How mental-health care is funded, how U.S. spending compares, and who controls where the money goes.
How money shapes mental health care.
Funding determines which services can operate and who takes responsibility for providing care. To begin with, the spending accounts place mental-health treatment within the wider health budget.
4.1% of health spending in 2021.
In the Bureau of Economic Analysis (BEA) national health account, mental-disorder treatment accounted for 3.4% of health spending in 2000. The share rose by 0.7 percentage points over twenty-one years, but a share of spending does not show who could obtain care.
the national health accountThe Bureau of Economic Analysis estimates spending on health care in its national health account. This chapter divides mental-disorder treatment spending by that account’s total for health.a shareHere, the share is treatment spending divided by total health spending, expressed as a percentage. A share can fall even while treatment spending rises, if the total grows faster.
The vertical scale starts at 3%, rather than zero, to make this small change visible. The gap at 2015 marks a change in diagnosis codes; the two sides are not strictly comparable.
The Timeline follows two changes in insurance coverage during these years. Their links provide context; the chart does not measure their effect on spending. 2008 · Mental-health parity2010 · Coverage expansion
What drove U.S. spending growth
The BEA study splits the change in U.S. spending over 2000–2021 between the number of treated cases and cost per case, or average spending on each. Both contributions are adjusted for inflation and population.
splitting the growthSpending rises either because more people are treated or because each case costs more. Splitting the growth measures how much of a change each of the two accounts for.cost per caseAverage annual spending for one treated case, adjusted for inflation. It can change with the price, amount or mix of care provided.adjusted for inflation and populationThe comparison accounts for changes in prices and population size. The remaining change can reflect how many people receive treatment and how much care each case involves.What it does not establish
The figures count more people in treatment without saying whether wider access, greater need or lower treatment thresholds produced the increase.
How to read the two bars
The upper bar shows the contribution from treated cases; the lower shows the contribution from average cost per case. Together they sum to 100% of the change. A hollow bar offsets growth, so the other contribution can exceed 100%. The cognitive-disorders row divides a decline.
Mood disorders147% / -47%More people treated accounted for 147% of spending growth, while the cost of a case fell and offset part of that increase.
Anxiety disorders100% / 0%More people treated accounted for effectively all of the growth in anxiety-disorder spending, while cost per case contributed no growth at the reported precision.
Attention-deficit, conduct, and disruptive behavior disorders73% / 27%Both contributions raised spending, with more people treated accounting for 73% of the growth and cost per case for 27%.
Delirium, dementia, and other cognitive disorders27% / 73%Spending fell for this group, so the percentages divide a decline: lower cost per case accounted for 73% and fewer treated cases for 27%.
Adjustment disorders62% / 38%Both contributions raised spending, with more people treated accounting for 62% of the growth and cost per case for 38%.
All diseases, for comparison33.7% / 66.3%In contrast, cost per case accounted for roughly two thirds of spending growth across all diseases, with treated cases accounting for the remaining third.
Select a row to read it.
Mental health care within health spending.
A common statistical model estimates spending on treatment across nine countries. It combines available data to fill gaps, so these shares are estimates rather than directly observed budgets.
Modeled treatment shares · Public and private spending · All ages · 2000–2019.
Share of current health spending
Nine countries · 2000–2019 · Percent
Estimate and 95% model rangeU.S. estimateSelect a country to read its history
Country
0%4%8%12%16%
Estimate95% range
Countries are ordered by their estimated share. Overlapping ranges leave the differences uncertain; the order does not rank care quality.
What the range meansThe 95% range expresses uncertainty in the model’s estimate of treatment spending. It excludes uncertainty in the health-spending total, which is held fixed.
What the share leaves outA higher share does not show better access, better care or enough funding. Substance-use and neurological disorders are excluded.
For 2019, the BEA account puts mental-disorder treatment at 3.9% of U.S. health spending, whereas this model puts it at 8.9%. The difference lies in the spending each assigns to these disorders, since the model counts about $317 billion and BEA about $114 billion. Although WHO’s health-spending total exceeds BEA’s and so narrows that gap, the two sources count spending by different rules, and the archive therefore keeps the readings apart.
Spending totals show the scale of treatment, whereas payment rules determine who can use the money and what services qualify.
The figures behind this line
The line breaks at 2015, where the diagnosis code book changed edition and the counts on either side stop being strictly comparable.
the diagnosis code bookDoctors record a diagnosis using a standard code so that it can be billed. The United States changed editions in 2015, so counts on either side of that year are not strictly comparable.
Billions of current United States dollars. The share is the first column divided by the second.
Each funding arrangement is read from its source through its use and effects. The five questions distinguish the movement of money from what the evidence shows changed as a result.
01
Source
Where does the money come from?
Taxes, insurance payments, donations or earned income.
02
Control
Who can direct or withhold it?
Congress, state agencies, insurers or courts.
03
Transfer
How does it reach its recipient?
Grants and payments, or rules that block or end them.
04
Use
What does it pay for?
Buildings, care, staff or oversight.
05
Effect
What changes because of the funding?
Services, control over budgets or duties to patients.
The community-care case follows these questions through seven changes in federal and state funding between 1963 and 2011.
Funding community care, 1963–2011.
Community care provides treatment and support outside long-stay psychiatric hospitals. Between 1963 and 2011, construction grants, insurance payments and state budgets supported different parts of this provision.
Although federal support continued, the form of payment changed which services qualified and how much responsibility rested with the states.
1963
Establishing community facilities
01 SourceImplied by the arrangementFederal funds for construction.
02 ControlDocumentedCongress authorizes the grants.
03 TransferDocumentedGrants fund community centers.
The archive places construction grants alongside earlier proposals, private philanthropy and later federal investment, since each supported a different part of service provision.
03 TransferBlockedFederal matching excludes qualifying institutions.
04 UseDocumentedCare in eligible settings.
05 EffectDocumentedPayment rules create incentives to change settings.
After construction, the question turns to which services and settings qualify for federal payment.
Medicare covers older adults and some younger people with disabilities, while Medicaid combines federal and state support for eligible people with limited income. Medicaid uses federal matching, but the psychiatric-institution exclusion restricts the settings eligible for that contribution.
federal matchingThe federal government reimburses a share of a state’s eligible Medicaid spending. If a service is excluded, that federal contribution is unavailable.the institution exclusionThe institution for mental diseases (IMD) exclusion generally bars federal Medicaid payment for services to adults aged 21–64 in qualifying psychiatric institutions. Exceptions apply; the later sixteen-bed threshold is one part of the definition.
Because federal payment is available in some settings and excluded in others, states have a financial incentive to change where care is provided.
Medicaid later allowed exceptions for short institutional stays, while Medicare expanded the professions eligible to bill. These changes concern separate programs established in 1965.
Exceptions for short institutional stays
Federal regulators offer to pay part of states’ Medicaid costs for short stays in psychiatric institutions ordinarily excluded from funding. A waiver gives permission for this exception, with conditions for crisis services and community care.
a waiverPermission for a state to try something the ordinary Medicaid rules forbid, for a fixed term and on stated conditions. The rule is suspended for that state, not repealed.
Medicare allows marriage and family therapists and mental-health counselors to enroll and bill directly, expanding the professions eligible for payment.
02 ControlDocumentedFederal support through the Community Support Program.
03 TransferDocumentedFunding for community services.
04 UseDocumentedHousing, employment help and rehabilitation.
05 EffectImplied by the arrangementDaily support extends beyond clinical treatment.
Even where clinical care is funded, people may need housing, employment assistance and support with daily life.
The Community Support Program provides about $3.5 million a year for housing, employment help and rehabilitation, including help coordinating services through case management.
Its scope extends beyond the buildings funded in 1963, but the funding record alone cannot show how well services met those needs.
Community services were one form of support, while Supplemental Security Income provided a federal monthly payment to eligible people with little income.
A federal income floor
Supplemental Security Income (SSI) replaces state adult-assistance programs with a federal monthly payment for eligible people with little income. Mental impairments can qualify a person for this income support.
Supplemental Security IncomeSupplemental Security Income provides a monthly federal payment to eligible people with little income who are older or have a qualifying disability. Mental impairments can qualify a person for support.
The later records distinguish funding withdrawn from obligations enforced, because ending a program and requiring a provider to deliver care change responsibility in different ways.
04 UseImplied by the arrangementStates select the programs supported.
05 EffectDocumentedMore service responsibility rests with states.
Following repeal, states receive greater control over the allocation of federal support.
Grants reserved for specific programs give way to block grants: federal funding that states allocate across a broader set of services.
a named grantA grant reserved for a specified program or purpose. Federal conditions direct its use, while the agencies receiving it remain responsible for implementation.a block grantFederal funding given to a state for a broad purpose, such as mental-health services. The state chooses programs within the grant’s requirements, rather than receiving a separate federal grant for each program.
Support continues at a reduced level, and states gain more choice over programs along with greater responsibility for providing services.
Block grants kept federal funding in place while giving states greater discretion over programs and more responsibility for providing services within the available budget.
04 UseImplied by the arrangementPsychiatric institutional care.
05 EffectDocumentedBed count becomes a condition of federal payment.
State discretion over grants remains separate from Medicaid’s federal payment rules.
Congress specifies that the excluded institution has more than sixteen beds, placing facilities with sixteen or fewer outside this definition.
Bed count becomes one condition governing federal Medicaid matching, and the exclusion also turns on the institution, the patient and applicable exceptions.
The institution exclusion uses a bed threshold, whereas parity requirements address the terms of insurance coverage, including restrictions beyond visit or dollar limits.
Plans must write down how they restrict care
Parity requires comparable insurance terms for mental-health and medical care. Plans must now explain restrictions beyond visit or dollar limits, such as approval before treatment and rules for admitting providers to their network.
parityThe 2008 law requires covered plans to apply comparable financial requirements and treatment limits to mental-health and medical benefits. These protections concern the terms on which covered care is available.restrictions beyond numerical limitsA plan can restrict care without counting visits or dollars, for example by requiring approval before treatment or by keeping few therapists in network. Since 2020 plans must document these in writing.
03 TransferWithdrawnBudget cuts reduce funding for services.
04 UseDocumentedCommunity mental-health services.
05 EffectDocumentedState cuts reach community provision.
Greater state responsibility leaves community services exposed when state budgets contract.
States reduce mental-health budgets after the recession, following three decades in which responsibility for community services had increasingly shifted toward state governments.
As a result, the state cuts directly affect the resources available to community services.
The national spending series includes these years but combines sources of funding. Its gradual rise in treatment share cannot establish whether a particular state service retained support.
Public budgets fund services, while professional and advocacy organizations draw on publishing income, donations and sponsorship to support their work.
The income behind diagnostic authority.
The American Psychiatric Association (APA) publishes the Diagnostic and Statistical Manual of Mental Disorders (DSM), used to classify diagnoses. Its annual tax returns show publishing income and net assets, the value of what it owns after debts.
the annual tax returnForm 990 is a public financial return filed by many tax-exempt organizations. The filings used here report the association’s income, expenses, assets and liabilities.net assetsNet assets are an organization’s assets minus its liabilities. This balance differs from annual income and may include property and funds restricted to particular uses.
American Psychiatric Association publishing income
Select a yearFiscal years 2011–2024 · fourteen filings
All publication titles combined, without adjusting for inflation. Rings mark releases of the diagnostic manual. A fiscal year is the organization’s annual accounting period. APA Form 990 filingsDSM publication records
Publishing income and clinical authority
In April 2013, the director of the National Institute of Mental Health questioned the manual’s categories as a basis for research. That critique came a month before the fifth edition appeared, and the institute and the American Psychiatric Association then issued a joint statement affirming the manual’s role in clinical practice.
Earned income, donations and sponsorship represent different financial relationships. Disclosures show who provided resources, whereas establishing influence would take evidence about the decisions those resources may have affected.
These financial records sit within a wider archive of thirty-four arrangements, which also includes service grants, payment rules and the withdrawal of support.
The fourteen annual filings
All publication titles combined, without adjusting for inflation. Rings mark releases of the diagnostic manual. A fiscal year is the organization’s annual accounting period.
Year
Publishing income
Share of revenue
Manual
2011
$7.6M
17.4%
2012
$5.7M
14.8%
2013
$42.4M
52.0%
DSM-5
2014
$14.8M
24.3%
2015
$10.5M
20.3%
2016
$7.4M
14.6%
2017
$7.2M
14.4%
2018
$7.3M
12.2%
2019
$8.6M
14.6%
2020
$8.1M
17.0%
2021
$7.7M
14.4%
2022
$15.7M
24.1%
DSM-5-TR
2023
$7.6M
11.8%
2024
$8.2M
14.1%
Thirty-four funding arrangements.
The wider archive follows public investment, insurance rules, organizational income and the withdrawal of support, using the same five questions for each arrangement.
Select a record for its funding route and supporting evidence.
The records trace where responsibility moved; whether access or quality changed in the same way across states would need evidence from each state.
Medicare and Medicaid establish continuing federal payment routes for health care.
Medicare and Medicaid. Medicare insures older adults and some younger people with disabilities. Medicaid combines federal and state funding for eligible people with limited income.
SourceFederal revenue and premiumsImplied by the arrangement
ControlCongress and program administratorsDocumented
TransferMedicare and Medicaid entitlementsDocumented
UseCovered health servicesDocumented
EffectA durable financing terrain for mental-health policyImplied by the arrangement
Eligibility, exclusions, and payment rules determine which services and settings receive federal support.
What it does not establish
Whether eligible people found care, and how good that care was, depends on providers and rules that this record does not trace.
Block grants continue federal support while giving states more control over which services receive it.
Block grant. Federal funding for a broad purpose, such as mental-health services. States choose which programs to support within the grant’s requirements.
SourceFederal revenueImplied by the arrangement
ControlFederal and state governmentsDocumented
TransferMental-health block grantDocumented
UseState-selected programsImplied by the arrangement
EffectFunding persists with less federal specificationDocumented
What it does not establish
How individual states allocated their share of the block grant can only be read from their own spending records.
A reserved share of the block grant funds coordinated specialty care for early serious mental illness.
Set-aside. A share of a grant reserved for a specific use. Coordinated specialty care brings several kinds of treatment and support together for people with early serious mental illness.
SourceFederal block-grant fundsDocumented
ControlCongress, SAMHSA, and statesDocumented
TransferFive, then ten percent set-asideDocumented
UseCoordinated specialty careDocumented
EffectAbout $160M across 51 states and territories by 2018Implied by the arrangement
What it does not establish
A reserved share fixes the intended use of the funds and leaves programs and outcomes free to differ across jurisdictions.
Roughly $3.5 billion supports mental-health and substance-use services, mobile crisis care and preparations for 988.
Appropriation. Money Congress makes available for specified purposes. Mobile crisis teams bring support to a person in crisis; 988 connects callers to the Suicide & Crisis Lifeline.
SourceFederal supplemental revenueDocumented
ControlCongress and SAMHSADocumented
TransferAbout $3.5B in emergency appropriationsDocumented
UseMental health, substance use, mobile crisis, and 988Proposed or intended
EffectCrisis-response infrastructure expandsImplied by the arrangement
What it does not establish
Because the total covers several distinct uses, it cannot be treated as funding for one interchangeable program.
The IMD exclusion restricts federal Medicaid payments for most services to adults aged 21–64 in qualifying psychiatric institutions, subject to exceptions.
IMD exclusion. IMD means institution for mental diseases. The rule generally bars federal Medicaid payment for services to adults aged 21–64 in qualifying psychiatric institutions, subject to exceptions.
Federal matching. The federal government pays a share of a state’s eligible Medicaid costs.
SourceMedicaid fundsDocumented
ControlCongress and program administratorsDocumented
TransferFederal payment exclusionBlocked
UsePsychiatric institutional careBlocked
EffectA payment rule becomes an architectural incentiveDocumented
What it does not establish
A payment incentive is one reason among several for where a person receives care, so the rule cannot explain every placement.
Congress sets the more-than-sixteen-bed threshold in the statutory definition of an institution for mental diseases.
IMD and federal matching. An institution for mental diseases (IMD) is a statutory category of psychiatric facility. Federal matching is the federal share of eligible state Medicaid spending.
SourceFederal Medicaid matching fundsDocumented
ControlCongress and Medicaid administratorsDocumented
TransferIMD definition: more than sixteen bedsBlocked
UseQualifying psychiatric institutionsImplied by the arrangement
EffectA statutory boundary for federal paymentDocumented
Institutions with sixteen or fewer beds fall outside the statutory IMD definition.
What it does not establish
The definition establishes a payment boundary, while spending, quality and changes in placement require separate evidence.
Federal parity law restricts annual and lifetime dollar limits for covered mental-health benefits in group health plans.
Parity. Comparable insurance terms for mental-health and medical benefits. This first law addresses dollar limits, rather than every restriction on care.
SourceInsurance premiumsImplied by the arrangement
ControlCongress and regulatorsDocumented
TransferNarrow federal parity requirementDocumented
UseEmployer health plansDocumented
EffectMental health enters federal insurance regulationDocumented
Its protections are narrower than those introduced in 2008.
What it does not establish
Because the law addresses specified dollar limits, its passage cannot establish equality across all benefits or restrictions on care.
The Supreme Court establishes that unjustified institutional isolation can violate the Americans with Disabilities Act.
SourceState service resources; amount not specifiedImplied by the arrangement
ControlSupreme Court and state public systemsDocumented
TransferADA integration duty; no transfer measuredNot established
UseCommunity-based services, subject to the ruling’s conditionsProposed or intended
EffectUnjustified institutional isolation is discriminationDocumented
Community placement is required when appropriate, not opposed by the person, and reasonably accommodated given state resources and other service needs.
What it does not establish
The ruling sets a conditional duty without appropriating funds, and it cannot show that every state then implemented community services.
Prospective payment funds Certified Community Behavioral Health Clinics and their required services.
Prospective payment. A payment rate set in advance for a defined service model. Certified Community Behavioral Health Clinics (CCBHCs) must offer specified mental-health and substance-use services.
SourceFederal demonstration fundsDocumented
ControlCMS and state purchasersDocumented
TransferProspective payment systemDocumented
UseCertified community behavioral-health clinicsDocumented
EffectPayment supports a defined service infrastructureImplied by the arrangement
What it does not establish
Patient outcomes under the payment model are a separate question, which comparative studies rather than payment records would have to answer.
New parity rules address approval before treatment, provider networks and payment standards.
Prior authorization and networks. Prior authorization requires a plan’s approval before care. A provider network is the group of clinicians and facilities a plan contracts with.
SourcePremiums and public-plan fundsImplied by the arrangement
ControlFederal regulatorsDocumented
TransferParity rules for authorization, networks, and reimbursementDocumented
UseInsurers and provider systemsDocumented
EffectThe payable boundary reaches service managementDocumented
Federal agencies announce a suspension of enforcement of the new rule in 2025.
What it does not establish
The rule’s stated requirements must be read alongside its later enforcement and legal status.
A California settlement requires Kaiser to repay patients, pay a penalty, shorten waits, revise its review of care and submit to monitoring.
Restitution. Repayment to people harmed by the conduct addressed in a settlement. A penalty is a separate payment imposed through enforcement.
SourceHealth-plan and provider fundsDocumented
ControlSettlement and regulatory processDocumented
TransferRestitution, penalty, monitoring, and revised reviewDocumented
UseKaiser network and membersDocumented
EffectA network duty becomes a collected obligationDocumented
What it does not establish
One settlement with one health plan in one state cannot establish compliance across the wider market.
Also read as Withdrawal and enforcement
California’s Kaiser settlement enforces treatment obligations after federal agencies suspend enforcement of the new parity rule. The settlement requires patient repayments, a penalty and monitoring of access to care.
FDA draft guidance in 1997 and final guidance in 1999 relax disclosure requirements for broadcast drug advertisements directed at consumers.
FDA. The Food and Drug Administration regulates how drug advertisements present risks and other required information.
SourcePharmaceutical marketing resources; amount not specifiedImplied by the arrangement
ControlFDA disclosure guidance and pharmaceutical firmsDocumented
TransferA broadcast-advertising route; payments not measuredNot established
UseConsumer-directed drug communicationProposed or intended
EffectA changed regulatory route to public audiencesDocumented
What it does not establish
The record concerns disclosure requirements for broadcast advertisements, so campaign spending, audience effects and changes in prescribing lie outside it.
A Senate inquiry reports pharmaceutical funding equal to 29% of $62.5 million in American Psychiatric Association financing for 2006.
APA. The American Psychiatric Association, which publishes the diagnostic manual used to classify mental disorders.
SourceDrug-company fundsDocumented
ControlCorporate donors and APADocumented
TransferContributions and sponsorship · 2006Documented
UseAssociation operations and programsDocumented
EffectA substantial organizational resource and possible dependenceImplied by the arrangement
What it does not establish
The funding shows a financial relationship and a possible conflict, but motive and influence would have to be shown from the association’s own decisions.
NAMI reports approximately $23 million in pharmaceutical-company receipts over 2006–2008 and an average 56% share of its national budget over 2005–2009.
NAMI. The National Alliance on Mental Illness, a mental-health advocacy organization.
SourceDrug-company fundsDocumented
ControlCorporate donors and NAMIDocumented
TransferApproximately $23M · 2006 to 2008Documented
UseNational advocacy operationsDocumented
EffectA large share of organizational capacity comes from industryImplied by the arrangement
What it does not establish
Because receipts and budget shares cover different periods, they cannot be combined into one annual measure.
A study finds that 60% of 92 U.S.-based DSM physicians received industry payments totaling $14.2 million over 2016–2019.
DSM and Open Payments. The DSM is the Diagnostic and Statistical Manual of Mental Disorders. Open Payments is the federal database of disclosed industry payments to health professionals.
SourceIndustry fundsDocumented
ControlCompanies and individual physiciansDocumented
TransferOpen Payments transfers · 2016 to 2019Documented
Use92 U.S.-based DSM physiciansDocumented
EffectA documented financial conflict within professional workDocumented
The payments are disclosed in the federal Open Payments database.
What it does not establish
The study covers 92 U.S.-based physicians rather than all panel members, and the disclosed payments alone cannot establish a change in diagnostic decisions.
Federal agencies suspend enforcement of the new parity rule while the underlying law remains in force.
Parity statute and rule. The statute is the law requiring comparable insurance terms. The rule sets requirements for applying it; suspending rule enforcement does not repeal the law.
SourceExisting parity obligationsDocumented
ControlFederal executive and enforcement agenciesDocumented
Transfer2024 rule enforcement suspendedWithdrawn
UsePlan oversight and complianceWithdrawn
EffectStatutory duty remains while enforcement recedesDocumented
What it does not establish
The record describes the suspension at that point, while later litigation and policy decisions may change enforcement.
Taken together, the records support three findings about spending growth, responsibility for services and the resources of organizations that define mental illness.
What the evidence supports
01
More people treated drove growth in mental-health spending.
147% of the growth in mood-disorder spending
Between 2000 and 2021, more people treated accounted for 147% of the growth in mood-disorder spending, while a fall in cost per case offset part of the rise. Treated cases contributed most of the growth in each mental-health category that grew. In contrast, cost per case accounted for roughly two thirds of the growth across all diseases.
What it does not establish
The figures count more people in treatment without saying whether wider access, greater need or lower treatment thresholds produced the increase.
Congress funded construction of community mental-health centers in 1963, while the block grants introduced by 1982 gave states more choice over programs. As states took on greater responsibility, their budgets became more consequential for services, including during the cuts after the 2008 recession.
What it does not establish
A change in control moves responsibility to the states, and whether care became better or easier to reach has to be read from each state’s spending and service records.
52% of psychiatric association revenue from publishing, 2013
The American Psychiatric Association received $42.4 million in publishing income in 2013, accounting for 52% of its revenue that year. The fifth edition of its diagnostic manual appeared that May, although the reported income covers all publication titles.
What it does not establish
Why a diagnosis was defined in a particular way is a question about the decisions themselves, which income filings cannot answer.
Funding assigns responsibility and sets the terms of care.
Funding shapes responsibility through the services a grant supports, the settings an insurance program covers and the decisions left to states. As a result, a continued commitment to community care can take different forms as the rules governing payment change.
The findings bring the spending accounts, community-care history and organizational finances together, while keeping the limits of each source in view.