Mental Health Funding and Services
[APRIL 1, 1998] The public responsibility for caring for people with
mental illness and other mental disabilities was set out in Michigan more than 100 years
ago, in the 1850 Michigan Constitution. The states first mental health institution,
the Kalamazoo Asylum for the Insane, received its first patients in 1859, and by 1983
there were others at Pontiac, Traverse City, and Newberry.
When they were established,
these institutions were viewed as examples of enlightened public policy. Previously, care
for the mentally ill and for people with mental disability had been a family
responsibility and sometimes harshly discharged.
The most recent state constitution
(1963) also identifies care for this population as an explicit responsibility of the
state. Article VIII, section 8 says,
Institutions, programs, and services
for the care, treatment, education, or rehabilitation of those inhabitants who are
physically, mentally, or otherwise handicapped shall always be fostered and supported.
In practice, the state system for
mental health care that has evolved over the years was designed to meet the needs of two
very different client populations,
developmentally disabledpeople with mental retardation,
autism, cerebral palsy, or epilepsy, and
mentally illadults and children afflicted by such conditions
such as schizophrenia, manic-depressive disorder, and serious depression.
For the first half of this century,
the capacity of state institutions grew dramatically. Yet, even as the capacity of these
institutions reached its peak, forces were at work that would diminish their importance.
As a recent Michigan Senate Fiscal Agency analysis shows, in the mid-1960s there were more
than 17,000 individuals in state facilities for the mentally ill and over 12,000 in state
facilities for the developmentally disabled; by 1997 the populations had dropped to
approximately 1,100 and 300, respectivelyin total, a roughly 95 percent decline in
the states institutionalized population.
The decline has occurred not because
fewer people are being afflicted or diagnosed but because of court rulings that limit
involuntary commitments, dramatic improvements in treatment, and a significant change in
how and where society thinks people with these illnesses and conditions should be treated.
Since the mid-1960s there has
evolved a general consensus among practitioners and the public that the needs of most
mental health patients best can be met in community programs located as close to a
patients family as possible. This treatment mode, broadly termed
"community-based care," was incorporated into the Michigan Mental Health Code in
1974 (P.A. 258), with the intent being to allow patients to participate more fully in
community life. Public Act 258 established the structure for community mental health
boards (CMHBs) throughout the state, and paved the way for local government to play an
increasingly important role in mental health care.
Today's Delivery System
As would be expected, deinstitutionalization of the mentally ill and the developmentally
disabled has had a profound effect on the structure of the mental health delivery system,
its budget, and state employment. Exhibit 1, produced by the
Senate Fiscal Agency, summarizes important developmentsappropriations, hospital
population, staffing levels, and so onover the past 11 fiscal years.
FY 198788 through FY 199798, gross state appropriations
for mental health in Michigan rose by $850 million (current dollars),
or 78 percent. General Fund/General Purpose appropriations (the best
measure of the State of Michigans contribution) rose by $287
million, or 38 percent. However, when the effects of inflation and
accounting changes are factored in, the increase is much more modest
in both cases: 15 percent for gross appropriations and just 2.5 percent
for General Fund/General Purpose appropriations.
FY 199697 the state hospital census had dropped from more than
5,000 to fewer than 2,000, a decline of 62 percent.
number of state employees working in a mental health setting declined
from over 11,000 full-time equivalents (FTEs) to slightly over 6,000or
Fund/General Purpose appropriations to state institutions declined
during the period by approximately 60 percent in real dollar terms.
The mental health delivery system in
Michigan today is characterized by a greatly diminished state hospital system and a
growing community system; responsibility has devolved from the state to the local level.
At present, there are 50 CMHBs (now called community mental health service programs, or
CMHSPs, in accordance with recent changes in law) serving the 83 Michigan counties. The
CMHSPs coordinate the diagnosis and treatment of patients and supervise the activities of
group homes, adult foster care homes, and assertive community treatment (ACT) programs.
demonstrates how the local CMHSPs spent their state allocation in FY 199596. More
than half was expended for programs for developmentally disabled clients, more than a
third for mentally ill adults, and less than 10 percent for mentally ill children. Per
capita, mentally ill adults fare best, followed by developmentally disabled clients, and
mentally ill children are again at the low end.
Since 1980 the state has closed 34 state mental health institutions, 17 since 1990. Fiscal
year 199697 alone saw closure of two facilities for mentally ill adults (Clinton
Valley Center, in Pontiac, and Detroit Psychiatric Institute) and one for mentally ill
children (Pheasant Ridge, in Kalamazoo), and services were terminated for the
developmentally disabled at the Caro Center.
As of the beginning of FY
199798, the state roster of facilities was as follows:
mentally ill adults, with a total planned census of approximately
1,000: Caro Center, Kalamazoo Psychiatric Hospital, Walter Reuther
Psychiatric Hospital (Westland), and Northville Psychiatric Hospital
mentally ill children, with a total planned census of approximately
100: Hawthorn Center (Northville)
developmentally disabled clients, with a total planned census of approximately
300: Mt. Pleasant Center and Southgate Center
The state system is reinforced by a
large system of private hospital care. As of May 1997, 127 private institutions in 38
counties offered a total of 5,100 hospital beds for psychiatric care. Just under 1,000 of
these private beds were reserved for children.
Without question, in years to come the mid-1990s
will be viewed as a watershed in the history of the Michigan mental health system. In
addition to continued state hospital closures, five significant public policy events took
place from 1995 to 1997, and their combined effect likely will influence state mental
health policy debate for some time to come.
1995 the first major revision of the state Mental Health Code in more
than 20 years was completed. Public Act 290 of 1995 is a massive and
complicated piece of legislation which, among its other accomplishments,
moved the state even more vigorously in the direction of community-based
care, set new treatment priorities, specified important new consumer
rights, and established new accreditation requirements for CMHSPs.
1996 all state mental health functions moved into the newly created
Michigan Department of Community Health (MDCH). The new department
subsumed health-related functions previously in the departments of
Mental Health and Public Health as well as the Michigan Medicaid program.
FY 199697 the state employed a new funding formula for CMHSPs
that uses sophisticated statistical projections to estimate the number
of mentally ill, developmentally disabled, uninsured, and Medicaid
patients in each CMHSP "catchment" area.
1995 Michigan state government has been embarked on an ambitious "managed-care
program" for mentally ill and developmentally disabled Medicaid
recipients. In the future, state officials plan to move toward an
even more aggressive system in which the CMHSPs themselves will be
forced to compete with other provider systems for management contracts.
1996 Congress passed the Mental Health Parity Act, which prohibits
health insurance plans from placing annual or lifetime limits on payments
for mental health benefits if the limits are more stringent than those
imposed on regular medical benefits.
Although the Mental Health Code
revision and the reorganization of state departments were major issues during 1995 and
1996, they appear to have become less controversial with the passage of time. For
instance, the fear, expressed by some advocacy groups, that mental health services would
become the "neglected stepchild" of the newly created "super"
department, seems not to have been borne out. Similarly, there appears to be broad
agreement that the code revisions for the most part are working as intended.
The issue of continued state
hospital closures remains contentious. The MDCH, Engler administration, and such
supporters as the Michigan Association of Community Mental Health Boards view the recent
closures as a difficult but necessary choice. They see the declining patient population as
making closure a prudent means of conserving resources and taxpayer dollars. Furthermore,
the MDCH and its allies argued that private hospital beds are available to take up any
slack created by state hospital closures.
The closings have been opposed by
various advocacy groups, including the Michigan Association for Children with Emotional
Disturbances and Alliance for the Mentally Ill in Michigan, both of which took the state
to court over various aspects of the issue. The Michigan Psychiatric Society and the
Mental Health Association in Michigan also opposed the 1997 round of closings, as did a
committee of the Michigan House of Representatives.
These groups, individually and in
combination, advance a number of arguments against closure. In the view of some, the
declining census in state hospitals is more the creation of state budget cutters than of
improved community-based treatment. They argue further that vulnerable populations,
including children and adults with severe, long-term psychiatric problems are being
deprived of services, and the private sector is not, in fact, positioned to meet these
particular needs. Some closure opponents argue that patients who are denied adequate
treatment through the state mental health system often became a state responsibility in
another waye.g., the criminal justice system; they point out that the Detroit
News reports that from 1993 to 1997 the number of Michigan prison inmates who had
been state mental-hospital patients grew by nearly 500, up 25 percent.
In September 1997, opponents of
closure were temporarily gratified when a Wayne County Circuit Court judge issued a
permanent injunction against closure of three state hospitals on the ground that it would
violate state constitutional requirements that the state foster and support mental health
institutions, programs, and services. The MDCH immediately appealed and was granted at
least partial relief by the Michigan Court of Appeals, which allowed the department to
proceed with the closures but agreed to rule on the constitutional issues at a later date.
At this writing, the ruling has not been issued.
While the issue of hospital closure
dominates much of the press coverage, the states commitment to competitive managed
care within the state mental health system may have greater long-term consequences.
Although mental health advocate groups believe that managed care can, in principle, work
well for low-income mental health patients, and although they are unaware of major
problems with it now, they have three areas of general concern: whether (1) there are
adequate data to properly evaluate the effects of managed care, (2) there is sufficient
opportunity for consumer input into the system, and (3) the private companies who may be
allowed to bid for management contracts have the experience necessary to deliver care to
mental health patients.
It is, however, impossible to
over-emphasize the fact that the long-term plan for a highly competitive system contains
the seeds of more radical change. As the Citizens Research Council of Michigan recently
noted, in an era of open competition, the continued success of CMHSPs will depend on their
ability to compete, with a "substantial prospect" existing for the privatization
of mental health service delivery in parts of the state.
Finally, the federal Mental Health
Parity Act will affect state employers and is of great importance to mental health
practitioners and to mental health patient advocate groups. Employers and insurers
generally oppose health-insurance mandates of all sorts on the ground that they inevitably
restrict choice and raise costs. Many also oppose mental health parity legislation because
they are skeptical of their ability to control utilization and costs in a system
characterized by rapid change and an explosive increase in the number of officially
Proponents of parity argue that
diagnosis and treatment of mental illness is every bit as precise and effective as that of
other medical conditions. Where others see baffling change, parity supporters see the
field as a maturing specialty and forecast more effective treatment. They argue that
current arrangements often are blatantly discriminatory against mental health
servicesa circumstance that they see as unfair to patients and practitioners and
costly to society to the degree that treatable conditions are allowed to become worse.
The debate is likely to intensify in
1998 with introduction of a "mental health parity package." The bills, which are
slated for introduction in May, would amend the state Insurance Code as well as laws
governing the operations of HMOs and Blue Cross and Blue Shield of Michigan, to ensure
that people with mental illness or substance abuse problems do not face a financial burden
greater then those with traditional health problems. Another bill would amend the Michigan
Handicapper Civil Rights Law to make discrimination illegal under that statute as well.
The parity package is supported by the states major mental health professional and
Violence; Health Care Costs and Managed Care;
Center for Mental Health Services Substance Abuse
and Mental Health Services Administration
U.S. Department of Health and Human Services
P.O. Box 42490
Washington, DC 20015
(301) 984-8796 FAX
Knowledge Exchange Network (KEN)
Citizens Research Council of
38200 West Ten Mile Road, Suite 200
Farmington Hills, MI 48335-2806
(248) 474-0090 FAX
Mental Health Association in
15920 West 12 Mile Road
Southfield, MI 48076
Michigan Association of Community
Mental Health Boards
319 West Lenawee Street
Lansing, MI 48933
(517) 374-1053 FAX
Michigan Psychiatric Society
15920 West 12 Mile Road, Suite 200
Southfield, MI 48076
(248) 552-8790 FAX
National Association of State Mental
Health Program Directors
66 Canal Center Plaza, Suite 302
Alexandria, VA 22314
(703) 548-9517 FAX
Office of Mental Health and
Substance Abuse Services
Michigan Department of Community Health
Lewis Cass Building
320 South Walnut Street
Lansing, MI 48913
(517) 335-3090 FAX