Medicaid expansion study recommends investment in the state’s mental health safety net to curb inefficient spending and strengthen community-based treatment services

Recent cuts to community mental health services cost Illinois taxpayers and hospitals millions more than they saved, study finds

November 19, 2013

Chicago — In a report released today, Thresholds, the state’s largest provider of mental health recovery services, recommends implementing several strategies tied to Medicaid expansion that will result in better health for individuals living with mental illnesses while also delivering dramatic cost savings as a result of a more coordinated mental health safety net in Illinois.

The report found that $113 million in cuts to mental health treatment services between FY09 and FY11 actually cost the State of Illinois and hospitals $131 million based on the spike in emergency room visits and hospitalizations that occurred after the cuts were implemented.

The report says that by reducing reliance on institutional care and investing in community-based treatment services and affordable housing, the state can save more than 42 percent on the cost to provide mental health services in nursing homes.

The savings generated would then be reinvested into early treatment and wellness services in order to refocus the system toward early intervention rather than constant crisis intervention.

“Medicaid expansion provides the State of Illinois with an historic, once-in-a-lifetime opportunity to transform the mental health services safety net, provide better services, and save money”, said Thresholds’ CEO Mark Ishaug. “An important step towards this is for greater support of a community-based care model, one that delivers a broad array of services from housing, to substance abuse counseling, to employment and life skills training, enabling people to recover and live productive lives.”

The Path Forward: Investing in the Illinois Community Mental Health System is the product of a recent Thresholds’ policy forum, where hospital leaders, managed care executives, mental health service providers, housing experts, elected officials and policy makers gathered to discuss the impact Medicaid expansion will have on Illinois’ mental health safety net.

“The recommendations in this report stem from input gathered from disparate voices representing the spectrum of the entire healthcare community,” said Ishaug. “Our job now is to educate lawmakers that the recommendations in this report will do two things: improve care for individuals living with mental illnesses and save Illinois taxpayers money.”

An analysis of the data provided by the Illinois Hospital Association shows trends in increased emergency room visits and hospitalizations following $113 million in cuts to community mental health treatment services made between FY09-FY11. The analysis uncovered the following findings:

  • Between 2009 and 2012, emergency room visits for people in psychiatric or substance abuse crisis climbed by 19% – by more than 35,000 ER visits. This increase is 12 percentage points higher than other medical ER visits.
  • Approximately 25% of these ER visits resulted in a hospitalization lasting on average 6.7 days. This means the mental health cuts made between FY09 and FY11 led to more than 8,800 psychiatric and behavioral health hospitalizations.
  • It is estimated that of those hospitalized due to the spike in ER visits, more than 250 of these individuals were placed in institutional care because of a lack of community treatment services.
  • Cost data shows the $113 million in cuts to community mental health services cost the state and hospitals $131.4 million between FY09 and FY12.

A Path Forward also recommended that Medicaid reimbursement be tied more closely to mental health, health and quality of life outcomes, and must cover the actual cost of providing services to allow providers to increase service capacity to cover the Medicaid expansion population.

The full report and executive summary can be found at Thresholds’ website –


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About Thresholds
Established in 1959, Thresholds provides healthcare, housing, and hope for thousands of persons with mental illness in Illinois. Through research, employment, advocacy, care, and housing, Thresholds assists and inspires people with mental illnesses to reclaim their lives. For more information about Thresholds, please visit our website at

Media Contact
For more information, contact Dave Bayless, Bayless Communications LLC, at (312) 533-0059 or via email at


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