In December 2003, Gov. Jennifer Granholm issued an executive order appointing a commission to recommend changes in the state’s mental health care system. Its recommendations are likely to influence discussions in the Legislature in 2005. Nevertheless, legislators should ensure that any reforms are patient-centered, so that money and choices go to patients or their guardians, not to state government agencies.

The Michigan mental health care system basically consists of local authorities who evaluate eligibility and either provide services or contract the services to private care providers. Michigan is divided into community mental health districts, with local boards to administer the mental health care system for an entire county or multicounty district. The boards may operate their own care facilities, or contract any of a wide range of services to private caregivers. A central state regulatory board monitors these local administrators, and most of its efforts are focused on monitoring whether local authorities are complying with state mandates on eligibility and the type of care being provided.

Much of the current regulation is aimed at determining whether local authorities are turning away eligible patients. These compliance requirements divert enormous resources toward monitoring the process followed by local authorities, while doing little to measure whether patients in the system actually get better.

A far simpler and more effective approach would start with orienting funding toward patients, rather than local boards. Dollars would be sent to individual patients or their guardians, perhaps through the creation of dedicated bank accounts or in the form of vouchers. Bypassing and eliminating the middlemen in the county-level administrative agencies would avoid the need for layers of paperwork and monitoring personnel.

The state’s remaining regulatory activities should consist of determining patient eligibility and certifying care providers. Patient eligibility could be evaluated based on state and Medicaid guidelines by a central authority with local offices. Care providers could be certified as meeting certain standards and then audited for compliance. Any remaining data collection could be oriented toward measuring effectiveness of treatments and care-giving facilities. These core functions would require far less paperwork and administrative resources than the current system.

Program administrators would need to develop a different mindset under this system, but it should not significantly disrupt current care provision. Counties that administer their own care facilities could be certified to continue to do so, although they would face competition from anyone else in their area who also meets the certification guidelines.

Perhaps more importantly, patients and their guardians would be empowered with more control over their treatment. Rather than take what regulators give them, they would have the money to secure the most appropriate benefits.

Facilities that were not as effective in providing treatment would face a loss of customers and funding if they could not attract patients. In this way, caregivers would have increased incentive to be more responsive to the needs of patients and the concerns of their guardians. The state could also play a role in making results-oriented data public, so that patients and guardians could make the best possible choices when deciding where they wanted to go for care.

The process of loosening the tight regulatory reins could be expanded to allow mental health organizations to explore other ways of providing new and different services that are not envisioned under the current model for mental health care. Shifting the focus toward rewarding initiative and success, and away from a strict compliance focus, could free mental health organizations to explore new programs, try out new approaches, build coalitions, find new revenue sources and generally raise the level of expectations in this important area of health care.

Maintaining the mental health care system in Michigan is expensive. Community mental health expenditures are now approximately $1.8 billion, much of which is funded by Medicaid and other federal programs. But the state funding is also substantial — in excess of $300 million. At a time when the state budget is the dominant political issue, the governor’s commission and the state Legislature should recognize the opportunity to achieve both cost savings and real quality-of-care improvements in the Michigan mental health system.


Theodore R. Bolema is an adjunct scholar with the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Bolema is also an attorney in the Finance and Law Department of Central Michigan University’s College of Business Administration. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.


Reforms to the state’s mental health care system should ensure that individual patients or their guardians are empowered with money and choices for effective care. State mental health boards should no longer be the major recipients of state money intended to improve care for the mentally ill.

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