Medicaid expenditures on psychotropic medications for children in the child welfare system

Children in the child welfare system are the most expensive child population to insure for their mental health needs. The objective of this article is to estimate the amount of Medicaid expenditures incurred from the purchase of psychotropic drugs - the primary drivers of mental health expenditures - for these children.

We linked a subsample of children interviewed in the first nationally representative survey of children coming into contact with U.S. child welfare agencies, the National Survey of Child and Adolescent Well-Being (NSCAW), to their Medicaid claims files obtained from the Medicaid Analytic Extract. Our data consist of children living in 14 states, and Medicaid claims for 4 years, adjusted to 2010 dollars. We compared expenditures on psychotropic medications in the NSCAW sample to a propensity score-matched comparison sample obtained from Medicaid files.

Children surveyed in NSCAW had over thrice the odds of any psychotropic drug use than the comparison sample. Each maltreated child increased Medicaid expenditures by between $237 and $840 per year, relative to comparison children also receiving medications. Increased expenditures on antidepressants and amphetamine-like stimulants were the primary drivers of these increased expenditures. On average, an African American child in NSCAW received $399 less expenditure than a white child, controlling for behavioral problems and other child and regional characteristics. Children scoring in the clinical range of the Child Behavior Checklist received, on average, $853 increased expenditure on psychotropic drugs.

Each child with child welfare involvement is likely to incur upwards of $1482 in psychotropic medication expenditures throughout his or her enrollment in Medicaid. Medicaid agencies should focus their cost-containment strategies on antidepressants and amphetamine-type stimulants, and expand use of instruments such as the Child Behavior Checklist to identify high-cost children. Both of these strategies can assist Medicaid agencies to better predict and plan for these expenditures.