https://www.wsj.com/articles/trump-takes-a-stand-for-the-mentally-ill-11582071818?mod=opinion_lead_pos10
Hundreds of thousands of Americans with serious mental illness sleep in jails, shelters and prisons on any given night. Fewer than 40,000 are in state psychiatric hospitals. This is largely due to a federal policy, the Institutions for Mental Disease Exclusion, which created a financial incentive for states to kick the mentally ill out of hospitals. The White House’s new budget proposes easing the exclusion. It’s the most important thing federal government could do to improve care for the seriously mentally ill.
The IMD Exclusion, part of the 1965 law that established Medicaid, prevents the program from funding care for mentally ill adults while they live in hospitals or even adult homes with more than 16 beds. It was intended to prevent the federal government from taking on care of the mentally ill, which had historically been a state responsibility. Many mistakenly believed that newly developed antipsychotic drugs and community mental-health centers would obviate the need for institutions.
It’s been a disaster. Before Medicaid was enacted, states paid for psychiatric hospitalization, and it was readily available. But states soon realized that if they kicked patients out of hospitals, Medicaid would kick in and pay half the cost of care. This “deinstitutionalization” continues. The country has lost more than 450,000 mental-hospital beds since the 1950s, 12,000 of them since 2005.