Economic Determinism and Medicaid

Ok, I’ll admit to trying an academic title to talk about bureaucratic history. What a combination!
But I think it adds up to something. We are in the predicament that often comes with yesterday’s solutions—they become today’s problems. By reference to economic determinism, I am referring to the way in which in the American states’ search for funding more and more community mental health services led to Medicaid; and this in turn has created an increasingly “medicalized” system of care—a mixed blessing.
The basic primer on US state funding for mental health and addictions goes like this—if you can convert state General Funds to Medicaid, the federal government ends up picking up roughly 60% of the costs previously borne 100% by state funding. The most obvious example in the state I served (Oregon) as mental health commissioner was that we could close state hospital wards and create a larger number of placements in community settings—and still save the state money. In the early to mid-1990s, long before the Olmstead Supreme Court decision, we began doing just that and closed a fairly troubled state hospital and created specialized residential services to support all of the patients discharged. Those who we couldn’t place, we transferred to other state hospital “beds.” Later, we stopped sending children and adolescents to our state hospitals by creating and expanding community residential programs.
This was all mostly well and good. These extended care services were based on several key Medicaid requirements—they couldn’t be in facilities larger than 16 beds. And more to the point of this blog entry, they had to be “medically necessary” or “medically appropriate.” This meant, as noted above, an increasingly “medicalized” approach. Medical practitioners had to “prescribe” services using the medical model as the key conceptual and operational requirement.
As funding pressures increased, Oregon expanded not only the types of services available in the community but also expanded eligibility for Medicaid by 2 maneuvers—first and earliest, by getting more people to qualify for disability payments through the SSI and SSDI. As a case manager in the 1980s, I learned from a couple of buddies (who worked for the disability determination offices) how to draft reports using the “listings” which determined whether a person qualified for disability. Like many other case managers, I could write honest and strategic letters that would get just about anyone with a major mental health challenge approved for monthly income payments and Medicaid eligibility to support their community mental health programs. Later, Oregon expanded its Medicaid eligibility to persons who were not necessarily disabled but qualified on the basis of low incomes and on the basis of psychiatric/medical diagnoses that were considered “treatable.”
So these kinds of planning and direct service interventions were heavily conditioned on the principle that economics drives history. Like most other states, we moved more and more toward systems of care that were highly medical in orientation. Following the generalized use of the term, “chronic mental illness,” the recovery concept could even be considered somewhat threatening to all these financial strategies to preserve services. As good stewards of the public’s money, we did all we could to legitimately claim as much as possible—both services and clients–for that holy 60% federal contribution.
While we did a lot of good things and preserved a lot of the community mental health system that would have been otherwise decimated, we now should step back and see if there are ways to, in some sense, “de-medicalize Medicaid.” I will throw one simple idea into the pot: Instead of Medicaid waivers using the terms “medically necessary” or “medically appropriate,” why don’t we see if the current federal administration would be open to the idea of “health necessity?” Many people in the health care reform world know of Steven Schroeder’s seminal article in the New England Journal of Medicine, in September 2007, in which he points out that only 10% of the determinants of health and premature death are actually attributable to medical care factors. The other 90% are a combination of social circumstances, environmental exposure, genetic predisposition, and behavioral patterns.
Health, therefore, should be considered the key goal driving the funding of services and supports; and we should open up Medicaid to much more than “medically appropriate” interventions. This would truly be transformational and would fit perfectly with the push toward “block granting” Medicaid funding. It would allow more flexibility than we’ve been able to imagine under our past allegiance to a narrow conception of health care. And with people having major mental health challenges dying 20-25 years earlier than the average American, can we really afford to do less?