Nearly 50 years after President John F. Kennedy signed the law requiring states to begin investing in community-based mental health programs rather than funding state institutions for treating individuals with mental illness, the promise remains unfulfilled.

Today, the real purchasing power of state mental health funding, adjusted for inflation, has dropped by more than $5 billion and the economy is losing an estimated $113 billion a year in lost productivity and welfare costs because of untreated and mistreated mental illness and substance abuse disorders.[1]

Between 1987 and 1997, the growth in public and private mental health spending in the United States roughly paralleled the growth in overall health care spending. Yet, over the same decade, mental health expenditures in real terms declined from 8.8 percent (1987) to 7.8 percent (1997) of the more than $1 trillion in U.S. health care costs.[2] Further, overall real purchasing power for state mental health appropriations between 1955 and 1997 declined from $16.5 billion to $11.5 billion.[3]

Moreover, Federal mental health spending grew at more than twice the rate of state and local spending between 1987 and 1997. Increasing Medicaid and Medicare expenditures accounted for the larger federal share, with combined federal and state Medicaid expenditures accounting for 20 percent of all mental health spending in 1997 alone.[4] Today, federal-state Medicaid expenditures for mental health exceed 50 percent and are expected to dominate approximately 60 percent of the total mental health spending by 2007.

Even as they confront potential cutbacks due to an economic downturn, public mental health systems are being asked to rapidly develop crisis response plans. However, these systems currently focus almost exclusively on those with chronic mental health needs and are generally unprepared to meet the needs of communities that have been hit by crises. Without additional funding, need for new services or planning may drain existing programs. Additionally, a greater emphasis on security concerns may encourage policy makers to spend more on those issues rather than preserving funding for Medicaid or other mental health programs. On the other hand, increased recognition of need could create windows for expanded services for children and adults experiencing trauma. In each state, the response to recent national tragedies will affect a variety of policy decisions, thus requiring require advocates to fully utilize their expertise in speaking out for mental health services in state legislatures.