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Expansion of Medicaid may prevent future tragedies

Dan Roundhill

It’s too soon to know what drove Adam Lanza to massacre 26 children and adults at Sandy Hook Elementary School in Newtown, Conn. But early signs suggest that serious mental illness played a role. If so, that — alongside another arsenal — would be a thread connecting last week’s atrocity with the recent mass killings in Aurora, Colo.; Phoenix; and Blacksburg, Va.

Since Friday, a wave of outrage and a renewed desire for gun-control laws have swept the country, including Washington. "Enough is enough," Senator Mark Warner, a Virginia Democrat with an "A" rating from the National Rifle Association, said on Monday. "I think most of us realize that there are ways to get to rational gun control."

Limiting the availability of assault weapons is an obvious and necessary step to reducing the future likelihood of mass shootings like the one in Connecticut. But so is maintaining and improving mental health care services, which have been severely strained in recent years (and in some areas reduced) and are further threatened by the fallout from a recent Supreme Court decision and the incipient deal to avert the fiscal cliff.


The linchpin is Medicaid. Though mainly thought of as a safety-net program for the poor, Medicaid provides about half of state mental-health budgets. "Medicaid is hands down the most important source of funding for public mental health services," says Ron Honberg, the director for policy and legal affairs at the National Alliance on Mental Illness. But the recession and the Republican-led effort to slash social spending have put enormous pressure on those budgets.

Initially, Medicaid fared well during the recession for two reasons.

The 2009 federal stimulus directed billions of dollars to state programs to prevent cuts, and Obama's health care law used Medicaid as a vehicle to expand coverage, requiring states to enroll people earning up to 138 percent of the poverty level.

But two things have happened since to turn that around. The stimulus funds dried up. And the Supreme Court's decision on the health care law, while preserving the individual mandate to purchase coverage, struck down the other mandate requiring states to expand their Medicaid programs. It's now optional.

Without the stimulus to fill their Medicaid coffers, states were forced to cut mental health services and restrict eligibility for care. No evidence has emerged that Adam Lanza depended on Medicaid; his family appears to have been financially stable. But care for the non-poor mentally ill — paid for through state general funds — has been especially hard hit by the recession, because many states are diverting general funds to preserve their Medicaid budgets and qualify for federal matching funds.


That has left many severely disturbed people without any coverage. For example, says Honberg, "If you're a non-Medicaid recipient in a state like Arizona, you're no longer eligible for public mental-health services, even if you have a diagnosis of schizophrenia. That's a result of the recession and the budget cuts that have come in its wake."

Until last month, the biggest threat to Medicaid was Mitt Romney's budget, which sought to cap and block-grant the program. That would have cut benefits by about one-third within a decade, says Judith Solomon, vice president of health policy at the Center for Budget and Policy Priorities, a Washington think tank. Romney may be gone, but entitlement cuts are a major component of the ongoing fiscal cliff negotiations. As of Tuesday, President Obama was offering to cut $400 billion over a decade, House Speaker John Boehner was demanding $600 billion. "Further cuts to Medicaid will have a profoundly negative impact on the system," Honberg warns. "It is the safety net program for lots of people with serious mental illnesses."


In the wake of the Supreme Court's decision, states have been left to decide whether to expand Medicaid coverage as the health care law envisioned. So far, 15 states, including Connecticut, have indicated they'll do so. Even absent the mandate, the law offers powerful financial incentives to go along, with the federal government paying the full cost of new Medicaid enrollees for the first three years and 90 percent thereafter.

But many Republican governors who opposed the law have announced they will not participate. Many more remain undecided.

Anyone moved to act by Adam Lanza's massacre would probably have a greater near-term impact by pushing states to expand Medicaid coverage rather than lobbying for new gun laws. Newtown provides a vivid, heart-wrenching example of how broader coverage might help prevent future tragedies. Even before the shooting, Nevada's Republican governor, Brian Sandoval, who opposed Obama's health law, cited mental health care as a reason why he decided to accept the Medicaid funding.

And unlike new gun restrictions, which will be difficult to get through Congress, Medicaid expansion has already passed into law and requires only public pressure on politicians to have its maximum positive effect.

Joshua Green is national correspondent at Bloomberg Businessweek. Follow him on Twitter @JoshuaGreen.