State waivers aimed at expanding mental health care for Medicaid beneficiaries have been largely successful in doing so. However, my research finds that state waivers aimed at removing the Institutions for Mental Diseases Exclusion appear to have different effects by state.
Mental illnesses are more prevalent among Medicaid enrollees, so it is important that Medicaid provides coverage for mental health care. Of the individuals insured through Medicaid, 29% have mental illnesses, compared to 21% of individuals insured through private insurers and 20% of individuals that are uninsured. However, Medicaid enrollees face some barriers to mental health care, including the Institutions for Mental Diseases Exclusion.
The Institutions for Mental Diseases Exclusion is a federal law prohibiting Medicaid from paying for services delivered to nonelderly adults in large mental health treatment facilities. In 2018, states were given the opportunity to apply for a Section 1115 waiver that removes the exclusion, allowing their states’ large health treatment facilities to accept Medicaid for services delivered to nonelderly adults. Ten states have received this waiver, but the waiver’s effects are largely unknown.
Because the waiver allows large health treatment facilities to accept Medicaid for services delivered to nonelderly adults, my research analyzed the waiver’s effects on Medicaid acceptance in large health treatment facilities that serve nonelderly adults. I used data from the National Mental Health Services Survey assess Medicaid acceptance in facilities. Based on previous research and because facilities were allowed to accept Medicaid for a larger portion of Medicaid enrollees, it was expected that states with waivers would experience increased Medicaid acceptance in facilities.
I found that the waiver’s effect on Medicaid acceptance in facilities appears nuanced. Surprisingly, states with waivers appeared to experience smaller increases in the percent of facilities accepting Medicaid compared to states without waivers. The graph below shows the waiver’s effect on Medicaid acceptance in facilities for states with waivers and states without waivers:
However, when analysis was limited to states with a high baseline percent of facilities accepting Medicaid, states with waivers appeared to experience relative increases in the percent of facilities accepting Medicaid. When states with waivers were compared to states with pending waivers, states with waivers also appeared to experience relative increases in the percent of facilities accepting Medicaid. Thus, waiver effects on Medicaid acceptance in facilities appears nuanced by state characteristics.
Furthermore, I found that the waiver’s effects on Medicaid acceptance in facilities appears different by state. Of the three states I examined, Washington D.C. appeared to experience an increase in the percent of facilities accepting Medicaid, while Indiana and Vermont appeared to experience a decrease in the percent of facilities accepting Medicaid. The graph below shows the waiver’s effect on Medicaid acceptance for individuals states with waivers:
While the aggregate of states with waivers showed an increase in in the percent of facilities accepting Medicaid, this was not representative of the waiver’s effect for each state. Thus, individual state differences may have been more important in determining Medicaid acceptance in facilities than waivers.
My research aimed to start examining the waiver’s effect on Medicaid acceptance at large mental health treatment facilities that serve nonelderly adults and found that the waiver’s effect differs by state. Further research should reassess these findings, examine incentives that determine a facilities’ decisions to accept Medicaid, and investigate differences between states’ mental health treatment facilities.
The waiver removes the Institutions for Mental Diseases Exclusion, allowing large mental health treatment facilities to accept Medicaid for nonelderly adults, which may be a useful step in removing a barrier to mental health care for Medicaid enrollees. However, because the waiver’s effect appears to differ by state, further research is needed to determine if waivers are sufficient to encourage large mental health treatment facilities to accept Medicaid.
Madelyn Mustaine is a junior Wells Scholar at Indiana University studying Policy Analysis at the O’Neill School of Public and Environmental Affairs. Madelyn is a Health Policy Research Assistant for Dr. Kosali Simon, and is passionate about Medicaid, reproductive healthcare, and mixed health systems. Next year, she plans continue her education at the O’Neill School with a Master’s in Public Affairs, concentrating in Policy Analysis and Health Policy.
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