Chapter 8 – Mental Health and Substance Abuse


  • The majority of patients with behavioral health conditions – as many as 80 percent – seek treatment in emergency rooms and primary care clinics. Up to 70 percent of these patients are discharged without care (source).
  • Over two-thirds of percent of primary care providers report that they are unable to connect patients with outpatient behavioral health providers due to a shortage of mental health providers and health insurance barriers (source).
  • From 2009 to 2012, states cut mental health budgets by a collective $4.35 billion and cut more than 3,222 psychiatric beds (source).
  • Nearly half of adults in the U.S. (46 percent) experience mental illness or a substance abuse disorder at some point in their lives, and costs amount to nearly $57 billion dollars per year (source) (source).
  • Anxiety disorders and depression are the most common mental illnesses. Anxiety disorders affect 18 percent of the population while the lifetime risk for depression is 17 percent (source).
  • In 2014, approximately 21.5 million people age 12 or older had struggled with a substance abuse disorder in the past year (source).

With 46 percent of U.S. adults experiencing mental illness or a substance abuse disorder at some point in their lives, and with costs amounting to nearly $57 billion dollars per year, public policy regarding behavioral health care makes a critical impact on nearly every American family (source; source). Today in the United States, the majority of patients with behavioral health conditions – as many as 80 percent – seek treatment in emergency rooms and primary care clinics where providers do not have the resources or training to offer adequate care. Up to 70 percent of these patients are discharged without care (source). Untreated mental illness is not only a major factor in homelessness and incarceration, but also has a significant impact on costs and overall health outcomes (source). Patients with these diagnoses use more medical resources, are more likely to be hospitalized for medical conditions, and are readmitted to the hospital more frequently (source).

As a result of the high levels of behavioral health care spending, as well as its often inefficient application, several members of Congress are calling for a major overhaul to the nation’s mental health system. While proposals vary significantly, there are several areas of overlap, including expanding access to care, clarifying how the Health Insurance Portability and Accountability Act (HIPAA) applies to mental health services, promoting electronic health record use, boosting the number of providers in underserved areas, and creating new federal leadership for behavioral health care (source).


The institutional inpatient care model, in which patients with behavioral health needs lived in hospitals where they had constant access to professional care, was prevalent for nearly a century from the mid-1800s to the 1960s. These state-funded institutions, however, often lacked adequate resources and began to draw criticism for their standards of care. By the mid-1950s, many countries were shifting towards outpatient, community-based care and the use of antipsychotic drugs to aid in treatment. The Community Mental Health Centers Act of 1963 initiated the closure of state psychiatric hospitals and limited the institutional commitment of individuals to only those “who posed an imminent danger to themselves or someone else” (source).

This movement, more recently described as “deinstitutionalization,” has continued, and the number of people who receive care in community-based settings has increased. Additionally, alternative methods of treatment have risen in popularity, including mobile crisis services, intensive community treatment that utilizes case management, medication management, and partial hospitalization. While these services have become more patient-centered, funding and payment remains fragmented (source).


The challenges facing the behavioral health care system are both unique and diverse.


Unlike many other areas of medicine, many patients with behavioral health conditions do not receive care, or even avoid seeking it out as a result of the stigma often associated with mental illness (source). Stereotypes depicting people with mental illnesses as violent or dangerous can lead to discrimination (source). Moreover, further stigma within health care institutions presents additional barriers by limiting opportunities for patients to seek help (source).

Complexity of Conditions and Co-Morbidity

In addition to the fears that behavioral health patients have with regards to seeking treatment, the range of behavioral health conditions is wide and diverse. Anxiety disorders are the most common mental illness in the U.S., affecting 18 percent of the population, followed closely by depression. At any point in time, 3 to 5 percent of people suffer from major depression, while the lifetime risk is 17 percent (source).

Physical and behavioral health conditions often occur simultaneously, which can frequently complicate proper care (source). Medical ailments may lead to mental disorders, such as depression, while mental conditions may place a person at risk for certain medical disorders. The treatment models proven to be most effective for patients with comorbid conditions, however, have not been implemented widely (source).

The shift to new payment policies by both public and private payers presents an opportunity to integrate behavior health care with primary care. There have been Medicare and Medicaid demonstration programs, for example, that permit providers to accept global payments for both behavioral and primary health care (source). Furthermore, Medicare’s new Medicare Physician Fee Schedule for 2017 permits billing for integrated care provided by behavioral health providers and primary care clinicians (source).

Provider Access and Shortages

Behavioral health treatment is most commonly sought in emergency room and primary care settings where clinicians often do not have the training or resources to adequately respond to these patients’ needs (source). Moreover, 66 percent of primary care providers report that they are unable to connect patients with outpatient behavioral health providers due to a shortage of mental health providers and health insurance barriers (source). As of 2014, nationally there was one behavioral health provider for every 790 people (source). Additionally, Americans with mental health issues have the lowest rates of health coverage (source). Consequently, as a result of these infrastructural barriers, up to 67 percent of adults with a behavioral health disorder do not receive treatment (source).

Substance Abuse

In addition to depression and anxiety, substance use disorders are one of the most prevalent behavioral health challenges. In 2014, approximately 21.5 million people age 12 or older had struggled with a substance use disorder in the past year. Within that population, 7.1 million had an illicit drug use disorder and 2.6 million people had both an alcohol use and an illicit drug use disorder (source). In addition, many patients with such a disorder  are also diagnosed with a mental disorder, and vice versa (source).

One class of drugs, prescription painkillers, which have been strongly impacting communities for almost a decade, have recently caught the attention of policymakers (source). From 1999 to 2011, the consumption of hydrocodone more than doubled and the consumption of oxycodone increased by nearly 500 percent. During the same time frame, the opioid pain reliever-related overdose death rate nearly quadrupled (source). Moreover, another concerning feature of this epidemic is the relationship between opioid use and heroin use. According to the federal government’s National Survey on Drug Use and Health, four out of five current heroin users report that their opioid use began with opioids (source). Many people with prescription painkiller addictions turn to heroin because it is cheaper (source).

In an effort to curb opioid prescriptions and address the growing demand for addiction treatment, governments at both the state and federal level are responding. Several states, including Iowa, Kentucky, Massachusetts, Ohio, Tennessee, and Utah, passed mandatory prescriber education legislation. The FDA has also called for mandatory physician training and a greater focus on pain management (source). Further, in March 2016, the Senate passed legislation, almost unanimously, that emphasized medication-assisted treatment instead of the historical abstinence-based one (source). This strategy is proven to be a more effective means of helping those with a substance abuse problem, but had been previously stigmatized by groups that opposed any intervention by prescription medications (source).

Population-Specific Challenges

The Affordable Care Act (ACA), enacted in 2010, outlined two changes that expanded access for mental health coverage. First, it required private health plans and Medicaid plans to offer mental health insurance. Second, it required parity, or equivalent access to mental health care as enrollees had to physical health care (source). Despite these consistent requirements, tremendous diversity still exists between patient populations, challenges, and access to care among the various health insurance programs.


Recent data indicates that 20.4 percent of adults aged 65 and older show signs of a mental disorder (source). Moreover, depression and alcohol abuse are common among Medicare beneficiaries, which often complicates the management of any chronic diseases (source). Because of preexisting physical conditions, elderly adults are more likely to seek treatment from primary care physicians, rather than specialty mental care settings (source). Because of this, approximately two-thirds of Medicare patients with a behavioral health disorder do not receive treatment (source). These untreated ailments may have an impact on health outcomes. For example, patients with depression may struggle with medication adherence (source). An additional challenge for Medicare patients is the 190-day lifetime limit on inpatient psychiatric care (source), which is problematic for Medicare enrollees with chronic mental illness(source).


Twenty percent of Medicaid enrollees have a behavioral health diagnosis and the program is America’s largest payer for behavioral health services (source). Moreover, low-income patients can be more challenging to treat because they also have contributing social factors, including housing, transportation and nutrition (source). Access to care for this impoverished, high-need population, however, is increasing. According to the Department of Health and Human Services (HHS), as many as 32 million people may be able to access behavioral health coverage for the first time by 2020 as a result of Medicaid expansion under the ACA (source). Despite the expansion, remaining roadblocks to care include low reimbursement rates for Medicaid providers and other restrictive measures that state agencies have implemented  to save money (source). Moreover, of the 5.3 million individuals with a behavioral health disorder who are eligible for Medicaid expansion, about half live in a state that has not yet expanded Medicaid coverage (source). Further, a Government Accountability Office study completed in June 2015 concluded that states that chose to expand Medicaid are better equipped to treat low-income patients suffering from behavioral health disorders than the states that did not (source). Often in these states, behavioral health agencies add uninsured patients to waiting lists and send them away without treatment (source).


In 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA), a federal law that generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits (source).

The ACA extended the act’s reach by requiring most plans, including those offered through the government-run marketplaces, to cover mental health and substance use disorder services (source). Between these two laws, mental health and substance use disorder benefits were estimated to be extended to 62 million Americans (source). Despite these pieces of legislation, however, the Johns Hopkins Bloomberg School of Public Health found in 2015 that a quarter of state-run exchange plans appeared to violate federal parity laws (source). In the past five years, the U.S. Department of Labor has conducted 1,515 investigations of parity complaints (source).

The clearest violations of the laws, in which insurance plans charge higher copays or separate deductibles for mental health care, have gone down considerably. However, plan compliance with the law’s ban on inequitable use of so-called “non quantifiable treatment limitations” – prior authorization requirements or the application of medical necessity criteria, for example – is thought to be spotty (source).

There have been some attempts to impose greater transparency requirements on the plans and to strengthen the government’s hand in gaining compliance with parity standards. In response to widespread concerns that enforcement of the parity law has been inconsistent, the Obama Administration convened a cross-agency task force that recently issued a report and initiated actions to ensure great compliance with the law (source).

Mental health experts are hopeful that the ongoing integration of behavioral health with primary care and the new payment models that develop as a result may force patients, clinicians, payers, and regulators to address the historical barriers to mental health and substance use disorder treatment in new, perhaps unanticipated ways (source).


In December 2016, Congress passed the 21st Century Cures Act, a law that contains provisions to combat opioid addiction, strengthens mental health parity rules and establishes grants to enlarge the mental health care workforce. While the law authorizes new grants for programs to support care for serious mental illness, appropriating funds for the grants was left to future Congresses (source).

As policymakers think about future improvements to the American behavioral health system, reforms will likely aim to solve three overarching challenges: stigma, inadequate resources, and fragmentation.

Mental health advocacy organizations, local governments, and public figures have recently joined the effort to end stigma around behavioral health through various public campaigns (source). In 2015, then-First Lady Michelle Obama lent her voice to the “Change Direction” initiative that encourages a cultural shift in the way America talks about mental illness.

Similarly, in November 2016, the U.S. surgeon general for the first time released a report on substance abuse. Surgeon General Vivek Murthy called in the report for a “a cultural shift in how we think about addiction,” warning that stigmas surrounding alcohol and drug abuse inhibit those affected from seeking help (source).

Moreover, uncertainty remains about how to finance changes. Many of the bills circulating in Congress call for new grants, especially for new outpatient treatment centers, but cannot guarantee the funding (source). At the state level, mental health budgets remain limited. From 2009 to 2012, states cut mental health budgets by a collective $4.35 billion and psychiatric beds by more than 3,222 (source). In 2014, 27 states and the District of Columbia increased funding, but seven states – Alaska, Louisiana, Nebraska, North Carolina, and Wyoming – cut their budgets again (source).

In addition to waning financing, behavioral health provider shortages persist. As of September 2014, 96.5 million Americans were living in areas with shortages of mental health providers, a population that had increased by over 5 million people in two years (source).

A final hurdle for policymakers is the institutional framework for mental health care delivery (source). While both mental and physical health clinicians provide behavioral health services, there is often limited coordination, making the application of the best treatments more difficult (source).  Moreover, physical and behavioral health services are often reimbursed separately. As a result, team-based care is difficult to finance and structure because it requires primary care and behavioral health providers to change both the way they work and the way that they receive payments.(source).

Many of the health care organizations that have successfully integrated physical and behavioral health care have done so with the aid of grants (78 percent in 2011) or funded the initiatives themselves (source). Others have utilized Medicare and Medicaid demonstration programs and waivers that make it possible for them to accept global payments for both physical and mental health services (source).


This guide was made possible with the support of the National Institute for Health Care Management (NIHCM) Foundation. This edition of the Sourcebook also had initial support from the Robert Wood Johnson Foundation.