Government News
States Try Diverse Solutions To Health Funding Crisis
Psychiatric News
Volume 40 Number 9 page 24-51

When Richard Codey (D) became acting governor of New Jersey in November 2004, mental health care advocates were delighted.

He had made mental health services a top priority during his service in the state's legislature. Mary Jo Codey, his wife, speaks frequently about her experience with postpartum depression in an effort to destigmatize the illness and gain resources for its treatment

Codey's first executive order authorized the establishment of the Governor's Task Force on Mental Health. At a mental health summit held by the task force, he said, "The problems of mental illness are difficult and expensive. And I'm not going to pretend that we are going to make lasting changes without new money."

The budget he submitted to the state legislature in March contained requests for additional money for a variety of mental health services, although implementation of his overall budget would result in a decrease in $600 million from current spending levels.

On March 31 Codey released the task force's report, saying, "The years of pretending the problems of mental illness belong to someone else are over."

The report, which will be analyzed in the next issue of Psychiatric News, contains an extensive list of recommendations.

Codey has retained his position as president of New Jersey's Senate while serving as acting governor.


Utah is faced with a shortfall of $3.2 million for its community mental health centers resulting from the federal government's shift to cost-based reimbursement for Medicaid.

Michael Deily, Utah's director of health care financing, explained that the state had a federal waiver that dates to the early 1990s allowing Medicaid funds to be spent on mental health services for people who are not Medicaid eligible as long as the state provided mandated services.

The waiver was an effort to benefit from managed care economies.

Federal regulations changed as a result of the Balanced Budget Act of 1997, and states are faced with their implementation.

Deily said, "We've made the argument to CMS [Centers for Medicare and Medicaid Services] that cost reimbursement will not be economical in the long run because it offers no incentive for keeping costs down. In fact, it will have an inflationary effect on costs."

In Washington, the shortfall from the rule change is a projected $82 million, or approximately 20 percent of the state's community mental health budget.

As of press time, Gov. Christine Gregoire (D) had included $80 million in her budget to make up the shortfall, and the state's Senate had passed a bill including the full $82 million.


The Oregon Senate approved a bill (SB 1) in March to require parity in health insurance coverage for mental health treatment, including substance abuse treatment, at a level equivalent to other medical conditions.

Although coverage for mental health and substance abuse is required now, the number of treatment visits can be capped.

Eighteen Democrats and five Republicans voted for the bill. No previous parity bill had passed either house of the legislature. Prospects for passage in the Republican-controlled House are uncertain, according to the March 22 Oregonian.


Kansas Gov. Kathleen Sebelius (D) is working with a coalition of public and private agencies called the Kansas Cancer Partnership to increase the tax on cigarettes from $.79 a pack to $1.25 a pack. The partnership also will sponsor various activities that encourage smokers to give up cigarettes.

If cigarette taxes are increased, the revenue will be directed to the HealthyKansas initiative, which encompasses many health reform activities, including the expansion of insurance coverage available through small businesses.


The Missouri House of Representatives approved legislation (SB 539) last month that would eliminate Medicaid coverage for people with incomes that exceed $579 a month.

Gov. Matt Blunt (R) supports the legislation, which the state Senate had already passed.

Upon implementation, an estimated 97,000 adults, almost 10 percent of the current Medicaid beneficiaries, would be cut from the rolls.

The bill would give state officials authority to cut optional services including podiatry, hospice care, and the provision of hearing aids, artificial limbs, and wheelchairs.

Advocates for people with disabilities are reviewing the legislation to determine whether it violates the Americans With Disabilities Act, which requires states to make reasonable efforts to place people with disabilities in community settings. Access to personal care services could be lost for those who are cut from Medicaid rolls. Those services enable people to live at home.

The bill would also require copayments for many services, including physician visits.


The 6th U.S. Court of Appeals ruled last month that Tennessee state officials do not need judicial approval for their plan to eliminate 323,000 adults from the rolls of TennCare, the state's Medicaid managed care program, according to<www.kaisernetwork.org> on April 13.

In January U.S. District Court Judge William Haynes, who is presiding over a 1998 class action lawsuit challenging TennCare's eligibility requirements, ruled that Tennessee Gov. Phil Bredesen (D) must seek the court's approval before carrying out his planned cuts.

Ordinarily, a state government must receive approval only from CMS to make changes to its Medicaid program, but the TennCare situation was complicated by the lawsuit.

Bredesen received approval in March from CMS to make the first phase of cuts.


The Nebraska legislature passed a bill (SB 709) requiring the state to study ways of controlling Medicaid costs and to hold hearings in each of the state's three congressional districts. ▪

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