News Release

By DAVID WILLIAMSON
UNC News Services

CHAPEL HILL— A new University of North Carolina at Chapel Hill study appears to confirm what some social service experts and others had warned – that changing to managed health care for mental illnesses has unintended negative effects.

The study, conducted in King County, Wash., showed that the switch there caused a significant decrease in expenditures in the county mental health system for outpatient care. At the same time, a striking increase arose in the probability that Medicaid recipients who may have needed mental health treatment would go to jail instead.

A report on the findings appears in the latest issue of Health Services Research, a top health policy journal. Authors are Drs. Marisa Elena Domino and Edward C. Norton, assistant professor and associate professor of health policy and administration,

respectively, at the UNC School of Public Health; Dr. Joseph P. Morrissey, deputy

director of research at the Cecil G. Sheps Center for Health Services Research; and Dr. Neil Thakur, a former Sheps center fellow now with the U.S. Department of Veterans Affairs and Johns Hopkins University.

"We found a statistically significant increase in the probability of jail use, both psychiatric and nonpsychiatric, after the start of managed mental health care for Medicaid enrollees," Domino said. "We concluded that managed care led to indirect cost-shifting, probably through poor access to services, which appears to have led to an increased probability of jail detention and increased expenditures in a completely different sector."

The study involved merging and analyzing records for 47,300 adults who used one or more of the following systems between 1993 and 1998 -- the King County jail system, Medicaid, the King County mental health system and the Washington State hospital system. Factored in were jail, state hospital and county outpatient mental health costs and results of multiple interviews with officials.

"While we didn’t explore the exact mechanism in this analysis, these results may point to a potentially troubling trend if the provision of mental health services in jails is not as efficient as it is on an outpatient basis due to additional costs of housing, guards and other features," she said. "The human costs, both intangible and in term of future labor market participation, are outside the scope of our analysis, but no less troubling."

Although the overall boost in the jail budget found in the study was modest -- about 2 percent -- Domino said the implications of their analyses are important for policy.

"First, our results show that there is a trend away from de-institutionalization of persons with mental illness," she said. "However, instead of re-institutionalization in mental hospitals, or even general hospitals, the institutionalization is in jails."

Second, it’s likely that treatment of mental illness is less effective in jail, even when psychiatric care is provided, than in a hospital specializing in such care, Domino said.

"Third, the overall cost of care is likely to be greater, when counting both the short-term and long-term costs," she said. "Fourth, this trend, like the de-institutionalization that started in the 1960s, is driven in large part by economic incentives instead of best treatment considerations."

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Note: Domino can be reached at (919) 966-3891.

Contact: David Williamson, (919) 962-8596