Lessons From Medicaid’s Divergent Paths On Mental Health And Addiction Services

Abstract

Over the past fifty years Medicaid has taken divergent paths in financing mental health and addiction treatment. In mental health, Medicaid became the dominant source of funding and had a profound impact on the organization and delivery of services. But it played a much more modest role in addiction treatment. This is poised to change, as the Affordable Care Act is expected to dramatically expand Medicaid's role in financing addiction services. In this article we consider the different paths these two treatment systems have taken since 1965 and identify strategic lessons that the addiction treatment system might take from mental health's experience under Medicaid. These lessons include leveraging optional coverage categories to tailor Medicaid to the unique needs of the addiction treatment system, providing incentives to addiction treatment programs to create and deliver high-quality alternatives to inpatient treatment, and using targeted Medicaid licensure standards to increase the quality of addiction services.