Medicaid cutbacks and block grants: crisis or opportunity for community mental health?

The fourfold growth in the mental health service system since 1955 has been largely financed by federal monies and by federal and state funding through Medicaid. This growth represents expansion of both institutional and outpatient settings, even though there has been a total reversal of the proportion of inpatient to outpatient care over the last 22 years. Current proposals to cap Medicaid costs and to issue block grants challenge the delivery system to attempt alternatives, such as financing similar to what is done in a health maintenance organization (HMO). The author describes a model of a "mental health HMO" that would be appropriate from professional consumer, and economic perspectives.