Tuesday, July 29, 2025

Treating Mental Illness

An excellent long City Journal article is about the lack of inpatient beds for psychiatric patients. It was triggered by President Trump's recent EO concerning "Ending Crime and Disorder on America's Streets."

[The EO] declares that “vagrancy, disorderly behavior, sudden confrontations, and violent attacks”—often a function of untreated serious mental illness—be addressed through civil commitment and humane treatment in long-term institutional settings. For this effort to succeed, the most urgent priority is expanding the number of available inpatient psychiatric beds. The U.S. currently has a significant shortage.

Why do we have this shortage? The article gives a detailed answer, explaining at length how a confluence of social and financial factors shut down government funding for psychiatric inpatient treatment.

When Medicaid was enacted in 1965, it included a provision known as the “Institutions for Mental Diseases (IMD) exclusion,” which barred federal reimbursement for care provided in psychiatric hospitals.

Today, state hospital bed capacity is down more than 97 percent from peak capacity, adjusted for population. While the IMD exclusion remains in place, simply maintaining current bed capacity is often financially unworkable for states.

As long as the IMD exclusion remains in place, states face a powerful fiscal disincentive to expand public psychiatric bed capacity. Congress must repeal the IMD exclusion and allow Medicaid to cover psychiatric hospitals as it does nearly every other medical setting. Anything less will blunt the impact of the executive order and leave the nation’s most vulnerable without the care they need.

Repeal of the IMD exclusion will require Congressional action. It has the force of law, Trump cannot change it by EO.