Medicaid’s Role in Addressing the Mental Health and Substance Use Disorder Challenges of Its Members

See all articles in the special issue, Mental Health and Substance Use Challenges Facing the United States: What Can State Policymakers Do?

Medicaid, which, since its inception in 1965, has reflected a federal-state/territory partnership model, has both greatly advanced the scope and integration of mental health (MH) and substance use disorder (SUD) services among payers and remains a work in progress with respect to scaling and funding these services across the country. In this Perspective, we posit that this constructive tension arises out of four key factors. First, because there is no federally mandated, uniform Medicaid MH and SUD benefit, there remains significant variability in how MH and SUD benefits are implemented across states and territories. Second, states and territories continue to face significant challenges associated with budget constraints, workforce shortages, and historical artifacts associated with siloing of health and human services. However, third, Medicaid’s capacity to innovate is enabled by a permissive array of federal law authorities and periodic availability of federal demonstration funds that have allowed state and territory programs to tailor service array and delivery models to fit their needs as well as to experiment with new approaches. Fourth, states and territories have more extensive interests than do private insurers and Medicare in covering MH and SUD services because they 1) typically serve Medicaid members over longer intervals than do private plans, 2) need to optimize use of limited state general funds, 3) want to address voter priorities, and 4) have direct influence over policy levers in both health and human services. Across the country, Medicaid programs have therefore centered on improving the integration and coordination of health care and social services across systems, including supports for children with complex health needs, coordination of transitions and connection to community-based health care for people leaving justice settings, and addressing the housing needs of people with MH conditions and SUD. In recognition of all of the factors noted above, our discussion:

• highlights Medicaid programs’ role in addressing MH and SUD;
• outlines the drivers and challenges associated with variability of coverage among programs;
• capsules three examples of innovative cross-systems work; and
• points to areas in need of further attention, investment, and research.