Medicaid managed care and the distribution of societal costs for persons with severe mental illness.
OBJECTIVE
Managed care financing strategies that involve financial risk to insurers can reduce budgeted health expenditures. However, resource substitution may occur and negate apparent savings in budgeted expenditures. These substitutions may be important for individuals with disabling illnesses. The distribution of societal costs for adults with mental illnesses enrolled in plans that differ in their financial risk is examined to evaluate the degree to which risk-based financing strategies result in net savings or in the differential distribution of costs across public or private payers.


METHODS
Six hundred twenty-eight adults with severe mental illnesses enrolled in three Medicaid plans that differ in financial risk arrangements were followed for 1 year to determine the distribution of resource use across Medicaid and other payers. Self-reported service use was obtained through interviews. Cost data were derived from self-reported expenditure, administrative, or agency data. Statistical procedures were used to control for preexisting group differences.


RESULTS
Managed care was associated with a tendency toward reduced overall costs to Medicaid. However, private expenditures for managed care enrollees offset decreased Medicaid expenditures, resulting in no net difference in societal costs associated with managed care.


CONCLUSIONS
Understanding the distribution of societal costs is essential in evaluating health care financing strategies. For adults with mental illnesses, efforts to manage Medicaid expenditures may result in substituting individual and family resources for Medicaid services. Government must focus on the distribution of societal costs since risk-based financing strategies may redistribute costs across the fragmented human services sector and result in unintended system inefficiencies.
Shern
David L
DL
Loius de la Parte Florida Mental Health Institute, University of South Florida, Tampa, FL, USA. dshern@mentalhealthamerica.net
Jones
Kristine
K
Chen
Huey Jen
HJ
Jordan
Neil
N
Ramoni-Perazzi
Josefa
J
Boothroyd
Roger A
RA
D000328:Adult; D000367:Age Factors; D002017:Budgets / Q000706:statistics & numerical data; D003361:Cost Allocation / Q000191:economics; D003363:Cost Control / Q000379:methods; D005260:Female; D005382:Financing, Personal / Q000191:economics; D017048:Health Care Costs / Q000706:statistics & numerical data*; D006302:Health Services Research; D006801:Humans; D008297:Male; D008329:Managed Care Programs / Q000191:economics* / Q000592:standards / Q000706:statistics & numerical data; D008484:Medicaid / Q000191:economics* / Q000592:standards / Q000706:statistics & numerical data; D001523:Mental Disorders / Q000191:economics* / Q000523:psychology / Q000628:therapy; D008875:Middle Aged; D011787:Quality of Health Care / Q000191:economics; D018570:Risk Assessment / Q000379:methods; D020414:Risk Sharing, Financial; D012720:Severity of Illness Index; D014481:United States; D014600:Utilization Review