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Mental Health in California

California has had a unique mixture of behavioral health silos[1] that are going to need to evolve under the Affordable Care Act. In this paper, we will try to summarize its current state, the needed evolution and the benefits to patients and their improved health outcomes.

The most recent estimates are that 4%[2] and 8%[3] of Californians will experience serious mental illness in the course of a year. Using a broader definition of mental illness, the estimate increases to 16%.[4] In one estimate, only a quarter of those with serious mental illness are getting the mental health care they need, and half reported getting no mental health services at all.[5] Even fewer (1 in 10) of those with severe addictions to drugs and alcohol access substance abuse treatment.[6] For many Californians, mental health issues are entwined with physical health issues and for some with substance abuse.[7] Jails, prisons and the criminal justice system are often the treatment venue for those with serious mental health conditions that are better and more cost effectively treated elsewhere.[8]

In the past, those with severe mental illness were confined in state mental hospitals.[9] Today they are not, but instead far too many are getting no care for their conditions.[10] Use of public mental health services is particularly low among Asian Americans, African Americans and Latinos with severe mental illness.[11]

Advances in modern pharmacy and mental health services make successful treatment for many behavioral health conditions, imminently achievable.[12] For example, serious mental illness such as schizophrenia and bi-polar disorder are successfully treated with medication and counseling; heroin addictions and severe alcoholism are also treatable with medications and counseling.

The ACA requires coverage of behavioral health (both mental health and substance abuse).[13] It builds upon the federal parity legislation, which requires plans to treat mental illness on par with physical illness.[14] It is hoped and anticipated that better treatment of those with severe mental illness will be important in improving health outcomes and reducing their use of avoidable medical services.[15]

California currently pays for and delivers its Medi-Cal care to the mentally ill as follows. Patients with severe and chronic illness are cared for through contractors of county mental health departments[16] for their mental illness treatments, through public and private hospitals and doctors for their health and mental health issues[17] and through contractors of county drug and alcohol departments[18] for their substance abuse issues (if any). That is referred to as trifurcated care and depending on the county there may be little or no integration/coordination of these services, or there may be extensive integration and coordination.[19]

The challenges in California moving forward under the ACA are 1) integrating behavioral and physical health services,[20] 2) upgrading access to care for those not getting treatment,[21] 3) improving the outcomes of care for those in treatment,[22] and 4) care for those with moderate or episodic mental illnesses so that they do not rise to the level of severe and chronic mental illness.[23] The state’s §1115 waiver makes a start on this issue in the following ways: coverage of limited mental health,[24] the option to cover substance abuse treatments,[25] the option for counties to integrate physical and mental health[26] and the requirement to enroll seniors and persons with disabilities in managed care.[27]

Counties are implementing these options in a variety of ways. Some are covering substance abuse treatments;[28] some are integrating physical and mental health,[29] and some are expanding mental health coverage.[30] There is wide variability in the local responses to these options. Some counties are reporting signal improvements.[31]

Many in the local mental health communities report that they are strapped for funding.[32] The state is shifting its Mental Health and Drug and Alcohol departments into the state Department of Health Care Services, and it is realigning funding and responsibilities for a range of mental health and criminal justice services from the state level to the counties.[33] It is unclear whether the state will have sufficient revenues to support this realignment, which may need ballot approval from the voters. This realignment is a work in very early progress at the local level.

What needs to be done? The federal government needs to clarify what it expects from California in implementing the ACA in its Medi-Cal program.[34] State government needs to establish accountability standards for behavioral health services.[35] Local physical, mental health and substance abuse treatments must be integrated, upgraded and coordinated.[36]


[1] California spends over $4 billion on mental health services through Medi-Cal; the largest part ($2.1 billion) is through county mental health plans, the smallest part is through Drug Medi-Cal ($400 million) and the rest is through regular Medi-Cal ($1.6 billion).  County mental health plans are the sole source for specialty mental health care. Regular Medi-Cal pays for psychotherapeutic drugs (roughly $1 billion) and mental health services (about 4% of visits) provided by community clinics, and primary care physicians and other professionals. Drug Medi-Cal pays for limited treatments, such as methadone for those with heroin addictions. Technical Assistance Collaborative, California Mental Health and Substance Use System Needs Assessment (February, 2012) at http://www.dhcs.ca.gov/provgovpart/Pages/BehavioralHealthServicesAssessmentPlan.aspx

[2] Ibid.

[3] Grant et al, Adult Mental Health Needs in California, Findings from the 2007 California Health Interview Survey (UCLA Center for Health Policy Research, November 2011) at www.chis.ucla.edu

[4] California Mental Health and Substance Use System Needs Assessment. The broader definition includes those with mild and moderate mental illness.

[5] Grant et al, Adult Mental Health Needs in California. The California Mental Health and Substance Use System Needs Assessment also found that half those on Medi-Cal with serious mental illness received no care at all. The other half received some care paid for by either county mental health or Medi-Cal. California’s Medi-Cal program is not unique in having a large segment of the severely mentally ill not using any services at all. New Mexico had the lowest usage rate of 6%, and New York the highest at 59%; California was at 27%. Using the broader definition of mental illness, the Technical Assistance Collaborative reported that only 2% of that population received any care through Medi-Cal or county Mental Health. Ibid.

[6] Pating et al., New Systems of Care for Substance Use Disorders (Psychiatric Clinics of North America, June 2012) at www.pysch.the.clinics.com and Addiction Medicine in the USA (National Center on Addiction and Substance Abuse, June, 2012). An estimated 6% of those needing such treatment participated in Medi-Cal treatment programs. Unfortunately the largest share do not complete their treatments successfully, indicating a need to improve program efficacy. California Mental Health and Substance Use System Needs Assessment.

[7] Persons with serious mental illness had between 50% to 100% higher prevalence of asthma, heart disease, multiple chronic conditions and high blood pressure. Twice as many smoked, and twice as many were disabled. Grant et al, Adult Mental Health Needs in California

[8] See Watson, California’s Mental Health System (Insure the Uninsured Project, August 2011) at http://itup.org/public-coverage/2011/08/24/californias-mental-health-system/

[9] Ibid.

[10] See notes 5 and 6. There are still stigmas about the use of mental health services, which account for low use rates, even among individuals with severe mental illness. Individuals with severe substance abuse may be particularly unwilling to seek and stay in recommended treatments.

[11] 63%, 60% and 55% respectively of those with severe mental illness get no care at all. See Grant et al, Adult Mental Health Needs in California. This is likely due to a combination of stigma, cultural attitudes towards mental health and the lack of providers with the requisite linguistic and cultural skills.

[12] See New Systems of Care for Substance Use Disorders and Addiction Medicine in the USA for a compilation of recent reports on the efficacy of substance abuse treatments.

[13] ACA §1302

[14] The Domenici-Wellstone Mental Health Parity and Addiction Equity Act of 2008.

[15] See Evaluation of the CMSP Behavioral Health Pilot Project, the Final Report, prepared for the CMSP Governing Board (The Lewin Group, February 17, 2011); Addiction Medicine, Closing the Gap Between Science and Practice and see Manov, California Low Income Health Plan Substance Abuse Services: a Study of Seven County Implementation and Evaluation Plans (July 2011) for summaries of the cost and outcome benefits.

[16] In California, these are known as Mental Health Plans or MHPs. They are the sole source plan for specialty mental health services for the severely mentally ill in their counties.

[17] California’s Medi-Cal managed care plans are both public and private. They care for families and children, the disabled and seniors in a variety of different configurations.

[18] The program is known as Drug Medi-Cal and is operational in most California counties. The services are quite limited: Naltrexone, residential treatment for pregnant women, narcotic replacement therapy, outpatient drug free and day care rehabilitation for pregnant women and children.

[19] See California Mental Health and Substance Use System Needs Assessment, p. 251-273.

[20] This could be a simple as authorizing, facilitating and enabling communication between a patient’s providers; there are patient privacy issues that will require patient approvals to share information. At the other end of the spectrum, it is a fully integrated delivery system for all physical and behavioral care and treatments.

[21] This means offering mental health services to the 50% of patients with severe mental illness who currently receive no care at all. See n. 6. Some patients do not want care and this is their right; however in many rural communities access to services is simply lacking. See California Mental Health and Substance Use System Needs Assessment.

[22] This means both improving patient outcomes from treatment and reducing the numbers of patients that exit the system because of their dissatisfactions with treatment. California county mental health programs apparently have a low (1% but increasing) level of use of evidence based practices and many of the patients in the system are getting worse or maintaining current levels of functioning rather than getting better. The few patients receiving evidence-based treatments appear to stay in treatment at higher rates. See California Mental Health and Substance Use System Needs Assessment.

[23] This refers to patients with serious, but non-recurring mental illness, to patients with moderate and mild mental illness. About 98% receive no care. See n.7. Due to funding restrictions, county mental health agencies have triaged their care to those with the most severe conditions. Untreated mental illnesses may worsen, endangering a patient’s well being and functioning at home, in the community and at work.

[24] It requires coverage of 10 days of inpatient care, 12 outpatient visits and medications for mental health treatment. See Wulsin and Yoo, Summary of California’s 1115 Waiver (Insure the Uninsured Project, January 2012) at http://itup.org/legislation-policy/2012/01/23/summary-of-%C2%A71115-waiver

[25] Ibid.

[26] Ibid. Many counties are testing models of integration to see which ones are most effective.

[27] Ibid. Seniors and persons with disabilities will be therefore enrolled in two managed care plans one for mental health and one for physical health. There is a required memorandum of understanding between the two entities, but in some cases that may be as far as the two plans cooperate. See California Mental Health and Substance Use System Needs Assessment.

[28] See Manov, California Low Income Health Plan Substance Abuse Services: a Study of Seven County Implementation and Evaluation Plans (July 2011)  This is an option that only eight counties such as San Francisco, San Mateo, Orange and Kern  have chosen to implement. Most do not implement because they lack the local certified public expenditures (CPEs) to use as the match.

[29] San Mateo, Santa Clara, San Diego and Napa were early pioneers. However in our recent rounds of regional workgroups in the Bay Area and Central Valley, nearly every county reported on their efforts to integrate mental and physical health. See Wulsin and Driscoll,  §1115 Waiver Implementation in California (Insure the Uninsured Project, January 2012) at http://itup.org/legislation-policy/2012/01/23/californias-%C2%A71115-waiver-implementation/ and Driscoll, Presentations and Summaries of ITUP Regional Workgroups in the Central Valley and the Bay Area (2012) at www.itup.org

[30] Los Angeles County for example has used the waiver to expand coverage of mental health services to patients with serious but not chronic mental illness and to patients with moderate mental illness in community clinic and county clinic settings. Ibid.

[31] For example, the 34 CMSP counties reported drops in hospitalizations and ER visits when they expanded their mental health services. See ITUP, §1115 Waiver Implementation in California and ITUP, California’s Mental Health System. See Evaluation of the CMSP Behavioral Health Pilot Project, the Final Report, prepared for the CMSP Governing Board (The Lewin Group, February 17, 2011)

[32] County mental health funding is a combination of county realignment, Prop 63, and federal matching funds. Prop 63 added a major new source of funding, but both realignment and Prop 63 funds were hard hit by the Great Recession and the demand for publicly funded health services increased as more and more individuals lost their jobs and health coverage. See Yoo, 2010 Health Care Financing Report (Insure the Uninsured Project, January 2011) at http://itup.org/health-financing/2011/01/14/2010-health-care-financing-report.   The waiver has been the most recent source of new funding for county mental health, but it requires that counties have the requisite local match (CPEs). Counties, which have spent little or nothing on mental health services to the county indigent uninsured are particularly challenged to make the match.  See §1115 Waiver Implementation in California. The political leaders and local stakeholders in a few counties have been noticeably reluctant to implement the waiver. Ibid.

[33] There are two mental health realignments in California, the first happened in 1991 and included realignment of health, mental health and social services; it was funded by sales tax and vehicle license fee revenues. The second realignment happened in 2011; it included mental health and criminal justice programs, and as of 2012 it does not yet have a dedicated source for the $5 billion in revenues to be shifted from the state to the counties on an ongoing basis. See Watson, California’s Mental Health System. For an excellent analysis of all the moving parts of California’s mental health funding, see Ryan, California Mental Health Funding, Pre and Post MHSA (January 2011) at www.cmhda.org.

Prop 30, which the voters will decide in November 2012, allocates the estimated $6-9 billion in new revenues from a temporary increase in the sales tax and increased taxes for high earners to schools and state deficit reduction.  Its fate will be critical to the state’s implementation of the ACA. http://ballotpedia.org/wiki/index.php/California_Proposition_30,_Sales_and_Income_Tax_Increase_%282012%29

[34] The federal government has not yet proposed and issued regulations defining the minimum essential benefits for behavioral health services for Medicaid programs. The federal regulations defining minimum essential benefits for the Exchange in essence punt the decision back to the states and do not really answer the questions of what level of mental health and substance abuse treatment services are required of “qualified health plans” in the Exchange. Can plans limit their care to only those patients with severe mental illness or must they offer care to patients with mild or moderate mental illness as parity would appear to require? California has a pending §1915b waiver request which gives the federal, state and county governments an opportunity to assure that county mental health plans provide an equivalent and accountable level of service in every county in the state – a requirement that is being ignored on the ground in California. See California Mental Health and Substance Use System Needs Assessment.

[35] As between the state and the counties, realignment has been a “see no evil, hear no evil and speak no evil” experience. There are both pioneering counties doing a remarkable job and laggard counties, which are underperforming. There is no comparable data or consistent state oversight to identify and improve underperforming counties and promote best practices of the pioneering counties. Furthermore state realignment funds are distributed based on 20 and 30 year old allocations, which are not adjusted for changing demographics, growth rates and economic need, as between counties.

[36] See ITUP’s §1115 Waiver Implementation in California and California Mental Health and Substance Use System Needs Assessment. for some exemplary counties. These need to spread to all counties, be scaled and evaluated, then adjusted to assure patients begin to receive quality behavioral health services in all California communities.


The full report is available for download below:

Mental Health in California Mental Health in California.pdf

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