Research & Commentary: Government Regulations and the Mental Health Shortage

Published August 24, 2016

According to the National Alliance on Mental Illness, “1 in 5 Americans will be affected by a mental health condition in their lifetime and every American is affected or impacted through their friends and family.” A recent study from the National Center for Health Statistics found the suicide rate rose by 24 percent from 1999 to 2014. Suicide has become the 10th-leading cause of death in the United States, the third-leading cause of death for people aged 10–24 and the second-leading cause of death for people aged 15–24, according to the Centers for Disease Control and Prevention.

Unfortunately, there is an alarming shortage of mental health facilities and services for the 62 million Americans who experience mental illness each year.

The number of state psychiatric beds has dropped at an alarming rate. The Treatment Advocacy Center recommends 40–60 psychiatric beds for every 100,000 people, but the national average is far below this recommended level – currently at 11.7. While many states are attempting to fill this gap with new beds, Michael Ollove argues in an article published in Stateline that it will not be easy. Ollove says some experts say the nation needs an additional 123,300 psychiatric hospital beds to adequately meet current demands.

The present shortage has led many states to place mentally ill patients with severe symptoms to be held in emergency rooms, hospitals, and even in jails while they wait for a bed in a psychiatric facility. This practice, known as “psychiatric boarding,” blocks patients from receiving needed care because hospital staff are often ill-equipped or not properly trained to provide the level of care these patients need. A 2012 study published by the American College of Emergency Physicians found “70% of institutions have to board psychiatric patients for more than 24 hours and 10% for a week or more.”

In an article published in Inside Sources and the Las Vegas Sun, Justin Haskins of The Heartland Institute and Jacquelyn Corley of Duke University outlined steps states can take to improve mental health services.

The first policy change Haskins and Corley recommend is for states to allow primary care physicians and mental health providers to operate using what is known as a direct primary care (DPC) model. DPC practices allow patients to pay a monthly membership fee, typically $50 to $80, in exchange for a more-generous allocation of appointments than they may otherwise receive under a traditional model. Some patients even receive a set number of same-day appointments or house calls. Because direct primary care cuts out third-party insurance companies, overhead costs can be reduced by up to 40 percent, allowing doctors to take on fewer patients and provide more personalized care.

The second recommendation is to reform or repeal certificate of need (CON) laws. States with CON laws require commission approval for a wide range of expenditures, including construction and modification of health care facilities, the purchase of major pieces of medical technology, and the offering of new inpatient beds, services, and medical procedures. Recent studies have shown CON laws fail to achieve many of their stated goals and increase costs for consumers by hindering competition and forcing providers to use older facilities and equipment.

Haskins and Corley say, “[O]f the 30 states and the District of Columbia ranked by Mental Health America as being the worst for access to mental health care services and prevalence of mental illness, 23 have CON laws or variations on CON legislation.” They argue CON laws could play a strong role in the lack of needed mental health services in some states and their high suicide rates. Haskins and Corley also note of the 26 states with the greatest shortages of mental health care professionals, 19 have CON laws.

The lack of mental health services is a public health and safety issue that states need to address. Simply throwing money at the problem will not suffice; states need to give mental health providers the flexibility to change and grow. Ending CON laws and allowing direct primary care programs to form would be a step in the right direction.

The following documents examine mental health reform, certificate of need reform, and direct primary care programs in greater detail. 

Ten Principles of Health Care Policy
This pamphlet in The Heartland Institute’s Legislative Principles series describes the proper role of government in financing and delivering health care and provides reform suggestions to remedy current health care policy problems. 

Government Regulations Reduce Access to Mental Health Services
In this edition of the Consumer Power Report, Justin Haskins, executive editor of The Heartland Institute, discusses President Barack Obama’s announced  proposal to spend $500 million on improving access to mental health care and to provide better mental health information for firearms background checks. Haskins argues repealing CON laws would go a long way to helping Americans find care. “This means by eliminating certificate of need, the lives of countless people suffering with mental health problems will be improved, making the United States a healthier and safer nation for everyone,” wrote Haskins.

Research & Commentary: Missouri Should Pursue Certificate of Need Reform–commentary-missouri-should-pursue-certificate-of-need-reform?source=policybot
In this Research & Commentary, Senior Policy Analyst Matthew Glans examines Missouri’s certificate of need laws, their effect on mental health services in the state, and he argues for their reform or repeal.

Amid Shortage of Psychiatric Beds, Mentally Ill Face Long Waits for Treatment
Michael Ollove writes in Stateline about the growing problem many states are facing with housing mentally ill patients and how some are held in emergency rooms, hospitals, and jails while they wait for a bed – sometimes for weeks. “The problem extends far beyond Washington[, DC]: In a 2014 survey, 19 of 38 state mental health directors said their states had been threatened with or found in contempt for failing to admit jailed inmates found mentally incompetent into mental health facilities in a timely manner,” wrote Ollove.

Three Ways to Address Mental Health
In this article published by Inside Sources and the Las Vegas Sun, Justin Haskins, executive editor of The Heartland Institute, and Jacquelyn Corley of Duke University outline steps states can take to improve mental health services. “Despite the many advantages of direct primary care practices, many states don’t allow this model to be used or treat these practices as though they are insurance companies, making it difficult or impossible to operate effectively,” wrote Haskins and Corley.

Direct Primary Care: Restoring The Doctor-Patient Relationship
Katherine Restrepo writes about direct primary care and how it could lower costs and improve the relationship between doctors and patients in this article in Forbes. “The beauty of practices like Doctor Direct is the traditional doctor-patient relationship is restored. By cutting 40 percent of overhead which is normally spent on getting paid by insurance companies, primary care providers can devote hour-long appointments to their patients and deliver care at a fraction of the cost.”

Direct Primary Care: An Innovative Alternative to Conventional Health Insurance  
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care that alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws that encourage this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Direct Primary Care: Practice Distribution and Cost Across the Nation
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.

Direct Primary Care: A Legal and Regulatory Review of an Emerging Practice Model
Philip M. Eskew examines concerns related to the “business of insurance” (BOI) encountered by DPC physicians. He analyzes recommended contractual provisions used to minimize BOI risk; compares state laws written chiefly to address risks related to BOI; considers the DPC provisions in the Affordable Care Act; and briefly considers the tax and scope-of-practice policy implications of the DPC model.

The Great Healthcare CON  
Jordan Bruneau of the Foundation for Economic Education says CON laws powerfully distort the health care market. He advises, “Rather than pinning our hopes on grand plans to overhaul the system, we should first look at where we can make changes on the margin that would move us in the right direction. Abolishing CON laws—a barrier to entry that drives up prices, restricts access, and is maintained by cronyism—would be a great place to start.”

Certified: The Need to Repeal CON: Counter to Their Intent, Certificate-of-Need Laws Raise Health Care Costs
Jon Sanders of the John Locke Foundation says CON laws fail to lower health care costs and in many instances actually increase costs. Sanders says state leaders could best honor the intent behind CON programs – preventing unnecessary increases in health care costs – by repealing those laws.


Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News at, The Heartland Institute’s website at, and PolicyBot, Heartland’s free online research database at

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