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By Randy Barrett, National Journal
© National Journal Group Inc.
Friday, Jan. 19, 2007

After 40 years of blue-ribbon panels, myriad reports, and poorly aligned public policies, severe mental illness remains an intractable and deepening problem in America. For proof, look no further than the homeless lady muttering on the corner outside your office building.

"Mental illness is the No. 1 public health crisis in the U.S. today," declared Ron Honberg, legal director for the National Alliance for the Mentally Ill, an advocacy group based in Arlington, Va.

The numbers back his claim. According to the World Health Organization, mental illness and suicide account for more than 15 percent of the mortality and disability in countries with established market economies. That's more than all forms of cancer combined.

In 2001, the most recent year for which official figures are available, the U.S. spent $85 billion on mental health treatment. Experts estimate that figure is closer to $130 billion today, with federal prescription coverage included. The costliest subset by far is the severely and persistently mentally ill -- about 12 million adults with schizophrenia, bipolar disorder, and major depression -- who account for 58 percent of the spending, according to researcher and activist E. Fuller Torrey.

This group includes about one-third of the homeless population and up to 25 percent of inmates in state and local jails, according to NAMI and the Justice Department. "County jails and prisons have become the new mental hospitals," said NAMI Executive Director Mike Fitzpatrick.

The problem, nearly everyone involved agrees, is an incoherent patchwork of federal and state laws and policies that effectively deny the seriously mentally ill the most-basic services and treatment. Last year, Fitzpatrick's group gave the nation's mental health system a D after surveying each state's service offerings. Only five states earned a B: Connecticut, Maine, Ohio, South Carolina, and Wisconsin.

"Many states do nothing but drive people to emergency rooms, shelters, and jails," Fitzpatrick said. "It reflects a lack of a federal plan."

A key problem is a fractured funding stream. About 55 percent of treatment dollars for serious mental illness comes from state Medicaid budgets, which have their own rules and criteria for coverage. "The whole system has grown by [local] accretion," said Ron Manderscheid, a former federal mental health official who is a consultant with the Constella Group, a health research contractor. "It's an elephant designed by committee."

It doesn't help that the federal government continues a long-standing ban on the use of Medicaid money to fund state mental hospitals, said Mary Zdanowicz, executive director of the Treatment Advocacy Center. The policy led to a wholesale emptying of state psychiatric hospitals in the mid-1960s and another wave of discharges in the early 1990s. "In Virginia, we've closed 50 percent of state hospital beds in the last 20 years," Zdanowicz said. "That's a critical -- and often overlooked -- loss for people who need intensive treatment for a severe mental illness."

Critics say that the federal government has also done a poor job leading the way to best practices in treatment. "In mental health at the national level, we're doing an excellent job doing demos," Manderscheid said. "It's entirely another thing to bring them up to scale."

There has been no lack of expert advice on how to fix the system. Every few years, a blue-ribbon panel examines the familiar problems and recommends the same solutions, said Chris Koyanagi, policy director for the Bazelon Center, a legal advocacy group.

In 2003, the president's New Freedom Commission on Mental Health concluded that the system is "fragmented and in disarray," and counseled the government to "address mental health with the same urgency as physical health." Like its predecessors, the report was barely acknowledged by the White House or congressional policy makers before staggering to the blue-ribbon morgue and expiring.

"It had no traction because it had no enabling legislation with it," Fitzpatrick said.

And no extra money. Consumers, psychiatrists, insurers, and the business lobby continue to clash over the costs of adequately treating severe mental illness -- and to what extent lesser mental ailments should be included in coverage.

Advocates for the mentally ill are hopeful that a substantive private insurance parity bill -- which would require equal reimbursement of mental and physical illness claims -- can pass Congress soon. But they say much more remains to be done to build a cohesive federal response on best practices, research, mental health funding accountability, and assertive treatment programs.

"We know what the policies ought to be," Koyanagi said. "We need the political will." [an error occurred while processing this directive]

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