New Report: The Case for Repealing Medicaid’s IMD Exclusion

With mentally ill Americans floundering, urgent solutions for in-patient care are warranted 

NEW YORK, NY – Homelessness camps have become a common theme in local reporting across the country, from New York City to Seattle, and Charlotte to San Jose. But to what extent do they signal a health-care system that’s failing its mentally ill? A new Manhattan Institute report from senior fellow Stephen Eide and policy analyst Carolyn D. Gorman homes in on the “IMD Exclusion,” an outdated federal policy which bars Medicaid dollars from funding care for adults between the ages of 21 and 64 in specialized psychiatric hospitals (“Institutions for Mental Diseases”). Originally intended in part to promote local investment in community wellness services, the IMD Exclusion has outlasted its usefulness and warrants urgent reversal in order to provide care for Americans suffering from the most serious mental afflictions.

The new report from Eide and Gorman offers historical context for the anachronistic IMD Exclusion, which stems from decades-old tensions over state versus federal responsibilities, and the merits of institutionalized versus deinstitutionalized, community-based care. It also discusses evidence that the current status quo is failing, explaining that unrestricted federal Medicaid funding for community-based services has not negated the need for IMDs—a sad reality which rears its head every time a patient is “boarded” in a hospital hallway, or a tragedy involving a mentally ill American who’s spent years cycling through public systems makes headlines.

In the post-Trump era, the Biden administration has an opportunity to score points on both sides of the political aisle by effecting a full and clear repeal of the IMD Exclusion. As the report demonstrates, fears over mass re-institutionalizations are overblown, and a richer array of services and regulations that have materialized since 1965, including the “integration mandate” within the Supreme Court’s Olmstead ruling, means repealing the IMD Exclusion won’t relegate the mentally ill to the “snakepit” days. Instead, greater Medicaid funding for IMDs will help provide Americans with serious mental illnesses a full spectrum of care that can better meet their individual needs.

Click here to read the full report