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To Fund Mental Health Care, States and Cities Raise Taxes

Denver may be the first major city where voters approved a tax increase for mental health services. Others have since followed.

The Affordable Care Act (ACA) was supposed to make mental health care accessible to everyone. The law mandated “parity” -- that insurance companies must cover mental health services, including substance abuse treatment, on par with medical and surgical care. But the goal hasn’t been realized. Loopholes in the ACA and other federal laws allowed some plans to limit or exclude mental and behavioral health coverage. Oversight and enforcement of the mandates have been inconsistent. And, of course, millions of Americans remain without health coverage.

So some state and local governments have begun taking matters into their own hands, enacting tax increases to fund mental health services. Seattle, Larimer County, Colo., and California are among jurisdictions that have taken that route; a 2018 report from the RAND Corp. found that the California tax had expanded services to 130,000 young people in Los Angeles County alone.

Among the latest jurisdictions to move in this direction is Denver, where in November voters approved “Caring 4 Denver,” a ballot measure that implements a small sales tax increase, .25 percent, to fund mental health services. It won 68 percent of the vote, and Denver is believed to be the first major city to get a tax increase for mental health services approved through a ballot initiative. It was quickly followed by Baton Rouge, La., whose voters approved a new property tax in December that will fund a psychiatric crisis center.

State Rep. Leslie Herod of Denver spearheaded that city’s campaign. She initially envisioned a proposal that would focus narrowly on stopping the city’s jails from being a de facto public mental health provider. But after talking to more people and traveling around the state, she realized that the city needed a more robust response. “The Denver school district has one of the highest suicide rates in the country,” Herod says. “We don’t have enough funding for therapists in our schools, and our kids are suffering. So while I was thinking this would be mostly about criminal justice reform, once I started listening to the community, I realized it was much bigger than that.”

Herod says she wanted to keep the proposal limited to the city level, rather than pushing for a statewide ballot measure, in part because she believes an initiative like this should start small and local. People tend to care more about helping “friends and family at the local level,” she says.

The tax is expected to raise $45 million in the first year. “That is an absolute game-changer,” says Carl Clark, president and CEO of the Mental Health Center of Denver. “Forty-five million dollars is a significant amount of money to create more programs and build more capacity for our existing programs that are working well.”

Aside from the impact on current programs, both Herod and Clark have larger aspirations for putting the revenues from the tax to use. Herod imagines something like a campus housing not only mental health providers but also facilities for detox and treatment for substance abuse -- “a place where law enforcement can take people other than a jail.” And Clark imagines revamping a statewide crisis line so it can refer Denver residents to a local provider, since many people experiencing a mental health crisis end up in the emergency room.

Regardless of what the city does with the new revenue, its voters have given mental health advocates hope that they can change the status quo of care, absent any developments from Washington. “I didn’t even allow myself to think about what could be different about our system until Election Night,” Clark says.

Mattie covers all things health for Governing.

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