Who pays for mental health services?
The Medstat Group estimated that $73 billion was spent on mental health treatment in the United States in 1997. Public funding (Medicare, Medicaid, other federal spending, and other state/local spending) was the largest source at 55.2 percent. From 1987 to 1997, the share of mental health spending from public funders, primarily Medicaid, increased. In 1997, private sources such as employer-based insurance and self-pay accounted for 44.8 percent of mental health spending. In the public sector, Medicaid was the largest funder, spending $14.4 billion. States and local governments (excluding Medicaid) were a close second, with $14.1 billion in spending. State and local mental health agencies provide significant funding for mental health services. Due to Medicaid rules (discussed in What mental health services are covered by Medicaid?), mental health authorities are the primary public funders of psychiatric hospitalization for adults with serious mental illness. In FY 1997, states spent $7.
