The impact of the ACA on community mental health and substance abuse services: Experience in three Great Lakes states

August 9, 2017

Image of the great lakes, with blue lakes on a white background.The Affordable Care Act (ACA) allowed states to expand Medicaid coverage to low-income childless adults, many of whom receive specialty mental health and substance use services through community mental health systems.  Leading up to the passage of the ACA, community mental health providers and their professional associations were generally supportive of expanding Medicaid under the ACA.  Medicaid covers specialty services central to quality mental health and substance use care, as well as other physical health services that many in the serious mental illness (SMI) and substance use disorder (SUD) populations lacked before 2010. This brief examines the impact of the ACA Medicaid expansion on community mental health.

To date, 32 states have expanded Medicaid (including the District of Columbia), while the remaining 19 have not.  This brief, which was developed with support from the Commonwealth Fund, examines the impact of the ACA on public mental health and substance use systems in three Midwestern states: Michigan and Indiana, both Medicaid expansion states, and Wisconsin, a non-expansion state.

The experience from these three states suggests that Medicaid expansion has had an important and overall beneficial effect in particular for the substance use population.  The favorable impact is particularly important in light of the opioid epidemic.

Key findings include:

  • Prior to the Medicaid expansion, state and local funds paid for many services for the SMI/serious emotional disturbance (SED) and SUD populations. In Medicaid expansion states, most funding shifted to the federal government, providing both advantages and disadvantages: more people in need received insurance coverage, but that coverage was less flexible for SMI/SED populations than prior funding mechanisms.
  • Funding for substance use services improved substantially in Medicaid expansion states, serving a particularly important role in enabling states to provide more services in the wake of the opioid crisis. In these states, many more individuals had Medicaid SUD treatment benefits than before expansion and federal block grant funds were freed up to provide additional substance use services. As a result of the additional funding provided, Michigan was able to increase the numbers of those who received SUD care by 14%.