America is Legislating a Return to the Asylum, One Policy at a Time

The budget reconciliation megabill signed by Trump on July 4 is among the latest in a series of federal and state policy choices this year that will have devastating impacts on poor people, disabled people, and drug users across the US. These decisions have in some instances forced voluntary community-based services and peer respites to reduce hours or shutter altogether, as they simultaneously threaten existing disability rights protections like the 1999 Supreme Court Olmstead vs. LC decision that requires states to eliminate the unnecessary segregation of disabled people in institutions.

This year, activists have had to respond to a dizzying array of upheavals and losses—from sudden, arbitrary funding cuts that threw state public health systems into disarray, to the announced dismantling of the Substance Abuse and Mental Health Administration (SAMHSA), to the proposed defunding of Protection and Advocacy for Individuals with Mental Illness (PAIMI) program, to a new attempted repeal of the Institutions for Mental Diseases (IMD) exclusion that was created as part of Medicaid 1965 to disincentivize institutional care. Taken together, these decisions funnel public dollars away from community support and rights protection, and accelerate the drumbeat towards reinstitutionalization.

And on July 25, President Trump issued an executive order that seeks to put “homeless individuals into long-term institutional settings” with those seen as mentally ill candidates for this long-term lockup. Given that state laws govern forced treatment standards, this executive order would need to rely on bullying tactics from the President and his administration, related to the withdrawing of federal funds to states that failed to comply with this call for long-term incarceration of the mentally ill, to enforce this executive order. Even so, it serves, at the moment, as evidence of the hostile political landscape today toward policies and initiatives that people with lived experience have fought for in the past decades.

And already, that political hostility is being translated into legislative actions.

The Potential Mental Healthcare Impacts of the Megabill

President Reagan invented the term “social safety net” to defend proposed cuts to New Deal and other programs in the 1980s by asserting a now-familiar promise: That such cuts would not impact the “social safety net” for Americans “truly in need.” Since then, the term has been adopted as a metaphor in legal and public discourse, often said to be “frayed” or even “ripped to shreds.” Legal scholars now argue that the concept itself has become essentially meaningless.

Health analysts widely view the budget reconciliation megabill as accelerating the deterioration of what little public assistance remained available in America, over five years after the Covid-19 pandemic began. The megabill will result in the poorest Americans losing access to healthcare and food assistance, beginning in December 2026. It will also usher in the “largest transfer of wealth in American history,” as stated by Senator Brian Schatz (D-HI). According to the nonpartisan Congressional Budget Office, the bill’s healthcare-related cuts would increase the country’s uninsured population by nearly 17 million by 2034. “If all of this comes to pass, it would represent the biggest roll back of health insurance coverage ever due to federal policy changes,” stated a report by the Kaiser Family Foundation.

The historic slashing of public benefits is predicted to have numerous ripple effects throughout the US healthcare and food systems. “This bill will leave America a far crueler and weaker place,” Robert Weissman, co-president of the nonprofit Public Citizen, said in a statement.

One-third of Americans with a psychiatric diagnosis and one-fifth of those with substance use diagnoses currently receive coverage through the Medicaid program. The cuts will likely result in significant disruptions in access to care and support. Mental Health America has taken credit for language in the bill that would exempt people diagnosed with mental health and substance use conditions from new co-pays and work reporting requirements.

“The law also includes MHA’s suggested language that requires states to use existing data on file to verify that individuals qualify as exempt from work requirements, rather than placing the burden on those individuals to verify their eligibility,” according to a July 19 statement.

Currently, 48 states and Washington, D.C. have elected to fund peer-delivered services under Medicaid. While Medicaid-reimbursable peer services have been criticized as a controversial move that threatens the foundations of peer support, the cuts to the program are also likely to result in reduced access to peer support services in many states, particularly in rural areas, leaving untold people without these sources of support.

Peer-Run Programs Struggle, Shutter Under Sudden, Arbitrary Federal Funding Cuts

 At the end of March, shockwaves began rippling through systems as the Trump administration announced that it was pulling $11 billion in Covid-era funding from states, because it considered the pandemic to be over. But states had already allocated the funding for public health initiatives that addressed the traumatic effects of the pandemic, including programs like peer respites, a voluntary, non-carceral approach to community support that psychiatric survivors have been advocating for since the 1970s.

While the federal government has never directly funded peer respites, advocates have fought to secure funding for these programs, which now exist in 14 states. A 2024 SAMHSA report on financing peer respites notes that states have leveraged the federal Community Mental Health Services Block Grant (MHBG), along with other funds to support respites. Without dedicated federal discretionary funding, however, peer respites are especially vulnerable to states’ budget disruptions.

Wisconsin, for instance, was set to lose over $225 million in federal funding as a result of the surprise cuts. The state then joined a lawsuit, along 19 other states’ attorneys-general, to compel the government to halt the funding cuts. Despite a judge’s injunction issued in May in favor of the plaintiffs, much damage has already been done.

The funding cuts hit peer support programs in the state particularly hard. The rural La Crosse Lighthouse peer respite had to lay off eight staff members, slash their hours of operation, and rely on donated funds to maintain operations. If the organization does not receive adequate support soon, the doors will have to close by September 2025, according to an ongoing mutual aid campaign. “This reduction in staffing and operating hours has directly impacted the individuals we serve by reducing the availability of crucial support,” La Crosse Lighthouse executive director Abigail Spanjers told Mad in America via email. “The loss of funding also gave many individuals in the area the impression that we were no longer operating. The rumor mill moves faster than our social media updates, and we are finding people don’t realize we are still available.”

“As the Executive Director, it was heartbreaking to lay off the staff and watch everything we have fought to build get dismantled,” Spanjers wrote. “It’s not just about these contracts, it’s about the future of funding for mental health.”

Other programs have been significantly impacted. Nora Hitchcock, whose organization oversees Parachute House, Milwaukee’s peer-run respite program, told the Milwaukee Journal Sentinel that she wasn’t sure if there would be sufficient funds to continue operations beyond June. Uplift Wisconsin, the state’s peer warmline, shut down in April and has not resumed operations.

Nze Okoronta, executive Director at SOAR Case Management, overseeing Solstice House Peer Run Respite and Peer Run Warmline in Madison, spoke to Mad in America about the cascading impacts of the funding cuts, straining an already under-resourced system. “[La Crosse] Lighthouse is especially up the creek, because La Crosse is on the map nationally for housing issues and there’s no psychiatric hospitals there,” Okoronta said. “So if you don’t get into a respite, and you don’t get picked up and carted off to [state hospitals] like Winnebago or Mendota or somewhere horrible, you just end up on the street.”

Speaking to The Cap Times, Okoronta elaborated on the impact: “The ARPA cuts mean that we lose essentially 40% of our statewide peer respite capacity in the blink of an eye. This then puts all the labor on all the other sites to compensate for those losses.”

The impact on the community has been devastating, Okoronta said. “We’re seeing a lot more people feeling totally unsupported and abandoned by the systems. It affects everyone, especially people who are at risk of deportation, people with immigrant experience. People are terrified of being criminalized. The increase of surveillance is just so visceral right now. Everyone is afraid of what’s in their medical records, who knows about them.”

Spanjers sees opportunity in “collaborations and advocacy for alternatives” amidst the current crisis. “These cuts shined a light on resources that may not have been well-known to the general population, and this gives us a platform for change,” she told Mad in America. “The more people know about the impact of the work we are doing, the better chance we have at finding financial and government policy support.”

The federal funding cuts caused confusion and disruption of peer specialist-delivered services and respites not just in Wisconsin, but in several other states including Iowa, Mississippi, Connecticut, Florida, and Michigan, Okoronta said.

As Medicaid Cuts Loom Over California, CARE Court Expansion Proceeds

California faces billions in potential Medicaid losses as a result of the megabill, but Governor Gavin Newsom continues to push for an expansion of his CARE Court, with a coalition of California’s Big City Mayors and the state psychiatric association, and family groups.

As previously reported in Mad in America, Newsom’s CARE Court represents the culmination of decades of state and federal efforts to erode psychiatric rights, enacted across the partisan divide. In 2022 the Democratic governor and his champions in Sacramento legislated a system of civil courts that compels people with diagnoses of untreated serious mental illness and/or substance use disorder into mandated care plans.

“There is nothing voluntary about CARE courts: at every stage that is allegedly ‘voluntary,’ refusal to comply defaults to coercion, ultimately resulting in full-on conservatorship,” according to a statement by the Western Regional Advocacy Center, which organizes with unhoused communities directly impacted by CARE Court. “This legislation does not invest a single dime in expanding or improving community based treatment options, and does not guarantee (nor fund) permanent supportive housing. Most egregiously, this policy continues a documented pattern of mental health laws being used as weapons to criminalize Black and Brown communities.”

And in 2024, California voters approved Newsom’s $6 billion bond that is being used at least in part to rebuild locked facilities, and included a last-minute amendment that lifted a prohibition on using the bond money for involuntary interventions. The measure passed only by the narrowest margin, in part due to lived experience opposition putting up a significant fight.

This legislative session has seen an onslaught of what Disability Rights California calls bad mental health bills that have put the disability community and allied organizations on the defensive again. In this session, organizers have had to contend with amendments introduced at the last minute, with little time to review or provide input.

“A lot of people in our community feel like we’re getting hit from every angle,” Eric Harris, associate executive director of external affairs for Disability Rights California (DRC), told Mad in America.

DRC hosted a virtual town hall on June 30 to discuss the bills with the community. Lex Steppling, a panelist and organizer with the Los Angeles Community Action Network and All People’s Health Collective said that California’s reputation as a “liberal and progressive” state has “ironically allowed [it] to lead the way … on criminalization of unhoused people.”

Steppling noted that while California presents itself as progressive, conservatives are enacting very similar legislation. “When you compare the plans of [Florida governor] Ron DeSantis and Gavin Newsom to address the crisis, the policies are nearly identical” while the “language used to present them is different.”

Steppling also called out the promises of housing in Newsom’s policies. “We know that you’re not going to build housing and [voluntary] treatment infrastructure. What you’re doing is enabling the state to kidnap people, using their mental health.”

“What we’re going to see is people snatched out of their lives,” Steppling said. “We’re creating the infrastructure today to snatch people off the streets.”

Preliminary CARE Court implementation data show that judges had to dismiss as many as 40% of petitions due to the narrowly-written criteria. In its first year, the program is said to be falling way short of its goals. SB 27 ostensibly chips away at the barriers to implementation by widening the criteria for referral and eligibility.

The bill represents a “significant expansion” of CARE Court, as stated in an opposition letter led by DRC. Currently, only people with schizophrenia spectrum diagnoses are eligible. This bill would expand eligibility and referral to include mood disorders with psychotic features, which are five times more common.

SB 27 was introduced by state Sen. Tom Umberg (D-34). Katherine Wolf, a panelist at the DRC town hall who is a doctoral student at the University of California at Berkeley and an organizer with the All Peoples’ Health Collective, noted that Umberg has introduced a CARE Court update bill yearly since the law passed in 2021. “Each update increases the coercion and erodes due process,” Wolf said.

At a July 1 Assembly Judiciary Committee hearing for SB 27, Michele Cabrera, executive director for the County Behavioral Health Directors Association of California, representing all 58 counties implementing CARE Court, testified against the expansion. “We’re talking about an order of magnitude really outside of the scope of what we are prepared to do upon enactment of this law, not to mention the lack of housing,” Cabrera said. “CARE Court did not necessarily bring with it resources.”

Harris from DRC opened his testimony with a quote from civil rights leader Fannie Lou Hamer: “We are sick and tired of being sick and tired.”

“In 2022, my colleagues and I were told by the champions of CARE Court that it would be voluntary and only cover a small portion of the disability community,” he said. “Ever since, every year the champions of CARE Court push for expansion.”

“California remains in a housing crisis and the state still is not providing enough accessible mental health services for those who need it,” he continued. “We warned the community and policymakers then that the champions of CARE Court would not stop, but would expand to cover more unhoused people with mental health disabilities and beyond. This is what SB 27 would do.”

At the DRC town hall, Wolf stated that in drafting these CARE Court bills, Senator Umberg consulted with “zero disabled people” and was “avoiding” them. “Now DRC also has to spend all this time and money to oppose this, whereas if legislators came to disabled people from the beginning, they could create policies that disabled people actually want and support,” she said.

“We could all be working together instead of fighting each other to a standstill while not much changes on the ground.”

“This CARE Act has cost $700,000 per person,” Wolf added. “Not any of that has gone to the person. It’s incredible, what a waste of money this is.”

SB 27 is now halfway through the process of becoming law, and advocates have little doubt that the bill will end up on Newsom’s desk for signature.

“We see the current role of ICE in Los Angeles and across the nation, and the radical redistribution of resources to it in the just-passed Big Beautiful Bill,” DRC said in a statement on the bill. “We must rage in opposition against this same creep in California policy, funneling more and more money toward systems that are cruel, harmful, and only serve to lock up and disappear the most vulnerable in our society … Our message is clear: SB 27 must die.”

The other bills include SB 331, introduced by state Sens. Caroline Menjivar (D-20) and Steve Padilla (D-18), which is sponsored by the California State Association of Psychiatrists, and supported by Families Advocating for the Seriously Mentally Ill. The bill dilutes the criteria for involuntary holds, expanding the definition of eligible mental health disorder to any diagnosis in the current edition of the Diagnostic and Statistical Manual of Mental Disorders. Under this massive umbrella, examples include caffeine withdrawal, gender dysphoria, premenstrual dysphoric disorder, and prolonged grief disorder.

“This dangerously broadens language that permits those who will enforce this law to further target individuals experiencing homelessness, transgender individuals, people of color, women, and more marginalized groups,” DRC posted on Facebook on July 1. “It gives massive clearance to law enforcement to essentially kidnap anyone off the street based on perceptions alone.”

SB 820, which has already generated significant opposition, was introduced by Sen. Henry Stern (D-12) and allows the state to forcibly administer neuroleptic drugs without informed consent to any person confined in a county jail on misdemeanor charges who is found incompetent to stand trial.

“We believe that this type of policy, to forcibly medicate a person, is one of the most intrusive exercises of government power that there is, and especially for anyone in the criminal legal system,” Harris said at the DRC town hall. “It violates human rights at the United Nations level.”

At the virtual town hall, Steppling emphasized an advocacy strategy that rejects compromise. “We can stop these bills if we all agree there’s no negotiating. The answer is no. The way forward is killing these bills. The way backward is not killing these bills. There is no way around.”

The Dismantling of SAMHSA, the PAIMI Program, and a Renewed Push to Repeal the IMD Exclusion

In March, Health and Human Services (HHS) under RFK Jr. announced a “dramatic restructuring” in which the Substance Abuse and Mental Health Administration (SAMHSA) would be dismantled and folded into a new agency called the Administration for Healthy America (AHA).

Proponents of involuntary psychiatric interventions have long called for the abolition of SAMHSA. In 2013, Mental Illness Policy Org executive director DJ Jaffe called for the agency’s elimination. Former Congressman Tim Murphy, who used mass shootings as a pretext to push for involuntary outpatient commitment in the mid-2010s, also put the agency in his crosshairs. And in January, Carolyn Gorman, who worked with Jaffe at Mental Illness Policy Org and advocates for “thoughtful” involuntary civil commitment, wrote an opinion piece in the conservative City Journal entitled “Trump Should Abolish the Federal Mental-Health Agency.” Among SAMHSA’s shortcomings, according to Gorman, is “advocating against involuntary commitment,” even though the agency has dispersed federal funding for so-called Assisted Outpatient Treatment programs since 2016.

It appears that these advocates may soon get their wish, as SAMHSA is now said to be “in crisis itself.” The dismantling of SAMHSA has caused many to fear that community services delivered by peer specialists and harm reduction efforts that have spurred a recent reduction in overdose deaths may lose vital funding. Local programs that survive worry that they will be left without the support of SAMHSA’s regional offices. Rural areas are likely to be hardest hit.

“Readers of Franz Kafka may appreciate that SAMHSA is pronounced ‘Samsa,’ which happens to be the surname of Gregor Samsa, the character in Kafka’s The Metamorphosis, who wakes up one morning to find that he has been turned into a giant cockroach,” wrote Robert Kuttner, co-editor of The American Prospect. “Trump’s infestation of public policy is a plague worthy of Kafka.”

In addition, there is a looming threat to the federal Protection and Advocacy (PAIMI) grant program overseen by SAMHSA. The PAIMI Act was established in 1986 to investigate abuse, neglect, and rights violations in mental health services. While Rob Wipond recently reported for Mad in America on PAIMI programs not adequately fulfilling their mission, the total loss of such programs would be catastrophic. “Without the federal Protection and Advocacy program, there is no federally mandated, independent oversight of abuse, institutional conditions or legal violations in psychiatric settings,” wrote Nev Jones and Jordyn Jensen in The Hill. “Cutting its funding would leave those in the most dangerous environments unprotected.”

Amid these developments, on June 17 Rep. Salud Carbajal (D-CA-24) filed a bill, co-sponsored by Rep. Don Bacon (R-NE-02), that would make it easier to rebuild institutions and confine people within them for longer periods of time. HR 4022, the Increasing Behavioral Health Treatment Act, seeks to repeal the Institutes of Mental Disease (IMD) Exclusion, a 1965 Medicaid rule designed to discourage confinement in large psychiatric institutions and incentivize community-based services and supports.

Under Medicaid, IMDs are defined as “facilities of more than 16 beds primarily engaged in providing diagnosis, treatment or care of persons with mental diseases.”

HR 4022 is not a novel effort; organizations including the National Alliance on Mental Illness (NAMI), the Treatment Advocacy Center, and the Manhattan Institute have been pushing for the repeal for over a decade, calling the IMD exclusion a form of “discrimination.” The move was a cornerstone of Tim Murphy’s mental health policy reforms from 2013-2016, ultimately defeated due to cost. The most recent 2023 nonpartisan Congressional Budget Office analysis puts the cost of a repeal at an estimated $38 billion over 10 years.

The IMD exclusion was also on the radar of the first Trump administration, which sought to dilute it through implementing a waiver system. In 2020, Jennifer Lav, writing for the National Health Law Program, said: “Weakening the ‘IMD exclusion’ while cutting funding for community-based mental health services would be a stark reversal of decades of progress, undermining the Americans with Disabilities Act and the Integration Mandate articulated by the Supreme Court’s decision in Olmstead v. L.C.”

“The first and most important step toward public mental health reform … is to eliminate the IMD Exclusion,” according to a 2021 Manhattan Institute report. The report takes on the Olmstead Decision, emphasizing that it does not “outlaw institutional-based care.” Citing that Olmstead protects the right of disabled people to receive services “in the most integrated setting appropriate to their needs,” the report states, “For some people, that will mean IMDs.”

In its current iteration, the bill includes no mention of rights protections. It stipulates that states are required to submit plans for “increased access to outpatient and community-based behavioral health care.” But there is also no enforcement mechanism to ensure that “increased access” to community-based care occurs. Further, HR 4022 does not put a cap on the length of stay in an IMD. This represents a significant departure from the past, where even under temporary Section 1115 waivers, hospital stays were usually capped at 15 or 30 days to disincentivize states’ historic overreliance on institutions.

The bill is endorsed overwhelmingly by various law enforcement organizations, as well as NAMI, the National Association of Counties, and the National Association of County Behavioral Health and Developmental Disability Directors.

Resisting Medical Fascism and the “Indefensible” Status Quo

“We cannot simply defend the status quo in healthcare and the Affordable Care Act,” wrote Sen. Bernie Sanders (D-VT) in The Guardian, announcing his April 29 re-introduction of the Medicare for All Act into the Senate, along with Rep. Pramila Jayapal (D-Wash.) in the House. “The time is NOW to declare that healthcare in our country is a right and not a privilege.” A 2020 Pew Research Center poll reported that a majority (63%) of Americans said that it is the responsibility of the government to provide health coverage for all. The bill was referred to committee, and is unlikely to move in the current political environment.

Writing in The Nation, political anthropologist, social psychiatrist, and psychoanalytic clinician Eric Reinhardt notes that today’s health and immigration policies drive the latest iteration of medical fascism, which he defines as the “integration of healthcare institutions and professionals into autocratic systems of control, coercion, and repression.” This rise in medical fascism, Reinhardt writes, “didn’t start with Donald Trump” but is “a well-established pattern that goes back to the origins of the [medical] profession in this country.”

“We have every reason to anticipate that the Trump regime will intensify these efforts to wrap health agencies and institutions into the war on immigrants and dissidents, to expand restrictions on reproductive and transgender healthcare, and to use medical institutions to surveil and punish marginalized communities,” Reinhardt wrote.

For Reinhardt, “Resistance alone is not enough … We must also fight for more effective, equitable, and democratic national health systems rather than simply try to defend an indefensible status quo.”

In STAT News, Reinhardt used the example of medical professionals who went underground and risked their lives rather than collaborate with the Nazi regime as a reminder that “organized resistance is always possible no matter how grave the danger or how cruel government or collaborationist hospital administrators may become.”

“While critique [of the bill] is necessary, it is not sufficient,” write the authors of “The Big Beautiful Bill: A Declaration of War on the People.” “This moment demands both clarity and action—not just an understanding of what is happening, but a commitment to confront it together through collective effort and radical imagination.”

“We fight this by refusing their logic. We fight this by organizing mutual aid, building solidarity economies, resisting evictions, defending land and water, and refusing to let each other go hungry or disappear in a cage,” they write.

“The future isn’t handed down from Congress. It is built in kitchens, in streets, in community centers, and on stolen land returned to collective stewardship.”