Six Surprising Facts About Medicaid's Mental Health Coverage

Medicaid is an essential link to mental health care for millions of Americans. It accounts for 25 percent of spending on mental health services in America every year, making it the largest single payer of mental health care in the country. About 21 percent of adults with mental health conditions have Medicaid, compared to 14 percent of the general population.

2. For over 50 years, Medicaid hasn't covered long-term inpatient care in psychiatric hospitals.

Medicaid was established in 1965, a time when the United States government was encouraging states to build networks of community mental health programs as alternatives to hospitalization. Due to these historic circumstances, Medicaid excluded coverage for long-term inpatient care in psychiatric hospitals. Many professionals and advocacy groups are pushing for Medicaid to change this policy. Medicaid has already updated its coverage to include short-term hospital stays and has recently started allowing states to apply for waivers to cover hospital stays of up to 30 days for the treatment of mental health and substance use disorders.

3. However, Medicaid covers mental health services that most private insurance policies don't cover.

Due to growing public awareness of the importance of mental health care and laws like the 2008 Mental Health Parity and Addiction Equity Act, private insurance plans are covering more mental health services than ever before. However, it is rare for private insurance plans to cover intensive services that many Medicaid plans cover like nursing home and other long-term care, round-the-clock services, supported employment, case management, and in-home mental health care. In fact, many older adults who need nursing home care or other intensive services often elect to "spend down" assets so they can qualify for Medicaid coverage for these specialized and otherwise expensive services. Most Medicaid plans also cover basic mental health services like therapy, psychiatrist visits, and clinic care.

4. Many essential mental health services and safety net programs rely on Medicaid for most or all of their funding.

Community mental health programs are an essential public resource and a safety net for vulnerable people who would otherwise be unable to live on their own. They help keep people with serious mental health conditions in their homes and connected to essential professional and peer supports. Public mental health programs also increase access to therapy, as many private practice providers don't accept Medicaid. In some states, Medicaid pays for over 60 percent of the services rendered by these essential public programs.

5. People who qualify for Medicaid typically require more intensive services.

People on Medicaid have higher rates of mental illness than people in the general population and use mental health services at a higher rate than people who have other types of insurance. They also have high rates of comorbid medical disorders. According to the Medicaid and CHIP Payment and Access Commission (MACPAC), about 10 percent of people on Medicaid have serious mental illness, relative to 3 percent of people with private insurance and 5 percent of people with no insurance. Only 69 percent of people on Medicaid do not have a mental health condition. About 24 percent of people on Medicaid received mental health treatment in the past year, relative to 14 percent of people with private insurance and 10 percent of people with no insurance. About 44 percent of people on Medicaid had fair or poor health status in the past year, compared to 13 percent of people with private insurance and 24 percent of people without insurance.

6. Medicaid coverage and eligibility requirements vary widely from state to state.

Medicaid is a joint federal and state program that allows states to have some flexibility in what and who they cover. Some states have stricter income and categorical eligibility requirements, especially the 14 states that have elected not to accept Medicaid expansion as of April 2019. While federal statutes require state Medicaid programs to cover essential programs like nursing facility services and physician services, other services, like clinic services, are optional. States differ widely in whether their Medicaid programs cover specialized services like psychosocial rehabilitation and round-the-clock services. However, based on 2016 data from MACPAC, all 50 states cover individual and group therapy, and most also cover family therapy.

Many people who are eligible for Medicaid don't realize they are eligible, especially since expanded Medicaid became available under the Affordable Care Act. If you're on a limited income, you should ask—Medicaid will link you with an impressive range of medical and mental health services. If you find out you're not eligible, consider signing up for affordable online counseling with BetterHelp (a sponsor) or using OpenCounseling's search tools to find free or low-cost counseling at a local provider. Getting the care you need may only be a click away.

Search for Affordable Counseling in Your City:

Search results include community based providers and also sponsored providers from BetterHelp. OpenCounseling may earn a commission if you follow links to a sponsored provider. Learn more.

Search