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Health and Human Services
Disability Services

State programs for the physically and mentally disabled have become one of the largest government enterprises in North Carolina, making up nearly one-fifth of the Health and Human Services (HHS) budget and employing thousands of people. Most of these programs rely significantly on federal dollars, though it should be noted that many of those federal dollars originated in North Carolina. Unlike other HHS programs, such as welfare for the able-bodied or Medicaid for middle-class seniors, disability services have long been considered a proper function for government to perform.

Unfortunately, the evidence suggests that North Carolina's disability services are poorly administered and delivered, too expensive, and too little directed toward promoting self-sufficiency and gainful employment.

Bureaucratic Bloat, Inadequate Results

The state's HHS department fragments disability services into five divisions:

1. Vocational Rehabilitation
2. Services for the Blind
3. Services for the Deaf and Hard of Hearing
4. Aging
5. Mental Health/Development Disabilities/Substance Abuse
6. Medical Assistance

A separate advocacy council for the disabled is housed in the Department of Administration. Many of these divisions provide similar services to their clients and exist for reasons that are more political than operational in nature.

It is difficult to obtain solid outcome measures for the many disability services, which include acute and chronic medical care, education, job training and placement, advocacy, regulation, counseling, and independent living. Costs per disabled worker successfully rehabilitated and placed in jobs rose significantly in the 1990s, but that growth has slowed since then. Over 70 percent of cases close because the recipient refuses services, fails to cooperate, or cannot be contacted (see chart, "Reasons for Closing V.R. Cases"). Only about seven percent are rejected by the system for having no disability, no impediment to employment, or no need for vocational rehabilitation.

An important factor in the lower productivity of disability programs has been the Americans with Disabilities Act. By establishing a variety of rights, it encouraged individuals to seek disability status who previously had no reason to. The act also had the unfortunate effect of reducing employment rates among the disabled, most likely because employers felt more reticent to hire disabled workers if they could be compelled to spend significant funds to accommodate such employees in their workplaces.

State mental hospitals are poorly run, poorly maintained, and prohibitively costly. At the same time, private psychiatric hospitals are underused, and community-based alternatives are inadequate to handle problems created by deinstitutionalizing mental patients.

The Easley administration has taken several steps towards sensible mental health reform efforts, including consolidation of county mental health efforts, privatization, and plans to replace aging mental hospitals with smaller, more efficient ones. Gov. Easley's budget request would put $89 million into the reform effort this year, and the Senate budget included $104 million. Local mental health agencies will not receive the $155 million advocates sought. The final budget will likely include $20 million in debt to complete the Central Regional Psychiatric Hospital in Butner and additional debt for one or both of the Eastern and Western Regional Psychiatric Hospital.

Recommendations

1. Lawmakers should continue efforts to merge most existing programs into a single Division of Disability Services, organized around services rather than disabilities, in order to improve performance and efficiency (see chart, "Current and Proposed Organization of N.C.'s Disability Services"). State and local agencies should also make better use of competitive contracting, vouchers, and incentive pay for caseworkers to deliver a higher quality of service to disabled North Carolinians at an affordable price.
2. The state should revisit its definition of disability to target resources more carefully to those who truly need them, while setting self-sufficiency as an unambiguous goal for those with slight or modest disabilities.
3. The state should transfer ownership and operation of its mental hospitals to local or private agencies and reform its funding process to route more patients into appropriate private hospitals or community-based care. Local mental health authorities should carry out the Easley administration's reform agenda by acting as informed purchasers of care from a variety of public and private providers.

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