New Report: Barriers to Inpatient Psychiatric Care in the U.S. 

A 1965 Medicaid provision is limiting treatment options for serious mental illness

NEW YORK, NY – Last month, President Trump signed an executive order to address homelessness and public disorder in America. In the order, President Trump acknowledged the reality of untreated serious mental illness driving the problems of homelessness and public disorder. The order emphasizes the use of existing tools such as civil commitment and institutional settings for treatment to help those in crisis. However, a decades-old Medicaid provision known as the “institutions for mental diseases” (IMD) exclusion could significantly undermine these efforts by restricting access to inpatient psychiatric treatment.  

The IMD exclusion was established in 1965 and prohibits Medicaid from covering inpatient psychiatric care in facilities with more than 16 beds—a restriction that does not apply to any other type of treatment setting. 

In a new Manhattan Institute report, Paulson Policy Analyst Carolyn D. Gorman examines the state of U.S. psychiatric hospitals under the IMD exclusion. Her analysis finds that the number of public psychiatric beds has dropped by over 97% since 1955, despite the ongoing mental health crisis. Gorman finds evidence that of the remaining psychiatric hospitals, the IMD exclusion prevents them from serving a large number of Medicaid beneficiaries, who are more likely to be seriously mentally ill.  

With the current difficulties in expanding psychiatric treatment, Gorman argues that repealing the IMD exclusion is necessary to increase coverage, particularly for low-income patients who are most likely to rely on the availability of public psychiatric beds. With bipartisan momentum building and the Trump administration voicing support for addressing the IMD exclusion, this report offers a timely analysis of the current landscape for inpatient psychiatric treatment.  

Click here to read the full report.