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President's New Freedom
Commission on Mental Health

Achieving the Promise: Transforming Mental Health Care in America

Goal 2 - Mental Health Care Is Consumer and Family Driven


    2.1 Develop an individualized plan of care for every adult with a serious mental illness and child with a serious emotional disturbance.

    2.2 Involve consumers and families fully in orienting the mental health system toward recovery.

    2.3 Align relevant Federal programs to improve access and accountability for mental health services.

    2.4 Create a Comprehensive State Mental Health Plan.

    2.5 Protect and enhance the rights of people with mental illnesses.

Understanding the Goal

The Complex Mental Health System Overwhelms Many Consumers

"... our fragmented mental health service delivery system. Mental health centers and hospitals, homeless shelters, the justice system, and our schools all have contact with individuals suffering from mental disorders."

Program Efforts Overlap

A brief look at traditional funding sources for mental health services illustrates the impact of this overly complex system. The Community Mental Health Services Block Grant, funded by the U.S. Department of Health and Human Services (HHS) through the Substance Abuse and Mental Health Services Administration (SAMHSA), provides funding to the 59 States and territories. It is only one source of Federal funding that State mental health authorities manage. The funding totaled approximately $433 million in 2002,47 or less than 3% of the revenues of these State agencies.48

But larger Federal programs that are not focused on mental health care play a much more substantial role in financing it. For example, through Medicare and Medicaid programs alone, HHS spends nearly $24 billion each year on beneficiaries' mental health care.15

Moreover, the largest Federal program that supports people with mental illnesses is not even a health services program - the Social Security Administration's Supplemental Security Income (SSI) and Social Security Disability Income (SSDI) programs, with payments totaling approximately $21 billion in 2002.49-51

Each program has its own complex, sometimes contradictory, set of rules. Many mainstream social welfare programs are not designed to serve people with serious mental illnesses, even though this group has become one of the largest and most severely disabled groups of beneficiaries.

If this current system worked well, it would function in a coordinated manner, and it would deliver the best possible treatments, services, and supports. However, as it stands, the current system often falls short. Many people with serious mental illnesses and children with serious emotional disturbances remain homeless or housed in institutions, jails, or juvenile detention centers. These individuals are unable to participate in their own communities.

Consumers and Families Do Not Control Their Own Care

Consumers Need Employment and Income Supports

Though living in poverty, SSI recipients paradoxically find that returning to work makes them even poorer, primarily because employment results in losing Medicaid coverage, which is vital in covering the cost of medications and other treatments. According to a large, eight-State study, only 8% of those returning to full time jobs had mental health coverage.56

Recent Federal legislation has tried to address the loss of Medicaid and other disincentives to employment. For instance, the "Medicaid Buy-In" legislation allows States to extend Medicaid to disabled individuals who exit the SSI/SSDI rolls to resume employment, but many States cannot afford to implement Medicaid Buy-In. The Balanced Budget Act of 1997 allows States to extend Medicaid coverage to disabled individuals whose earned income is low, but still above the Federal Poverty Guidelines.

Another statutory reform - The Ticket to Work and Work Incentives Improvement Act (TWWIIA) of 1999 - is problematic because its rules do not give vocational rehabilitation providers enough incentives to take on clients who have serious mental illnesses. Rather, these programs are more inclined to serve the least disabled - a process called creaming, in reference to the legislation's unintentional incentives for vocational rehabilitation providers to serve less disabled people rather than more disabled ones (the latter most commonly people with serious mental illnesses). One large study found that only 23% of people with schizophrenia received any kind of vocational services.6 Since TWWIIA rewards only those providers who help their clients earn enough to no longer qualify for SSI, the bottom line is that most people with serious mental illnesses do not receive any vocational rehabilitation services at all.

Because they cannot work in the current climate, many consumers with serious mental illnesses continue to rely on Federal assistance payments in order to have health care coverage, even when they have a strong desire to be employed. Regrettably, a financial disincentive to achieve full employment exists because consumers lose Federal benefits if they become employed. Adding to the problem is the fact that most jobs open to these individuals have no mental health care coverage, so consumers must choose between employment and coverage. Consequently, they depend on a combination of disability income and Medicaid (or Medicare), all the while preferring work and independence.

For youth with serious emotional disturbances, the employment outlook is also bleak. A national study found that only 18% of these youth were employed full time, while another 21% worked part-time for one to two years after they left high school. This group had work experiences characterized by greater instability than all other disability groups.57

Other financial disincentives to employment exist as well, including potential loss of housing and transportation subsidies.

Over the next ten years, the U.S. economy is projected to grow by 22 million jobs, many in occupations that require on-the-job training.58 With appropriate forms of support, people with mental illnesses could actively contribute to that economic growth, as well as to their own independence. They could fully participate in their communities. Instead, they are trapped into long-term dependence on disability income supports that leave them living below the poverty level.

A Shortage of Affordable Housing Exists

A recent study shows that people who rely solely on SSI benefits - as many people with serious mental illnesses do - have incomes equal to only 18% of the median income and cannot afford decent housing in any of the 2,703 housing market areas defined by the U.S. Department of Housing and Urban Development (HUD).62 HUD reports to Congress show that as many as 1.4 million adults with disabilities who receive SSI benefits - including many with serious mental illnesses - pay more than 50% of their income for housing. 63

Limited Mental Health Services Are Available in Correctional Facilities

They are likely to continually recycle through the mental health, substance abuse, and criminal justice systems.69

As a shrinking public health care system limits access to services, many poor and racial or ethnic minority youth with serious emotional disorders fall through the cracks into the juvenile justice system.

When they are put in jail, people with mental illnesses frequently do not receive appropriate mental health services. Many lose their eligibility for income supports and health insurance benefits that they need to re-enter and re-integrate into the community after they are discharged.

Women are a dramatically growing presence in all parts of the criminal justice system. Current statistics reveal that women comprise 11% of the total jail population,70 6% of prison inmates,71 22% of adult probationers, and 12% of parolees.72 Many women entering jails have been victims of violence and present multiple problems in addition to mental and substance abuse disorders, including child-rearing and parenting difficulties, health problems, histories of violence, sexual abuse, and trauma.73 Gender-specific services and gender-responsive programs are in increasing demand but are rarely present in correctional facilities designed for men. Early needs assessment, screening for mental and substance abuse disorders, and identification of other needs relating to self or family are critical to effectively plan treatment for incarcerated women.

More than 106,000 teens are in custody in juvenile justice facilities.74 As a shrinking public health care system limits access to services, many poor and racial or ethnic minority youth with serious emotional disorders fall through the cracks into the juvenile justice system. (See Goal 4 for a broader discussion of mental health screening.)

Recent research shows a high prevalence of mental disorders in children within the juvenile justice system. A large-scale, four-year, Chicago-based study found that 66% of boys and nearly 75% of girls in juvenile detention have at least one psychiatric disorder. About 50% of these youth abused or were addicted to drugs and more than 40% had either oppositional defiant or conduct disorders.

The study also found high rates of depression and dysthymia: 17% of boys; 26% of detained girls.75 As youth progressed further into the formal juvenile justice system, rates of mental disorder also increased: 46% of youth on probation met criteria for a serious emotional disorder compared to 67% of youth in a correctional setting.76 Appropriate treatment and diversion should be provided in juvenile justice settings followed by routine and periodic screening.

Fragmentation Is a Serious Problem at the State Level

The development of a Comprehensive State Mental Health Plan would create a new partnership among the Federal, State, and local governments and must include consumers and families. To be effective, the plan must reach beyond the traditional State mental health agency and the block grant to address the full range of treatment and support service programs that mental health consumers and their families should have. The planning process should support a respectful, collaborative dialogue among stakeholders, resulting in an extensive, coordinated State system of services and supports.

As States accept increased responsibility for coordinating mental health care, they should have greater flexibility in spending Federal resources to meet these needs. Using a performance partnership model, the Federal government and the State will negotiate an agreement on outcomes. This shift will then give States the flexibility to determine how they will achieve the desired outcomes outlined in their plans.

Aligning relevant Federal programs to support Comprehensive State Mental Health Plans can have the powerful impact of fostering consumers' independence and their ability to live, work, learn, and participate fully in their communities. (See Recommendations 2.3 and 2.4.)

Consumers and Families Need Community-based Care

"...confinement in an institution severely diminishes the everyday life activities of individuals, including family relations, social contacts, work options, economic independence, educational advancement, and cultural enrichment."

When parents cede their rights in order to place their children in foster care or in a program for delinquent youth, they may also be inadvertently placing their children at risk for abuse or neglect.79 These placements also increase the financial burden on State child welfare and juvenile justice authorities. A more family-friendly policy must be found to remedy this situation.

Consumers Face Difficulty in Finding Quality Employment

The Use of Seclusion and Restraint Creates Risks

Achieving the Goal


    2.1 Develop an individualized plan of care for every adult with a serious mental illness and child with a serious emotional disturbance.

Develop Individualized Plans of Care for Consumers and Families

The plans should form the basis for care that is both consumer centered and coordinated across different programs and agencies. A consumer's plan of care should describe the services and supports they need to achieve recovery. The funding for the plan would then follow the consumer, based on their individualized care plan. For those consumers who need multiple services and supports, the burden of coordination and access to care should not rest solely on them or on their families, but rather it should be shared with service providers.

Providers should develop these customized plans in full partnership with consumers.

Consumer needs and preferences should drive the type and mix of services provided, and should take into account the developmental, gender, linguistic, or cultural aspects of providing and receiving services. Providers should develop these customized plans in full partnership with consumers, while understanding changes in individual needs across the lifespan and the obligation to review treatment plans regularly. For consumers and families, the system should be easy to understand and navigate. The Commission recommends that SAMHSA convene a consensus panel to examine and explore developing models to guide individual plans of care.

Where a range of services are available, increased opportunities for choice will create a more viable marketplace for mental health care and provide a greater level of satisfaction by giving consumers and families control over important funding decisions that affect their lives. A recent Medicaid Cash and Counseling Demonstration waiver program that focuses on people with physical disabilities, developmental disabilities/mental retardation, and older adults confirms what many have long suspected. The evaluation, jointly funded by HHS and the Robert Wood Johnson Foundation, found that, when compared to traditional agency-directed personal care services, consumer-directed services resulted in:

In this demonstration, these selected Medicaid waiver program beneficiaries choose their own support services (e.g., personal care attendants and adaptive equipment) from an approved list. The Commission sees the value in undertaking a similar demonstration waiver program to evaluate the potential benefits for people with mental illnesses.

An exemplary program that expressly targets children with serious emotional disturbances and their families, Wraparound Milwaukee strives to integrate services and funding for the most seriously affected children and adolescents. (See Figure 2.1.) Most program participants are racial or ethnic minority youth in the child welfare and juvenile justice systems. Wraparound Milwaukee demonstrates that the seemingly impossible can be made possible: children's care can be seamlessly integrated. The services provided to children not only produce better clinical results, reduce delinquency, and result in fewer hospitalizations, but are cost-effective.86

Each consumer or child's family should receive the technical assistance necessary to develop the individual plan of care, including:

Youth with serious emotional disturbances should participate in meetings to ensure that their voices are heard in educational decisions that affect their school-based intervention and placement, particularly in the student's Individualized Education Program (IEP). To succeed, the plan must also be supported by the proposed Comprehensive State Mental Health Plan. (See Recommendation 2.4.)

Figure 2.1. Model Program: Integrated System of Care for Children with Serious Emotional Disturbances and Their Families


Wraparound Milwaukee


To offer cost-effective, comprehensive, and individualized care to children with serious emotional disturbances and their families. The children and adolescents that the program serves are under court order in the child welfare or juvenile justice system; 64% are African American.


Provides coordinated system of care through a single public agency (Wraparound Milwaukee) that coordinates a crisis team, provider network, family advocacy, and access to 80 different services. The program's $30 million budget is funded by pooling child welfare and juvenile justice funds (previously spent on institutional care) and by a set monthly fee for each Medicaid-eligible child. (The fee is derived from historical Medicaid costs for psychiatric hospitalization or related services.)


Reduced juvenile delinquency, higher school attendance, better clinical outcomes, lower use of hospitalization, and reduced costs of care. Program costs $4,350 instead of $7,000 per month per child for residential treatment or juvenile detention.86

Biggest challenge

To expand the program to children with somewhat less severe needs who are at risk for worse problems if they are unrecognized and untreated.

How other organizations can adopt

Encourage integrated care and more individualized services by ensuring that funding streams can support a single family-centered treatment plan for children whose care is financed from multiple sources.


Milwaukee and Madison, Wisconsin; Indianapolis, Indiana; and the State of New Jersey


    2.2 Involve consumers and families fully in orienting the mental health system toward recovery.

Involve Consumers and Families in Planning, Evaluation, and Services


    2.3 Align relevant Federal programs to improve access and accountability for mental health services.

Realign Programs to Meet the Needs of Consumers and Families

Federal expenditures and policies have a tremendous impact on consumers and families. Particularly at the Federal level, leadership must increase opportunities for consumers and families, and develop innovative solutions.

The Federal government must also provide leadership in demonstrating accountability for funding approaches and in removing regulatory and policy barriers. The funding and regulatory systems should advance the goal of making the mental health system consumer- and family-driven and should encourage choice and self-determination.

In a transformed system, the key goals of a revised Federal agenda for mental health would include:

As States increase their levels of interagency coordination, the Federal agencies would provide greater flexibility in how funds could be used.

The Commission recommends that HHS take the lead responsibility to develop a cross-Department mental health agenda with the goal of better aligning Federal policy on mental health treatment and support services across agencies and reducing fragmentation in services. The HHS Secretary should require that key agencies and programs that serve people with serious mental illnesses coordinate their responsibilities, including:

Align Federal Financing for Health Care

Demonstration: "Money Follows the Individual" Rebalancing

    means adjusting a State's Medicaid programs and services to achieve a more equitable balance between the proportion of total Medicaid long-term support expenditures used for institutional services (i.e., nursing facilities and intermediate care facilities - mental retardation) and the proportion of funds used for community-based support under its State Plan and waiver services. A balanced, long-term support system offers individuals a reasonable array of options, including meaningful community and institutional choices.

Demonstration: Community-based Alternatives for Children in Psychiatric Residential Treatment Facilities

Demonstration: Respite Care Services for Caregivers

Make Supported Employment Services Widely Available

Figure 2.2. Model Program: Supported Employment for People with Serious Mental Illnesses


To secure employment quickly and efficiently for people with mental illnesses. Alarmingly, only about one-third of people with mental illnesses are employed,53 yet most wish to work.


An employment specialist on a mental health treatment team. The employment specialist collaborates with clinicians to make sure that employment is part of the treatment plan. Then the specialist conducts assessments and rapid job searches and provides ongoing support while the consumer is on the job.


In general, about 60% to 80% of those served by the supported employment model obtain at least one competitive job, according to findings from three randomized controlled trials in New Hampshire; Washington, DC; and Baltimore.55 Those trials find the supported employment model far superior to traditional programs that include prevocational training. The cost of the supported employment model is no greater than that for traditional programs, suggesting that supported employment is cost-effective.

Biggest challenge

To move away from traditional partial hospital programs, which are ineffective at achieving employment outcomes but are still reimbursable under Medicaid.

How other organizations can adopt

Restructure State and Federal programs to pay for evidence-based practices, such as Individual Placement and Support (IPS)55 that help consumers achieve employment goals rather than pay for ineffective, traditional day treatment programs that do not support employment.


30 States in the United States, Canada, Hong Kong, Australia, and 6 European countries

Even though supported employment is effective, few people with mental illnesses receive these services. One reason is that individuals with psychiatric disabilities often receive services that may be called "supported employment," but are supported employment in name only. These vocational services lack the key ingredients that make supportive employment effective. Additionally, State-Federal vocational rehabilitation services are funded for limited time periods and do not pay for ongoing job support (other than a "post-employment services" status that is rarely used). Similarly, Medicaid does not reimburse for most vocational rehabilitation services. Thus, the lack of available financing mechanisms and the inadequately implemented supported employment models are barriers that prevent people with mental illnesses from benefiting from supported employment.

Studies of supported employment show that 60% to 80% of people with serious mentally illnesses obtain at least one competitive job - a clear success rate.

The Commission recommends strengthening and expanding supported employment services, such as Individualized Placement and Support,55 to all people with psychiatric disabilities. The system must make opportunities for supported employment available for anyone who wants to participate. To make supported employment services more widely available, the Commission urges CMS to provide technical assistance to States on how to effectively use the Medicaid

Rehabilitation Services Option to fund those components of supported employment that are consistent with Medicaid policy. The Commission encourages the Social Security Administration to evaluate the possibility of removing disincentives to employment in both the SSI and SSDI programs.

The Commission encourages States to use Medicaid Buy-In legislation to extend Medicaid coverage to disabled individuals who are working.

The widespread use of supported employment, coupled with the reduced disincentive to employment, could result in productive work and independence for consumers while accruing enormous cost-savings in Federal disability payments. Additionally, CMS and SSA should determine the feasibility of using savings accrued by SSA as beneficiaries go back to work to offset increased State and Federal Medicaid costs.

CMS and SSA should launch a national campaign to encourage States to use this powerful incentive to employment. The campaign should be designed to:

The Commission recommends developing a Federal-State interagency initiative involving all Federal agencies that are charged with addressing mental health, employment, and disability issues. Through this initiative, agencies can:

Make Housing with Supports Widely Available

Address Mental Health Problems in the Criminal Justice and Juvenile Justice Systems


    2.4 Create a Comprehensive State Mental Health Plan.

Create Comprehensive State Mental Health Plans to Coordinate Services

The Commission envisions that developing and using Comprehensive State Mental Health Plans will greatly facilitate new partnerships among the Federal, State, and local governments to better use existing resources for people with mental illnesses. Incorporating the principles in this report, at the very least, the plan should:

To accomplish this change, the Federal government must reassess pertinent financing and eligibility policies and align reporting requirements to avoid duplication, promote consistency, and seek accountability from the States.

The underlying premise of the Commission's support for Comprehensive State Mental Health Plans is consistent with the principles of Federalism - providing incentives to States by granting increased flexibility in exchange for greater accountability and improved outcomes. For example, California's AB-34 program, designed to meet the needs of adults with mental illnesses who are homeless, demonstrates that services provided through programs that allow flexibility in financing care do, indeed, produce positive outcomes that benefit individuals, families, and society while most efficiently using resources. (See Figure 2.3.)

The intended outcome of Comprehensive State Mental Health Plans is to encourage States and localities to develop a comprehensive strategy to respond to the needs and preferences of consumers or families.

The Commission recommends that each State, Territory, and the District of Columbia develop a Comprehensive State Mental Health Plan. The plans will have a powerful impact on overcoming the problems of fragmentation in the system and will provide important opportunities for States to leverage resources across multiple agencies that administer both State and Federal dollars. The Office of the Governor should coordinate each plan. The planning process should support a dialogue among all stakeholders and reach beyond the traditional State mental health agency to address the full range of treatment and support service programs that consumers and families need. The final result should be an extensive and coordinated State system of services and supports that work to foster consumer independence and their ability to live, work, learn, and participate fully in their communities.

Figure 2.3. Model Program: Integrated Services for Homeless Adults with Serious Mental Illnesses


AB-34 Projects - Named after California Legislation of 2000


To "do whatever it takes" to meet the needs of homeless persons with serious mental illnesses, whether on the street, under a bridge, or in jail.


Outreach (often by formerly homeless people), comprehensive services, 24/7 availability, partnerships with community providers, and real-time evaluation. Flexible funding, not driven by eligibility requirements.


66% decrease in number of days of psychiatric hospitalization, 82% decrease in days of incarceration, and 80% fewer days of homelessness.100

Biggest challenge

To change the culture, attitudes, and values around treating difficult populations with different strategies. Traditional services and providers tend to want to continue "business as usual" and follow funding streams rather than integrate services or share responsibility.

How other organizations can adopt

Change infrastructure to integrate services. This concept is a different way of doing business and requires links to a broader array of services, not just mental health.

Web sites (The web site is currently being developed and will be expanded soon.) (click on Community Mental Health Services, Homeless Mentally Ill Programs, and then Integrated Services for the Homeless Mentally Ill.


38 California counties


    2.5 Protect and enhance the rights of people with mental illnesses.


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