Medicaid Restructuring Under the American Health Care Act and Implications for Behavioral Health Care in the US

Medicaid is a major source of coverage and financing for people with behavioral health conditions, and enrollees benefit from a comprehensive array of mandatory and optional services.

  • In 2014, Medicaid covered 20% of adults with mental illness, 24% of adults with serious mental illness, and 16% of adults with substance use disorder.
  • In 2011, average Medicaid spending for people with behavioral health conditions was nearly four times as much as it was for other enrollees ($13,303 vs. $3,564).
  • The ACA’s Medicaid expansion, federal parity rules, and the development of new service delivery models have further facilitated access to behavioral health services for Medicaid enrollees.

The American Health Care Act proposes to end the enhanced federal financing for newly eligible adults and to repeal the requirement that state Medicaid plans cover essential health benefits, which include behavioral health conditions.

  • Because enrollees with behavioral health conditions are some of the costliest enrollees, states may be incentivized to restrict their eligibility in response to pressures to cut costs. This may result in loss of coverage for these enrollees.
  • States may also limit benefit packages and remove many of the optional services that are particularly valuable to enrollees with behavioral health conditions.
  • These changes could lead to decreases in access to behavioral health services, increases in societal costs resulting from untreated behavioral health conditions, and greater uncompensated care costs for providers.

The American Health Care Act also proposes to convert federal Medicaid funding into a per capita cap, with a pre-set growth amount.

  • In response to limited funding, states may impose enrollment caps or waiting lists, reduce eligibility levels, and trim benefit packages. All of these changes could disproportionately impact the costliest enrollees, including those with behavioral health conditions.
  • States may also decrease provider payment rates, which may hinder provider participation in Medicaid and exacerbate the already limited availability of behavioral health providers. Costs may instead be shifted to State Mental Health Agencies.
  • The proposed changes may enable the Department of Health and Human Services to provide additional tools and flexibility to states to respond to emerging health issues, such as the opioid epidemic, and to develop innovative models of care for enrollees with behavioral health conditions. However, with decreased federal funding, states may be limited in their ability to take advantage of this flexibility.


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