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Our Economy’s Effect on New York State’s Mental Health Budget

One can hardly turn on a television or listen to the radio without coming across some discussion of our present economic times. Terms like financial tsunami and economic disaster are cavalierly bandied about as ways of describing where our economy presently stands. With unemployment rates reaching levels not seen in the past 30 years our present circumstance has been compared to by experts and pundits alike, and arguably rightfully so, that horrific span of time in American history, the Great Depression. Naturally, with such a difficult economic climate State and Local Governments have felt the pinch with severely reduced tax revenue. In New York, where State law mandates that the Governor and Legislature produce a balanced budget, less money coming into the system means less money going out. Programs are cut, salaries are, at best, stagnated, and planned improvements are either put on hold or completely disregarded.

As those in the mental health community are all too aware, when government seeks to cut its overall expenditures cuts in mental health spending are likely among the first items on the chopping block. In the past two fiscal budgets, while funding for mental health services were certainly cut, advocates and Legislatures with an understanding of the need for appropriate services have preserved critical programs.

This article will discuss some components of New York State’s Budget over the past two years as it relates to spending on mental health programs and what the anticipated effect of these cuts can be. In addition, this article will highlight some of the achievements that were previously mentioned.

New York State Budget Spending Over the Past Two Years

New York by far exceeds the rest of the country in terms of mental health spending on a per capita basis. However, that lead has slimmed significantly in the past 30 years. In 1981, New York expended $69 per person on mental health treatment, exceeding the national average by 155%. By 1997, while New York had increased its per person spending, the ratio dropped by half to 88% greater than the national average. Indeed, over the past 10 years mental health spending has remained idle in the State. It is with this background in mind that we look to the present cuts in spending over the past two fiscal years.

In the 2008 and 2009 budgets, reductions in spending on mental health services totaled approximately $240 million. Many of these cuts were realized by deferring or outright cancelling previously approved projects that had not yet begun. Adopting this posture with respect to the construction, maintenance, and rehabilitation of state facilities, most notably psychiatric facilities, is where a large portion of these savings took place. As an example, 450 beds were eliminated from State run psychiatric facilities. Significant reductions were also exercised in the area of aid by the State to community based mental health programs.

Specifically, in the 2009 Budget, nearly half of the savings achieved that year were at the expense of State workers who were forced to do without a cost of living adjustment to their salaries. The Medicaid reimbursement rates for psychiatric care to hospitals were also appreciably reduced. This reduction will most certainly have the effect of reducing the length of in-patient hospitalizations possibly against better clinical judgment.

Despite what appears to be an otherwise bleak outlook, these cuts must be considered in light of the fact that all State agencies were called upon to reduce spending, reduce salaries, and eliminate programs. With that in mind, mental health advocates, and likeminded members of the New York State Legislature achieved fairly significant successes in terms of limiting, and more specifically, targeting spending cuts to those programs deemed of least importance.

Mental health advocates, such as the New York State Mental Health Association, have fiercely argued that if cuts were necessary, the first place where reductions should take place is spending on Sex Offender Programs. One can argue the relative merit, or lack thereof, of the civil confinement and treatment of sex offenders on a separate basis. However, the fact that these programs, not to mention these individuals, are indiscriminately lumped together with those suffering from a mental illness has been a thorn in the side of the mental health community for some time. Nevertheless, because this is the political reality presented, mental health advocates worked hard to garner cuts in sex offender programs so as to alleviate the pressure on programs that deal strictly with people with mental illness. Those efforts were rewarded in the most recent Budget by forcing cuts in programs designated for the civil confinement of sexual offenders, thereby limiting the spending cuts necessary for other core mental health programs.

While cost of living adjustments to mental health worker’s salaries were deferred in the 2009 Budget, they were maintained the previous year, which was a rather significant success in 2008 for mental health advocates and consumers of services alike. Also in the 2008 budget, increases in spending were achieved for housing services, children’s services, and co-occurring disorders. Successes, in the 2009 Budget were markedly more modest; resigned to ensuring that funding continued at similar levels for already enacted programs, such as supported housing. In light of the worsening economic picture this year as opposed to last, forestalling reductions in a program’s funding must be considered an accomplishment.

The Effects of These Cuts on People with Mental Illness

The direct impact of these spending cuts will be sweeping. A reduction in the number of beds available at State run facilities, which are almost exclusively long-term care options, means one of two things; either patients will languish in acute care facilities where they are unable to receive the long-term care they require, or, because these patients are unable to obtain a bed at a long-term care facility, acute care hospitals will seek to discharge patients into the community before they are psychiatrically capable of handling that environment. This will lead to vulnerable individuals being taken advantage of, or worse, suffering physical harm.

Reductions in funding for Medicaid will no doubt affect inpatient care. A reduction in Medicaid dollars will cause a shortening of days available for inpatient care and the premature discharge of these patient. In turn, this leads to patients being placed in harm’s way because they are left to survive in an environment, they are not yet clinically capable of dealing with. Another effect of premature discharge is the exacerbation of the already pervasive problem of the “revolving door” of psychiatric care. In essence, patients leaving an inpatient setting before they are clinically appropriate for discharge only to find themselves right back on an inpatient unit because they were never ready to leave in the first place. One can certainly ask the question how money is saved with this myopic approach.

Another ubiquitous difficulty during the best or financial times let alone these difficult times is that of housing for people with mental illness. It goes without saying that a stable home, a place to feel safe and secure, has a significant impact on one’s mental health. This is true for those that do not suffer from any mental illness and is especially true for those unfortunate individual’s that must struggle with a severe diagnosis of mental illness. A reduction, or even a limited increase, in dollars targeted to housing leaves people with mental illness homeless and susceptible to the dangers of the street or shelter life. Likewise, it leads to the same “revolving door” dilemma that was previously discussed.

Although more subtle than these direct impacts, but perhaps more severe, is the elimination of a cost of living adjustment in the 2009 Budget for those that work in the mental health field. Mental health services are only as good as the people that deliver them. A sparklingly new, up to date facility is worthless without the nurses, social workers, psychiatrists, and countless others needed to effectuate the implementation of services. While the large majority that work with people with mental illness are extraordinarily dedicated people who clearly are not in it for financial gain, at some point the financial reality of limited pay will force these individuals to find new careers. Likewise, low pay without the prospect of improvement will scare away the new crop of employment talent that is sorely needed.

Compounding the problem of a reduction in services is that now more than ever mental health services are needed. Recently, the World Health Organization (“WHO”) issued a report on the impact on the global financial crisis on people with mental illness. As we all intuitively know, the report concluded that due to financial stressors it can be anticipated that there will be an increase in the acute exacerbation of symptoms of mental illness and of course, a rise in suicide rates. The study notes the clear link between suicide attempts and financial difficulties. Furthermore, WHO expressed its severe concern for people with mental illness in poorer nations that already receive, at best, sub-standard care.

There is no doubt that the impact of this financial climate will reverberate far beyond the borders of New York State. To a large extent however, New York will feel the pain of this crisis a bit more severely considering the State’s reliance on financial institutions for a large portion of employment. A quick look at present unemployment numbers within the State and more specifically, within the New York City region, indicates that countless individuals have lost their jobs and remain jobless, without health insurance. Moreover, many of those that are fortunate enough to remain employed are gripped with fear that they may be next to lose their jobs. Hence, it is likely that those that are jobless and those that are fearful of becoming so that already suffer from a mental illness will exhibit an exacerbation of their symptoms as a result of such a significant stressor in their lives.

Even those that are financially stable as a result of the largess they acquired when times were good are not free from the psychiatric impact of these times. “The big guys, the wheelers and dealers of the hedge funds, and the mutual funds and such, their stressors come from a little bit different angle. It’s not the financial so much as it is the loss of their identity. And, if they don’t have a life other than their company, then they really are at a loss,” was a recent quote from Deborah Cross, head of the New York State Psychiatric Association.


Advocates for people with mental illness must scratch and claw for every dollar of spending they achieve regardless of the state of the economy. In that respect, they are well trained to deal with times like this where cuts to spending are inevitable and the key is to target and limit them. Although spending cuts did take place it is heartening to see a recognition of the importance of mental health programs, particularly during stressful times. The question remains though, if short term savings on mental health programs really leads to long term financial sense if thrift in the present will lead to expensive future care. Perhaps a longer-range view of the effects of these cuts is warranted.

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