UM Kids' Medicaid

January 11, 2017

Reform or Relapse? Kids’ Medicaid Mental Health Services Hang in the Balance

By Abigail Kramer

In October 2016, New York State was closer than it’s ever been to solving an old and intractable problem.

After five years of planning and negotiation, the State’s departments of health, mental health, and substance abuse had come up with a plan to overhaul their outdated, overburdened system of mental health services for low-income kids.

The idea was not just to shore up existing services, but to re-engineer the system by strategically shifting health care dollars into preventive, community-based therapies designed specifically for children. The goal: Catch up with two decades of research suggesting that good, early help for struggling kids can prevent years of unnecessary suffering.

Then came November. Like so much of the country’s recent progress on health care access, New York’s hard-won mental health reform for kids is now in danger of being crushed by Congress and the incoming Trump administration.

The State’s mental health care system for young people has functioned in near-fiscal crisis for years. Low pay and stingy insurance coverage have created chronic shortages of pediatric programs and specialists. Outpatient clinics and residential treatment centers are overwhelmed and underfunded, and sick kids often sit on waitlists for months. Depending on where a child lives, it can take half a school year to get into a therapy program that serves kids, and even longer to see a child psychiatrist.

The consequences can be severe. Kids get sicker; schools are overburdened; families are stressed and sometimes broken. And taxpayers foot the consequent bills for years of foster care, homeless services and incarceration—not to mention the health care costs when childhood emotional disturbance grows into full-blown, adult mental illness.

In recent years, both the Federal government (through the Affordable Care Act) and the State (through its massive project to redesign Medicaid) have worked to increase and improve mental health care—but the focus has largely been on adults. The reasons are, in part, financial: Mentally ill adults frequently end up in emergency rooms and hospitals, accounting for a disproportionate share of total health care spending. Smart investments in their preventive care can lead, at least in theory, to fairly quick and significant cost savings.

Kids, on the other hand, rarely make it to the top of mental health care reformers’ priority lists, in part because they don’t rack up hospital bills in nearly the same numbers as adults. While better pediatric mental health care promises long-term savings, it doesn’t offer the immediate potential for hospitals or insurance companies to pocket big savings. Nor can public officials show taxpayers an immediate payoff in the budget.

It was all the more remarkable, then, when New York State last fall released its plan to significantly expand mental health and substance abuse services for the two million children and young people through age 21 on its Medicaid rolls (approximately 200,000 of whom receive such services each year).

The plan, which is scheduled to roll out through 2017, increases the range of available services and makes more kids eligible for them. It also allows providers new flexibility to deliver services in the context of children’s families and communities, rather than expecting them to sit in offices like mini-adults.

Take, for example, a preschooler returning to her family after time in foster care. Under the expansion plan, Medicaid might pay for a social worker to provide specialized play therapy to the child and parent together—a treatment that shows substantial evidence of reducing the risk that she will be removed from her home again, but which is nearly impossible to fund under the State’s current Medicaid payment structure.

In the case of an anxious, developmentally disabled teenager, a therapist might travel to a school to practice social skills. A parent with an emotionally disturbed child could get help from a formally trained peer support provider. And many more kids would become eligible for the kinds of services—rehabilitation, crisis intervention, respite care—that help families look after sick kids at home, rather than resorting to institutional care.

The plan also includes cost-control measures: Rather than billing Medicaid directly, providers will have to get services approved by private, managed-care insurance companies, whose bottom-line interests have an inverse relationship with the quantity and cost of treatment.
That’s a daunting prospect for small, community-based organizations with little bargaining power to fight insurers who deny care—or to negotiate new reimbursement rates. But it comes as part of a package that offers providers their first real hope, in many years, of building capacity, hiring staff, and investing in up-to-date treatments.
Unfortunately, such efforts will be new and fragile just as the State faces the prospect of a drained health care budget. If the Affordable Care Act were to be fully repealed, for example, officials estimate that the State would take a loss of $3.7 billion. Washington may also make deep cuts to total Medicaid spending under the guise of transforming it into finite block grants to states. The Kaiser Family Foundation has estimated that such a move would result in 14 to 21 million Americans losing Medicaid coverage in a decade’s time, dumping health care costs for many of them back on the states.

Amid the inevitable picking of battles and fighting for scraps, New Yorkers will have this choice to make: Will we defend the progress we’ve made and the children whose wellbeing is in our hands?

It would certainly be easy to let this new Medicaid reform plan die. Poor kids in need of mental health services have few powerful advocates, and the rest of us have, historically, proven remarkably willing to allow them to suffer. If we continue on that course, vulnerable kids and their families will pay now, and we’ll all pay into the future.

Abigail Kramer is a staff editor at the Center for New York City Affairs.

Improving health and human services for children and families is a long-standing priority at the Center. Look for our upcoming report on Medicaid redesign and behavioral health care. Do you have feedback, tips, or professional or personal experience that should inform our reporting? Email

Photo Credit: Stefanos Papachristou