President’s FY 2007 Budget Foreshadows Bleak Future of Mental Health Care


Heather Cobb at 703-797-2588
or [email protected]

ALEXANDRIA, Va. (February 7, 2006)—At a time of growing insecurity in this country about access to needed health care and broad awareness of the needs of people with or at risk of mental illness, the White House’s proposed budget for FY 2007 risks creating an even bleaker future for Americans with chronic health needs.

The National Mental Health Association calls on Congress to stand up for individuals with mental illnesses, lower-income Americans with serious health needs and our nation’s veterans, and reject dangerous cuts and “reforms” to safety net and critical federal programs proposed in this budget.

Further Medicaid Cuts Threaten Recovery from Mental Illness

On the heels of far-reaching Medicaid cuts earlier this month that threaten to deny vulnerable Americans needed health care, the President’s budget would further weaken this safety net.

Medicaid is the single largest source of funding in this country for mental health services, and plays a vital role in providing millions of Americans the services and support that enable them to live in their communities rather than in costly institutional settings. While this budget would both limit and eliminate key Medicaid services critical to people’s recovery from mental illnesses, it offers no answers to those who would be displaced—to graver illness, homelessness, or emergency-care—by the recently passed Deficit Reduction Act, or by this proposed next round of Medicaid restructuring. Tragically, the Administration’s plan continues to encourage using Medicaid—a program for vulnerable Americans—to finance basic coverage for the uninsured, thereby proposing a “solution” for one group of Americans at the expense of another.

In the face of the nation’s growing health insecurity, this fiscal blueprint would not only further unravel Medicaid and other programs critical to vulnerable Americans with chronic illnesses, but would also weaken our private health insurance system. And, at a time of growing challenges to public health, it would further shrink rather than expand needed public health investment.

Mental Health and Public Health Shortchanged

With large numbers of Americans still falling through the cracks of our mental health system, state funding for mental health care continuing shrinking and our national failure to translate what we know about excellence in mental health care into community practice, it is clear mental health care must become a national priority. With calls to the Substance Abuse and Mental Health Services Administration’s (SAMHSA) suicide hotline nearly doubling in the aftermath of Katrina; 2,000 young people on any given day remaining incarcerated simply because community mental health services are not available; and 9 percent of adolescents and 8 percent of adults experiencing a major depressive episode in the course of a year, we must accelerate our commitment to mental health. But rather than increasing funding levels to address such needs, this budget would retreat further. To illustrate, the budget for the principal federal agency charged with promoting excellence in mental health care, the Center for Mental Health Services (in SAMHSA), would see its funding shrink to levels close to where they were in FY 2002.

Indeed, this budget is critically shortsighted in failing to make meaningful public health and human-services’ investments, and instead proposes deep, unwarranted public-health cuts. Public health investments generally would suffer under this budget, with dangerous declines in vital programs administered by the Centers for Disease Control and Prevention and the Health Resources and Services Administration, at a time that we should be increasing our investments in such areas as health promotion and disease prevention. Critical opportunities for research would be set back with a second year of reduced funding for the National Institute for Mental Health, National Institute on Drug Abuse and National Institute on Alcohol Abuse and Alcoholism. And with its commitment to other priorities, this budget not only ignores deep pockets of need, but threatens to aggravate festering wounds. To illustrate, with up to 80 percent of youth in the juvenile justice systems having a mental disorder, according to the 2003 report of the President’s Commission on Mental Health, funding for vital juvenile justice programs would sustain a cut of nearly 50 percent.

Again, Housing Faces Hard Hit

Many department programs vital to the recovery of people with mental illness would suffer substantial cuts. Housing, for example, so critical to people seeking to recover from mental illnesses, would suffer a harsh setback under this budget. Funding for HUD section 811 supportive-housing program for people with disabilities would inexplicably sustain a 50 percent cut of $118 million, despite Congress’ rejection of that proposal last year.

Nod to Veterans’ Mental Health, VA Still Lacks Adequate Funds

A proposed $139 million mental health initiative in the Veterans Administration’s FY07 budget reflects an acknowledgement of the veterans’ mental health needs. But elements of VA’s budget raise deep questions about the department’s ability to meet its commitments.

VA’s budget proposes to fund the Department’s health care system through a combination of federal funds and third-party collections. But while its medical-services budget identifies a $3 billion increase in funding, that increase relies largely on illusory legislative-savings’ ideas that Congress has repeatedly rejected. Specifically, this budget prematurely “books” income of more than $500 million and assumes—without any foundation—that Congress will enact Administration-proposed higher veterans’ fees and copayments despite the fact that it has consistently rejected this and similar Administration proposals.

The budget also assumes other questionable savings, including $138 million in new clinical “efficiencies.” VA’s budget narrative asserts that the “overall cost of veterans’ increased health care demand will be partially offset by anticipated resource savings associated with efficiencies” with projected overall savings of $1 billion, an increase of $197 million. But the failure to realize these lofty and often wholly arbitrary “efficiency” goals—a failure VA has experienced in the past—would certainly risk compromising other patient-care objectives.

A budget increase for veterans’ health care would be most welcome, especially in the context of cuts experienced by other departments and agencies. VA, of course, faces increased needs on the part of veterans returning from war with physical and emotional wounds as well as those of aging veterans of earlier wars.

But given medical inflation and other fixed-cost increases that VA must sustain just to keep pace with existing service-delivery, veterans must be concerned that under this budget—propped up in part by illusory income and “efficiencies”—VA would not have the required resources to meet their deep needs.

Flawed Solutions” for the Uninsured

While the growing number of uninsured Americans should indeed be a matter of grave concern, the principal insurance “solutions” embraced in the budget would aggravate, rather than remediate the problems fueling the growing numbers of the uninsured. The budget notably proposes new incentives to establish health savings accounts and association health plans. But eliminating critical regulatory safeguards for association health plans and fostering health savings accounts will encourage healthy individuals to abandon traditional group health insurance and lead to far-higher costs for those with chronic illnesses and others who cannot avail themselves of these now-favored devices. And while aiming to foster such insurance “reforms,” this budget fails to reiterate, and calls into question, the President’s 2002 call for enactment of legislation to reform health insurance by outlawing its longstanding discrimination against people with mental illnesses.

Congress must protect individuals with mental illnesses, lower-income Americans with serious health needs and our nation’s veterans by rejecting cuts and “reforms” to safety net and critical federal programs proposed in the President’s budget.

The National Mental Health Association is the country’s oldest and largest nonprofit organization addressing all aspects of mental health and mental illness. With more than 340 affiliates nationwide, NMHA works to improve the mental health of all Americans through advocacy, education, research and service.

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