State Budget Cuts


For one county’s experience reducing the consequences of non-treatment for severe mental illness and saving money while doing it, check out this story on YouTube.

Crisis and Opportunity

The darkening fiscal picture for state governments nationwide is clearly raising new barriers to treatment for those with severe mental illness. Psychiatric beds – already at historic lows – are being reduced further. Entire hospitals are being closed or threatened with closure. Emergency-room holds for people with acute symptoms are ballooning into days and even weeks in the absence of open inpatient beds. Prescription-drug coverage for low-income patients is being eliminated – slashing the lifeline to sanity and functionality for thousands of people.

In such a fiscal environment, it is more imperative than ever for mental health systems to include assisted outpatient treatment (AOT) in their approach to community-based care. This need stems from two simple facts:

  • Assisted outpatient treatment vastly improves treatment outcomes for its target population, which leads to savings in the avoidance of the costly consequences of non-treatment. E.g., a recent independent study of New York’s AOT program found that, for the program’s high-risk population, AOT cut both the likelihood of being arrested and the likelihood of hospital admission by about half.
  • Without assisted outpatient treatment, a sizable portion of any amount spent on community-based services goes to waste because some of the intended recipients are not capable of accessing those services at all.

Budget freefalls and budget cuts

Virtually all states are required by law to balance their operating budgets annually or biannually. As a result, unlike the federal government, states cannot maintain services during an economic downturn by running a deficit. State government revenues have been in a freefall because of falling tax revenues and pension fund investment losses, according to the Census Bureau. Revenues available for states to fund programs, including mental health care, plunged almost 31% between fiscal 2008 and 2009; dismal economic projections and the scheduled expiration of federal assistance to state Medicaid programs in June may lead to even deeper cuts in fiscal year 2012 budgets.

In this environment, every public program funded directly by states is subject to possible reduction. Already, budget cuts have impacted all major areas of state services in at least 46 states plus the District of Columbia since 2008, according to The Center on Budget and Policy Priorities. Health care – the category that includes mental health treatment – has been reduced in 31 states.


The impact of mental health budget cuts can be mitigated by maximizing the use of existing mental health services by those in the most dire need, and that is precisely why assisted outpatient treatment must be part of the current fiscal debates. AOT remains unauthorized in five states and is grossly under-used in nearly all of the 45 states and the District of Columbia, where it has been signed into law. With circumstances forcing mental health systems to do more with less, advocates everywhere must make the case that assisted outpatient treatment is a critical form of “smarter spending.” 

Find tips for effective advocacy here.

Find our backgrounder on assisted outpatient treatment here.

Find Frequently Asked Questions about assisted outpatient treatment here. 

Adapted and reprinted from Catalyst - Winter 2011. Copyright 2011 Treatment Advocacy Center. Maybe be reprinted with attribution.


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