Disability Caseload Trends and Mental Illness: Incentives under Health Care Reform to Invest in Mental Health Treatment for Non-Disabled Adults

Mental illness impacts health outcomes and program costs across the social and health services spectrum. This paper documents the role of mental illness in driving disability caseload growth and health care costs. With the expansion of Medicaid under federal health care reform to more non-disabled low-income adults, and with an enhanced federal share of costs for the Medicaid Expansion population, this paper shows that states have an incentive to invest in mental health treatment for non-disabled adults prior to persons becoming functionally impaired to the point of disability.