State Appropriations

Should eliminating unnecessary institutionalization require additional resources, states are not in a strong position to argue that they cannot afford to increase their own appropriations.

Community mental health services are generally no more expensive than institutional care. However, to shift a system from over-reliance on institutions to one that provides more appropriate and more effective community services requires an investment in the community services. Start-up costs, along with the need to ensure that people continue to receive care while new community options come on line, have hampered states' ability to ensure that resources follow individuals into the community. Until community services are up and running, Medicaid and other sources of reimbursement cannot be tapped. Accordingly, states may need to make a direct appropriation of their general funds for this purpose.

But far from meeting these obligations, states have been reducing spending on mental health services over past years. For example:

• State only appropriations for mental health services are significantly lower today (adjusted for inflation and growth in population) than they were in 1955, when most people with mental illness were warehoused in state institutions.⁽¹⁵⁾ Given that institutions provided little in the way of real treatment at that time, it would be expected that state expenditures for mental health would have grown, as new interventions and new medications were made available.
• State appropriations for mental health have lost ground, by 7 percent, between 1990 and 1997. This is true for nearly every state, as shown in the comparison of states adjusted for inflation in Table 1.
• State appropriations for mental health have been falling in relation to other state spending. Spending on mental health has grown more slowly than (1) total state-government spending, (2) state-government spending on health and welfare and (3) spending on corrections.⁽¹⁶⁾ During the 1990s, state mental health spending grew by 33 percent, but total state spending grew 56 percent, spending on health and welfare services grew by 50 percent and spending on corrections, by 68 percent. As a result, the proportion of all state spending allocated to mental health services fell 15 percent from 1990 to 1997 (from 2.12 percent of state spending in 1990 to 1.81 percent in 1997). This is a decline of 13 percent.⁽¹⁷⁾

The overall change in real purchasing power for state mental health appropriations between 1955 and 1997 is shown in the chart below. While other funds supplement these state expenditures (for example, the federal Medicaid match and the federal mental health block grant), these falling numbers represent a reduction of states' own efforts over the past 42 years.

Accordingly, it would hardly be a fundamental alteration in programming for states to increase their appropriations for community mental health services in order to comply with the Supreme Court's ruling in L.C. As explained earlier, investment in community services has the potential to bring about long-term savings by enhancing states' ability to tap into federal dollars, making increased investment in developing community services even more important.

Next: Federal Block Grant