States Are Poised to Cut Mental Health Care Despite Rising Demand Under COVID

Helena, Montana — When the pandemic hit, health officials in Montana’s Beaverhead County had barely begun to fill a hole left by the 2017 closure of the local public assistance office, mental health clinic, chemical dependency center and job placement office after the state’s last budget shortfall.

Now, those health officials worry more cuts are coming, even as they brace for a spike in demand for substance abuse and mental health services. That would be no small challenge in a poor farming and ranching region where stigma often prevents people from admitting they need help, said Katherine Buckley-Patton, who chairs the county’s Mental Health Local Advisory Council.

“I find it very challenging to find the words that will not make one of my hard-nosed cowboys turn around and walk away,” Buckley-Patton said. “They’re lonely, they’re isolated, they’re depressed, but they’re not going to call a suicide hotline.”

States across the U.S. are still stinging after businesses closed and millions of people lost jobs due to covid-related shutdowns and restrictions. Meanwhile, the pandemic has led to a dramatic increase in the number of people who say their mental health has suffered, rising from 1 in 3 people in March to more than half of people polled by KFF in July. (KHN is an editorially independent program of KFF.)

The full extent of the mental health crisis and the demand for behavioral health services may not be known until after the pandemic is over, mental health experts said. That could add costs that budget writers haven’t anticipated.

“It usually takes a while before people feel comfortable seeking care from a specialty behavioral health organization,” said Chuck Ingoglia, president and CEO of the nonprofit National Council for Behavioral Health in Washington, D.C. “We are not likely to see the results of that either in terms of people seeking care — or suicide rates going up — until we’re on the other side of the pandemic.”

Last year, states slashed agency budgets, froze pay, furloughed workers, borrowed money and tapped into rainy day funds to make ends meet. Health programs, often among the most expensive part of a state’s budget, were targeted for cuts in several states even as health officials led efforts to stem the spread of the coronavirus.

This year, the outlook doesn’t seem quite so bleak due in part to relief packages passed by Congress last spring and in December that buoyed state economies. Another major advantage was that income increased or held steady for people with well-paying jobs and investment income, which boosted states’ tax revenues even as millions of lower-income workers were laid off.

“It has turned out to be not as bad as it might have been in terms of state budgets,” said Mike Leachman, vice president for state fiscal policy for the nonpartisan Center on Budget and Policy Priorities.

But many states still face cash shortfalls that will be made worse if additional federal aid doesn’t come, Leachman said. President Joe Biden has pledged to push through Congress a $1.9 trillion relief package that includes aid to states, while congressional Republicans are proposing a package worth about a third of that amount. States are banking on federal help.

New York Gov. Andrew Cuomo, a Democrat, predicted his state would have to plug a $15 billion deficit with spending cuts and tax increases if a fresh round of aid doesn’t materialize. Some states, such as New Jersey, borrowed to make their budgets whole, and they’re going to have to start paying that money back. Tourism states such as Hawaii and energy-producing states such as Alaska, Wyoming continue to face grim economic outlooks with oil, gas and coal prices down and tourists cutting back on travel, Leachman said.

Even states with a relatively rosy economic outlook are being cautious. In Colorado, for example, Democratic Gov. Jared Polis proposed a budget that restores the cuts made last year to Medicaid and substance abuse programs. But health providers are doubtful the legislature will approve any significant spending increases in this economy.

“Everybody right now is just trying to protect and make sure we don’t have additional cuts,” said Doyle Forrestal, CEO of the Colorado Behavioral Healthcare Council.

That’s also what Buckley-Patton wants for Montana’s Beaverhead County, where most of the 9,400 residents live in poverty or earn low incomes.

She led the county’s effort to recover from the loss in 2017 of a wide range of behavioral health services, along with offices to help poor people receive Medicaid health services, plus cash and food assistance.

Through persuasive grant writing and donations coaxed from elected officials, Buckley-Patton and her team secured office space, equipment and a part-time employee for a resource center that’s open once a week in the county in the southwestern corner of the state, she said. They also convinced the state health department to send two people every other week on a 120-mile round trip from the Butte office to help county residents with their Medicaid and public assistance applications.

But now Buckley-Patton worries even those modest gains will be threatened in this year’s budget. Montana is one of the few states with a budget on a two-year cycle, so this is the first time lawmakers have had to craft a spending plan since the pandemic began.

Revenue forecasts predict healthy tax collections over the next two years.

In January, at the start of the legislative session, the panel in charge of building the state health department’s budget proposed starting with nearly $1 billion in cuts. The panel’s chairperson, Republican Rep. Matt Regier, pledged to add back programs and services on their merits during the months-long budget process.

It’s a strategy Buckley-Patton worries will lead to a net loss of funding for Beaverhead County, which covers more land than Connecticut.

“I have grave concerns about this legislative session,” she said. “We’re not digging out of the hole; we’re only going deeper.”

Republicans, who are in control of the Montana House, Senate and governor’s office for the first time in 16 years, are considering reducing the income tax level for the state’s top earners. Such a measure that could affect state revenue in an uncertain economy has some observers concerned, particularly when an increased need for health services is expected.

“Are legislators committed to building back up that budget in a way that works for communities and for health providers, or are we going to see tax cuts that reduce revenue that put us yet again in another really tight budget?” asked Heather O’Loughlin, co-director of the Montana Budget and Policy Center.

Mary Windecker, executive director of the Behavioral Health Alliance of Montana, said that health providers across the state are still clawing back from more than $100 million in budget cuts in 2017, and that she worries more cuts are on the horizon.

But one bright spot, she said, is a proposal by new Gov. Greg Gianforte, a Republican, to create a fund that would put $23 million a year toward community substance abuse prevention and treatment programs. It would be partially funded by tax revenue the state will receive from recreational marijuana, which voters approved in November, with sales to begin next year.

Windecker cautioned, though, that mental health and substance use are linked, and the governor and lawmakers should plan with that in mind.

“In the public’s mind, there’s drug addicts and there’s the mentally ill,” she said. “Quite often, the same people who have a substance use disorder are using it to treat a mental health issue that is underlying that substance use. So, you can never split the two out.”

[Correction: This article was updated at 4:45 p.m. ET on Feb. 6 to correct the value of President Joe Biden’s proposed relief package.]

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