychiatric hospitals and a sizeable share of the $37 billion nation-wide under the direction of state mental health authorities and because they are used for both inpatient and outpatient care cuts in those funds will affect both. In FY 2010, 37 states received a total of $2.8 billion in DSH funds, representing 27 percent of all state hospital revenues in FY 2010. These losses are compounded by cuts in state funding for mental health programs totaling $5 billion over the last five years in 41 states.

There is no doubt that ACA was a well-intentioned act meant to improve care and lower costs, but the provisions above could prevent some of the most seriously mentally ill from geting care. Reducing care increases incarceration. The IMD Exclusion should be elminated and changes should be made in ACA to protect the most seriously mentally ill.

DJ Jaffe is Executive Director of Mental Illness Policy Org, a non-partisan non-profit think tank focused on serious mental illness (not mental health).