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Six Surprising Facts About Medicaid’s Mental Health Coverage
The 2010 Affordable Care Act expanded Medicaid, which had previously been reserved for people with disabilities and other vulnerable groups, by allowing people to qualify based on income alone. Even though many states elected not to participate in the Medicaid expansion, the policy change still significantly extended the already large insurance program’s nationwide coverage.
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For more information about Medicaid, including a full overview of Medicaid’s mental health coverage, you can read our article “Medicaid Mental Health Benefits Explained.”
Read on to learn six surprising facts about how Medicaid works and who it’s for.
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Medicaid is the single largest payer of mental health care in the United States.
Medicaid is an essential link to mental health care for millions of Americans. It accounts for 25 percent of spending on mental health services in America every year, making it the largest single payer of mental health care in the country.
About 21 percent of adults with mental health conditions have Medicaid, compared to 14 percent of the general population.
For over 50 years, Medicaid hasn't covered long-term inpatient care in psychiatric hospitals.
Medicaid was established in 1965, a time when the United States government was encouraging states to build networks of community mental health programs as alternatives to hospitalization. Due to these historic circumstances, Medicaid excluded coverage for long-term inpatient care in psychiatric hospitals.
Many professionals and advocacy groups are pushing for Medicaid to change this policy. Medicaid has already updated its coverage to include short-term hospital stays and has recently started allowing states to apply for waivers to cover hospital stays of up to 30 days for the treatment of mental health and substance use disorders.
Medicaid covers mental health services that most private insurance policies don't cover.
Due to growing public awareness of the importance of mental health care and laws like the 2008 Mental Health Parity and Addiction Equity Act, private insurance plans are covering more mental health services than ever before.
However, it’s rare for private insurance plans to cover intensive services that many Medicaid plans cover, such as nursing home and other long-term care, round-the-clock services, supported employment, case management, and in-home mental health care.
In fact, many older adults who need nursing home care or other intensive services often elect to “spend down” assets so they can qualify for Medicaid coverage for these specialized and otherwise expensive services.
Many essential mental health services and safety net programs rely on Medicaid for most or all of their funding.
Community mental health programs are an essential public resource and a safety net for vulnerable people who would otherwise be unable to live on their own. They help keep people with serious mental health conditions in their homes and connected to essential professional and peer supports.
Public mental health programs also increase access to therapy, as many private practice providers don’t accept Medicaid, while publicly-funded mental health agencies do. In some states, Medicaid pays for over 60 percent of the services rendered by these essential public programs.
People who qualify for Medicaid typically require more intensive services.
People on Medicaid have higher rates of mental illness than people in the general population and use mental health services at a higher rate than people who have other types of insurance. They also have high rates of comorbid medical disorders.
The following statistics are all provided by the Medicaid and CHIP Payment and Access Commission (MACPAC). According to MACPAC:
- About 10 percent of people on Medicaid have serious mental illness, relative to 3 percent of people with private insurance and 5 percent of people with no insurance.
- About 24 percent of people on Medicaid received mental health treatment in the past year, relative to 14 percent of people with private insurance and 10 percent of people with no insurance.
- About 44 percent of people on Medicaid had fair or poor health status in the past year, compared to 13 percent of people with private insurance and 24 percent of people without insurance.
This means that Medicaid is an important link that connects essential medical and mental health services with the people who need them most.
Medicaid coverage and eligibility requirements vary widely from state to state.
Medicaid is a joint federal and state program that allows states to have some flexibility in what and who they cover. Some states have stricter income and categorical eligibility requirements than others, especially the 12 states that have elected not to accept Medicaid expansion as of April 2022.
While federal statutes require state Medicaid programs to cover essential benefits like nursing facility services and physician services, other services, like clinic services and psychosocial rehabilitation, are optional. So, some mental health services are covered by Medicaid in some states but not in others.
According to MACPAC, all 50 state Medicaid programs cover individual and group therapy, and most also cover family therapy. Specifically, every state’s Medicaid plan currently covers “some form of outpatient mental health services,” which generally includes individual and group counseling. Many states’ plans also cover family counseling.
Many people who are eligible for Medicaid don’t realize they are eligible, especially since expanded Medicaid became available under the Affordable Care Act. If you’re on a limited income, you should look into it—Medicaid will link you with an impressive range of medical and mental health services.
If you find out you’re not eligible, consider signing up for affordable online counseling with BetterHelp (a sponsor) or using OpenCounseling’s search tools to find free or low-cost counseling near where you live. Getting the care you need may only be a call or click away.
Stephanie Hairston is a freelance mental health writer who spent several years in the field of adult mental health before transitioning to professional writing and editing. As a clinical social worker, she provided group and individual therapy, crisis intervention services, and psychological assessments.