GAO: States With Expanded Medicaid Can Better Treat Mental Illness

Almost 20 percent of the uninsured have a behavioral health condition, according to a new GAO report.
by | August 3, 2015

As states still grapple with whether to expand Medicaid three years after the U.S. Supreme Court ruled that the Affordable Care Act doesn't require them to, new information from the Government Accountability Office (GAO) indicates that expansion states have been able to provide health insurance to additional residents without incurring additional costs.

Some 29 states and the District of Columbia chose to extend health-care benefits to people earning up to 138 percent of the federal poverty level. That’s an annual income of $32,923 for a family of four, or $16,242 for an individual. The remaining 21 states have so far refused.

The GAO analyzed Medicaid enrollment from July 2014 until June 2015 and conducted interviews from behavioral health agencies in 10 states. The report concludes that states that chose to expand Medicaid are better able to treat low-income people suffering from mental health disorders and addiction than the states that opted out of expansion -- and that they're able to do so without negative fiscal repercussions, at least so far, because the federal government covers the entire cost of expansion.

In the survey of expansion states selected, behavioral health officials reported that Medicaid expansion increased the quality and availability of treatment options to low-income people. Conversely, officials from non-expansion states are forced to focus care on adults with the most serious conditions while consigning uninsured people with more moderate conditions to waiting lists.

The GAO report did not provide evidence that more people in expansion states were actually receiving treatment for serious psychological and addiction problems. It showed merely that more people could get help because they would be covered if they sought treatment.

The GAO estimates that roughly 17 percent of all low-income, uninsured people experience a behavioral health condition -- such as post-traumatic stress disorder, schizophrenia, bipolar disorder, depression or alcoholism -- that makes it difficult to hold down jobs. Roughly 3 million low-income people are suffering from mental health disorders or addiction nationwide, 1.4 million of whom live in non-expansion states. Once insured, they become eligible for intensive behavioral health treatment programs like group counseling, drug and alcohol retaliation, and psychiatric care.

The high expense of treating mental illness creates doubt among governors and health-care providers regarding the capacity of states to effectively expand Medicaid to all low-income adults. The increased demand for behavioral health services and the sudden influx of particularly difficult cases caused many policymakers to reject the addition of millions more needy Americans to an already costly entitlement program in 2013 -- despite the federal government’s commitment to cover 100 percent of all costs associated with expansion until 2017, and no less than 90 percent every year after. There is, however, no guarantee that this support will continue forever.

“We’re not expanding Medicaid. That’s it. It’s like putting a thousand more people on the Titanic when you know it’s going to sink,” said Lucy Nash, deputy press secretary to former Texas Gov. Rick Perry, back in 2013. The Lone Star state rejected Medicaid expansion due to concerns over how lengthening the state’s Medicaid rolls would affect the state budget. In doing so, they left $100 billion in federal Medicaid money unclaimed and close to a million low-income Texans uninsured.

With additional federal funding, expansion states can reduce the amount of tax revenues dedicated to providing care to the uninsured, most of whom now qualify for Medicaid. They reappropriate the funds to other areas, or they lower taxes. In fiscal year 2015, legislatures reduced the budget for behavioral health agencies by $25.5 million in Connecticut, $21 million in Kentucky and $33 million in Nevada. If federal funding ever decreased, which is a very real possibility, states would be forced to raise taxes or spending to other government services to make up for these cuts. Worse, they could be forced to rescind the coverage of millions of low-income people.

“Any law that will add 300,000 Mississippians to a federal entitlement program partially funded by the state will either result in a huge tax increase or drastic cuts to education, public safety, job creation and other budgets,” said Mississippi Gov. Phil Bryant in his 2013 State of the State speech. To expand Medicaid would mean “assuming enormous costs that we cannot afford” without a guarantee that the federal government would continue subsidizing expansion.

In Georgia, Gov.Nathan Deal likewise “did not judge it prudent to expand the eligible population of an entitlement program, since our state is already spending approximately $2.5 billion in state taxpayer funds annually” and could not spend more without disrupting the budget.

In the expansion states the GAO picked -- Connecticut, Maryland, Michigan, Kentucky, Nevada and West Virginia -- health agencies responsible for treating mental illness and substance abuse among poor people reported coming up with new policies to address staff shortages caused by the increase in Medicaid beneficiaries, including using video conferencing to provide treatment and hiring non-licensed providers to administer treatment. Officials also reported concerns about shortages of qualified nurses and doctors and a lack of space for those seeking care, which led keeping patients in emergency rooms for several days before moving them to a suitable psychiatric facility.

The GAO selected four non-expansion states -- Missouri, Montana, Texas, and Wisconsin -- each varying in population size, adult Medicaid enrollment, per capita number of behavioral health professionals and geographic region. Although these states have treatment options for uninsured poor people with severe mental illnesses, they lack the resources to effectively treat the uninsured with more moderate problems. Without an increase in state or federal funding, uninsured poor people with addictions or serious psychiatric conditions cannot get psychiatric assessments, visits with medical providers, counseling or prescription medications. Behavioral health agencies simply add uninsured patients to waiting lists and send them away without care. In Missouri, there were 3,723 people on the waiting list for substance use treatment as of January 2015.

The GAO concludes that Medicaid expansion offers more treatment options to more low-income people without compromising a state’s fiscal responsibilities.

“Officials we interviewed from the six expansion states generally reported that Medicaid expansion had resulted in greater availability of behavioral health treatment, and changes were greater in states without previous coverage options for low-income adults.”