July 17, 2007

RALEIGH – Increased accountability and a larger private sector role could help improve North Carolina’s troubled mental health system. That’s a major recommendation offered in a new John Locke Foundation Spotlight report.

Click here to view and here to listen to Joseph Coletti discussing this Spotlight report.

“An ambitious, well-intentioned mental health reform plan has been flawed,” said study author Joseph Coletti, JLF Fiscal Policy Analyst. “But the state won’t fix the flaws by throwing more money at the system. A state-by-state review shows quality is not a function of spending. Finding policies that work is the key.”

North Carolina adopted a reform plan in 2001 to move mental health patients from state hospitals to community-based providers. But the reforms have not erased complaints, Coletti said.

“Continuity of care, quality of treatment, and use of state mental hospitals have not improved,” he said. “Private providers are hard to find because of low reimbursement rates and a complex bureaucratic process. Few counties have 24-hour crisis services available. Some mental health advocates even long for the old system.”

The reform plan featured some good ideas, Coletti said. They included: closing one of North Carolina’s four state mental hospitals; creating a statewide mental health trust fund; making local mental health agencies accountable to county governments; and splitting care management from care provision.

“The General Assembly dropped the funding and accountability recommendations when it approved mental health reform legislation,” Coletti said. “One important consequence affected the local management entities, or LMEs, that replaced old area mental health agencies. Legislators supported county officials who did not want to take on the mental health burden. So the LMEs mirrored the old agencies in lacking accountability to any government or the market.”

That lack of accountability has generated problems, Coletti said. “Lack of accountability has resulted in some LMEs returning their allocations from the state and others spending nearly all of their funds, but nobody having any idea why in either case.”

Lawmakers created the mental health trust fund, but they turned around and tapped that fund to plug a hole in the 2001-2002 state budget, Coletti said. “This diversion meant fewer resources were available to build an adequate community-services infrastructure to handle the influx of patients being released from state hospitals.”

Despite the problems, policymakers have avoided writing blank checks to reform the public mental health system, Coletti said. “They have been cautious in providing new money to the system without accountability, which is one reason this year’s budget has only a small net increase in mental health appropriations,” he said. “These proposals include allocations for specific types of care instead of system-wide spending.”

North Carolina will get few clues about proper spending levels by studying other states, Coletti said. “At $50 per person, North Carolina earns the same D+ grade as Pennsylvania, which spends $172 per person adjusted for personal income,” Coletti said. “The National Association for Mental Illness says the states with the best mental health systems are Connecticut, which spends $98 per person, and Ohio, which spends $58 per person.”

Accountability is a key factor in any reform, Coletti said. “While the state adds more accountability within the public mental health system, including Medicaid, lawmakers should also seek ways to help the private sector play a larger role in the provision and payment of services for the mentally ill,” he said. “They can do this without burdening insured people with yet another mandate in their policies.”

Joseph Coletti’s Spotlight report, “Reform the Reform: How mental health reform went wrong and what lies ahead,” is available at the JLF web site. For more information, please contact Coletti at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].