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The need for policy direction in the provision of care to the mentally ill: an interdisciplinary view
Journal of Socio-Economics 31 (2002) 105–113
The need for policy direction in the provision of care to the mentally ill: an interdisciplinary view Randall G. Krieg∗ Academic Affair, University of Mary, Bismarck, ND 58504-9652, USA
Abstract This paper argues that mental health care is underprovided, and that the role of nonprofit providers should be expanded for three major reasons. First, a positive externality exists since society, as a whole, benefits when those in need of mental health care consume care. External benefits include lower crime rates, lower unemployment, and less homelessness. Second, consumers of mental health care are mentally ill and often do not believe that they need care, underestimate their need, or believe that care is not worth the time or expense. Third, common law, to a large extent, is based on individual liberty, largely ignoring the benefits individuals receive from treatment. It is argued that government policy is needed to increase the supply of mental health care, through nonprofit agencies. © 2002 Elsevier Science Inc. All rights reserved.
1. Introduction This is an interdisciplinary study of the procurement of mental health care. It argues that mental health care is underprovided, and that the role of nonprofit providers should be expanded. A contention of this paper is that the provision of mental health care needs to be increased for three major reasons. First, a positive externality exists since society, as a whole, benefits when those in need of mental health care consume care. External benefits include lower crime rates, lower unemployment, and less homelessness. Second, the market requires rational thought on the part of consumers in order to work efficiently. Libertarian thought has played a role in the transfer of the decision making from mental health care professionals to the mentally ill themselves through the process of deinstitutionalization. Consumers of mental health care are mentally ill and often do not believe that they need care, underestimate their need, or believe that care is not worth the time or expense. Consequently, they do not receive care that could add to their quality of life and their ability to make rational ∗
Tel.: +1-701-255-7500; fax: +1-701-255-7687. E-mail address: [email protected] (R.G. Krieg). 1053-5357/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 5 3 - 5 3 5 7 ( 0 1 ) 0 0 1 1 5 - 9
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decisions. Third, common law, to a large extent, is based on individual liberty, largely ignoring the benefits individuals receive from treatment. Patients receiving adequate care may be more rational and better decision-makers in the market place than if they avoid necessary care. This paper considers these market limitations, particularly the role of the mentally ill as decision-makers, and it explores the wisdom of possible government influence in this market. It is argued that the market for mental health care needs some direction. Demand- and supply-side alternatives are considered with emphasis placed on supply-side initiatives. In addition, it is argued that because of their inherent advantages, the role of nonprofit organizations should be expanded relative to forprofit firms.
2. The mentally ill as decision makers Entrusting mental health agencies with some of the most vulnerable people in society is much different than contracting road or sewer work. It is not simply a matter of buying a service but a matter of trust and responsibility in providing a very personal service. Free markets work best when consumers are, in general, rational decision-making agents. When consumers are the severely mentally ill, markets may not reach a socially desirable outcome. What further complicates the consumer side of the market is that, unlike other interest groups, the mentally ill often are not aware of their need for services. It is often argued that many self-awareness deficits in schizophrenia are manifestations of the neuropsychological deficits associated with the disorder (Young et al., 1993). Over half of the patients with schizophrenia (57%) had moderate to severe unawareness of having a mental disorder (Amador et al., 1991). More and more findings suggest that lack of insight (severe self-awareness deficits) are a prevalent feature of schizophrenia, perhaps stemming from the neuropsychological dysfunction associated with the disorder and are more common in schizophrenia than in other psychotic disorders (Amador et al., 1991). Results from Young et al. (1993) support the hypothesis that at least in some cases, a lack of insight has an organic etiology probably mediated by the frontal lobes. Lack of insight becomes a problem when those who need treatment to function well in society choose not to obtain it. As expected, studies find that the mentally ill with greater insight into their condition are more likely to seek psychiatric help when needed and are also more likely to comply with treatment programs. McEvoy et al. (1989) found that among 52 patients with schizophrenia, those with insight into their own condition were more likely to admit themselves, whereas those with little or no insight were more likely to be admitted involuntarily. They also observed that committed patients were significantly less likely than were voluntarily admitted patients to acknowledge that they were in need of treatment. In a related study, Lysaker et al. (1994) found that those with schizophrenia and impaired insight were less likely to comply with work rehabilitation programs. Of course lack of insight may be partial, in the sense that some in need of help may think that they need some help but not to the extent that it is worth the time and money to seek care. When we consider cases of total lack of insight and partial lack of insight, we can see a bias towards the underprovision of mental health care in the market place, and the need to encourage the provision of more care.
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2.1. Liberty Many libertarians understand individuals as being naturally free to live their lives as they see fit. For the mentally ill, this means the right to choose whether to receive treatment and, if so, where to receive treatment. Morse (1982) argues that arguments to the contrary constitute social control, protecting society at the expense of individuals. Introducing the concept of positive liberty into the debate leads us to reconsider the role of government in deinstitutionalization. Philosophic debates of deinstitutionalization are sometimes couched in terms of liberty versus paternalism. This apposition can be reframed to reflect a debate between two types of liberty. Isaiah Berlin (1969) distinguishes between two types of liberty: “positive” and “negative” liberty. He classifies negative liberty as freedom from interference often stressed by libertarians and positive liberty as the freedom of self-mastery, or having the means to be self-reliant, often discussed by Hegel and Marx. In the ongoing dialogue evaluating the appropriateness of deinstitutionalization, arguments of furthering deinstitutionalization are based on negative liberty, stressing the need for government to play a more laissez-faire role in the provision of care for the mentally ill. Yet one should add a discussion of positive liberty to the dialogue. In the case of the mentally ill, further care may aid one’s ability to make autonomous deliberations, facilitating democracy rather than undermining it. In this light, a more active role in the care of the mentally ill can be seen as promoting the positive liberty of these citizens. From this perspective, severe mental illness can be seen as a constraint to positive liberty, which can be mitigated by increased care in residential care units. Their illness is preventing the mentally ill from self-awareness, depriving them of positive freedom. As Berlin states (p. 131) “the positive sense of the word ‘liberty’ derives from the wish on the part of the individual to be his own master.” Certainly the ability to make rational decisions on a consistent basis is a minimum prerequisite for positive liberty. Other prerequisites may include the ability to manage money, maintain adequate hygiene, take appropriate medication, maintain friendships, and so forth. People who generally function well, despite mental disorders, may have lapses of bad judgment stemming from failure to take medication or symptoms of, for example, bipolar disorder. Such lapses may include violence to others or to themselves. These lapses could be mitigated if the mentally ill are enabled to make rational decisions in these circumstances. For example, in a normal state of mind, suicide or other violence may not seem to be an attractive option. Negative freedom, enabling the severely mentally ill to go untreated allows occasional (possibly fatal) lapses to interfere with their decisions that would be made differently had agents been in a stable state of mind. This can be viewed as interfering with their positive freedom of reaching their potential with treatment. Thus interference with the negative liberty of nonrational agents, the mentally ill, must be balanced with the promotion autonomous decision-making, that is, increased positive liberty. The positive liberty argument can be reconciled with a traditional utilitarian perspective. John Stuart Mill argues that social welfare was not made up solely of hedonistic pleasure, but rather, depends on the value of people in society. He states, “The worth of a state in the long run is the worth of the individuals composing it (Mill, 1956, p. 141).” Thus from Mill’s perspective, society (or policy) must be judged according to how well it develops individuals
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composing society. Society benefits from mental health care not only from decreased crime, unemployment and homelessness, but also from the increased value of mentally ill citizens who have received treatment. In a series of cases (O’Connor v. Donaldson, 1975; Shelton v. Tucker, 1960) the courts have made it difficult for patients to receive involuntary treatment. California’s Lanterman–Petris– Short Act in 1967, and the 1973 Wisconsin federal district court decision Lessard v. Schmidt (1972), cite the need to show that patients pose a danger to themselves or to others in order to be institutionalized involuntarily for any period of time. Such rulings support the cause of libertarians (negative liberty), largely ignoring the cause of positive liberty. As a consequence, if we accept the merits of positive liberty in this case, we can argue that society underprovides mental health care. 2.2. External benefits of care Another justification for expanding government’s role is that because of the external benefits (benefits accruing to members of society other than consumers), the market will undervalue care for the mentally ill. Care given to those with severe mental illness means that social benefits (e.g., lower unemployment, crime, violence and homelessness) accrue to others in society. Social benefits are greatest when the most severely mentally ill (those most likely to become homeless and become a nuisance or even violent) are cared for properly. Rice et al. (1990) find that the direct costs of care are only half as much as the indirect costs to society. Existence of such externalities will cause the market to underprovide care for the mentally ill, other things being equal, since many of those in society receiving benefits from increased care are not represented in the market as consumers or suppliers. 2.3. Demand-side policy A demand-side policy is one that provides more revenue to consumers, enabling them to procure more quantity and/or quality of care. The federal government funds over 25% of health spending, but less than 20% of mental health expenditures (Frank and McGuire, 1999). Frank and McGuire (1999) contend that only about 25% of those in need receive treatment over a 12-month period. Among the most needy, only 36% of those with bipolar disorder or major depression are treated. One drawback of most demand-side policies that put money directly in the hands of the mentally ill is that individuals may choose to use such funds for consumption of goods other than appropriate mental health care (to the extent that this is possible). This is particularly a problem for those who lack adequate insight into the extent of their problem. 3. The supply-side of mental health care This section investigates the provision of care for the mentally ill in light of deinstitutionalization. More specifically, it examines preferred characteristics of mental health providers and the appropriate sector (among public, nonprofit and forprofit sectors) in caring for the
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mentally ill. There has been a trend towards contracting out mental health services, particularly to forprofit firms, which are generally treated the same as nonprofit firms. In the following discussion of desirable provider characteristics, however, nonprofits compare favorably to public and forprofit firms. 3.1. Efficiency Efficiency is often used as a rationale for states to contract out services to private firms rather than to provide the services directly (Clark and Dorwart, 1992). Private firms are deemed to be more efficient than public agencies because bureaucratically controlled public agencies often lack the flexibility of private firms and the downward pressure on price (and costs) characteristic of competitive markets. As a practical matter, contracting outside of the public sector may also be advantageous because private firms (forprofit and nonprofit) are less constrained by civil service regulations and labor unions, and they often pay lower salaries than those in the public sector (Smith and Lipsky, 1992). Nonprofit firms bring efficiency gains to the market for a number of reasons. Nonprofits often employ those who are willing to work for lower salaries in order to aid a cause that they value (Preston, 1989; Weisbrod, 1983), thus reducing price for customers. Motivation and morale may also be relatively higher for these employees, increasing productivity. Moreover, donors may fear that contributions to forprofit firms may become profits and, therefore, choose to give to nonprofits, thus increasing revenues for these firms. Nonprofits also facilitate market efficiency by providing consumers “insurance” against asymmetric information. Economists note the existence of asymmetric information in markets where consumers do not have full knowledge of a product or service (Arrow, 1972). In the absence of such knowledge, consumers may chose to trust nonprofit firms more, depending on perceived notions of altruism on the part of nonprofits (Mark, 1996). Results from Mark (1996) indicate that nonprofit psychiatric hospitals have a welfare-enhancing role in markets characterized by asymmetric information. 3.2. Caring for the needy Society may benefit the most from mental health care when it is given to those who are homeless, unemployed, or otherwise financially needy. Such care may decrease the burden on taxpayers and lower the incidence of crime. Patients are often admitted to private hospitals based on the ability to pay (Dorwart et al., 1991, p. 206), leaving the needy without proper care. Olfson and Mechanic (1996) view treating the needy as an important role of nonprofit and public hospitals. Preservation of public and nonprofit firms is important because if forprofit firms are to subsidize care for the needy it must be through cross-subsidization. Forprofit firms must first serve patients who are able to pay (using their own resources or insurance coverage), before having the ability to subsidize those in need with any surplus revenue. Moreover, forprofit firms have less of an incentive to use profits to subsidize the needy. Public providers, however, receive a larger percentage of their revenue from government sources. Nonprofits also may be
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able to aid the needy since they receive private and public donations from those who wish to help those in need. Community mental health agencies (CMHAs) provide most outpatient services treatment in the United States. These agencies tend to be nonprofits (in states such as Iowa this is a requirement) and a great deal of the care is given at below the cost of the services (Clark and Dorwart, 1992, p. 517). In many areas, CMHAs are the only provider of mental health services to those who cannot afford to pay the full price. If the pressure to compete with proprietary firms threatens the health of CMHAs, the quantity and quality of care to the needy may be in jeopardy. Clark et al. (1994) examine competition between public and private mental health agencies. They contend that increased competition may adversely affect the quality of care to the needy. Greater competitive pressure is associated with higher probabilities of using financial incentives, emphasizing fee collection (charging fees for missed appointments and using collection agencies), and having separate facilities for insured and uninsured clients. In addition, competition may cause public and nonprofit firms to follow forprofit firms and pursue the goal of profit-maximization. While competition may decrease costs, it may also encourage larger care sites, which may further decrease the quality of care. 3.3. Pragmatism From a pragmatist’s perspective, nonprofits may foster experimentation, since their mission may be to make progress towards a goal other than profit-maximization, namely, patients’ mental health. Theories concerning care for the mentally ill are varied and often at odds with one another. It may be beneficial to patients to be in an environment that is open to experimentation in a variety of practices. Experimentation is more likely in smaller nonprofit groups. This is because experimentation with new methods and programs may be politically and/or administratively difficult to initiate for large proprietary firms and government agencies due to extensive regulations and established procedures. 3.4. Social welfare As taxpayers and potential crime victims, members of the community have a vested interest in quality mental health care. Moreover, nonprofits may attract personal donations that may benefit consumers in terms of quality and/or price, as well as contributors who may feel fulfilled when contributing to a cause of their choice. (Rose-Ackerman, 1996, p. 720). Schlesinger and Dorwart (1984) contend that nonprofits borne out of a strong sense of responsibility are more likely to develop services benefiting the community. They find that forprofit psychiatric hospitals are less likely to supply services providing benefits to the community. The role of nonprofits also promotes civic life. Voluntary action not only serves to solve social problems but it functions to strengthen citizen interaction in communities. Another advantage of nonprofit providers is that many of them are neighborhood or community-based, which is conducive to establishing a good rapport between patients, caregivers and the community.
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3.5. Quality of care Given the vulnerable state of the mentally ill, care and nurturing are more important components of quality mental health care than in other service industries. A nonprofit may possess a mission or vision that may attract employees that care more about consumers than typical employees might. To some extent, this may be true for proprietary firms in the industry, but the lower wages in nonprofit firms (Preston, 1989; Weisbrod, 1983) implies that employees must be gaining other nonpecuniary compensation from working for nonprofit firms. Quality can also be demonstrated by a low patient/staff ratio in care facilities. Nonprofit hospitals have the lower patient/staff ratios than proprietary and public agencies (Dorwart et al., 1991), suggesting that for profit firms may seek less labor-intensive methods of care. The same is true in private nursing homes, where more money is spent on sedatives (as opposed to more labor-intensive means to calm patients) than in nonprofit homes (Weisbrod, 1988). In another study, McCue and Clement (1993) find that nonprofit hospitals had significantly more full-time employees at one given time with less need for sedatives. Quality care is often hard to find in rural areas. Sullivan et al. (1996) found that rural patients received less case management services, fewer home visits, and participated in fewer day treatment programs than urban patients. Proprietary firms may overlook rural areas because they are not as profitable as urban areas where there is a greater concentration of people. Grassroots nonprofit organizations would be well suited to provide care in rural areas from both an organizational and financial standpoint. 3.6. Supply-side policy Government has a role as a protector of public safety. Consumers are drawn to firms offering lower prices. If competition between forprofit and nonprofit firms continues to increase, policy makers may increasingly consider consumer protection because monitoring and auditing may become more of an issue. Government should also consider guidelines in managed care. Cutler and Zeckhauser (1998) argue that managed care plans can discriminate by consumer group, selecting the more profitable risks from the insurance pool, prohibiting high-cost individuals from joining their plan. In order to promote good service, some states have implemented various types of performance assessments. Small grants to increase community experimentation in care were common in the past. Such grants would work well with nonprofit firms with ties to the community (Smith and Lipsky, 1992). A pragmatic approach may be beneficial to society in the long-run. Any increase in the role of the federal government need not include the provision of mental health services. A more viable alternative would be a revenue sharing arrangement, whereby state and local governments could use revenues to contract out services at the local level. There has been a consolidation and growth of large forprofit health care firms. Some contend that this will replace much of the nonprofit care (Walsh, 1995). Should policy makers be concerned and promote policies that favor nonprofit mental health care providers? Some advantages already exist such as tax privileges and real estate financing. Other policies, determined by individual states, are currently used in the provision of health care. In Minnesota, for example, legislation supports the development of integrated service delivery systems that
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provide a comprehensive set of services to a designated consumer group. Such systems are required to be nonprofit. The many advantages of nonprofits in the procurement of mental health services do not mean that competition from proprietary firms should be eliminated. Some competition may be good. Trash collection and electricity provision are examples illustrating that forprofit firms can successfully take over services formerly provided by the government, but these services are qualitatively different than mental health care. It may be beneficial to further promote the provision of care by nonprofit organizations relative to public or proprietary agencies.
4. Conclusion This paper has argued that the market for mental health care needs some direction. The market will underprovide care for three reasons. First, many of those who need mental health care do not realize it or do not think that it is worth the expense in terms of time and money because of lack of knowledge or insight. Second, our current policy, developed in part by the courts, is based on the concept of negative liberty, and largely ignores the benefits of or the “right” to become more rational and self-reliant (positive liberty). Third, external benefits to society accrue to society from mental health care in terms of less crime and violence, lower unemployment, less homelessness, and a more valuable workforce. Various policy options are available. Demand-side policies are already being employed. This policy promotes the negative liberty of recipients (although not for taxpayers) who have flexibility as to how the government assistance is spent. While the current policy may be a good solution for many of the mentally ill, those who lack insight as to the extent of their problem may not always take advantage of care available to the extent necessary. A supply-side policy may be a better alternative. Expanding the supply of care available would have two effects. First, the price of care would decrease to consumers without altering the prices of other goods, encouraging those, who are otherwise hesitant, to obtain care. Second, increased availability of care would decrease the time commitment to potential consumers, thus further encouraging those who are hesitant, to receive care. Moreover, the increase in supply of care would ultimately decrease its price and further encourage consumption to those in need. Such an increase in supply of care can be done in the public sector or contracted out to the proprietary or nonprofit sector. While some degree of competition can be healthy, the nature of the service makes the public sector and nonprofit sectors attractive options. Proprietary firms are touted for efficient provision of goods, but in some ways, for example, the case of asymmetric information, nonprofit firms may be more efficient. Public sector provision is likely to be the least efficient due to bureaucratic constraints. Nonprofits may not only add to efficiency in markets, but also lend themselves to a nurturing environment. Nonprofit also may best fill the much-needed niche in rural areas where care is sparse. In such areas, proprietary firms may not be viable, and public agencies may be scarce. Small nonprofit halfway houses and other residential living may be best in a nonprofit environment with government assistance when needed.
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References Amador, X.F., Strauss, D.H., Yale, S.A., Gorman, J.M., 1991. Awareness of illness in schizophrenia. Schizophrenia Bulletin 17, 113–132. Arrow, K., 1972, Summer. Gifts and exchanges. Philosophy and Public Affairs 1 (4), 343–362. Berlin, I., 1969. Two concepts of liberty. In: Four Essays on Liberty. Oxford University Press, New York. Clark, R.E., Dorwart, R.A., 1991. Competition and community mental health agencies. Journal of Health Politics Policy and Law 17 (3), 517–540. Clark, R.E., Dorwart, R.A., Epstein, S.S., 1994. Managing competition in public and private mental health agencies: implications for services and policy, Milbank Quarterly (4), 72. Cutler, D., Zeckhauser, R., 1998. The anatomy of health insurance. In: Newhouse, J.P., Culyer, A.Y. (Eds.), North Holland Press, Amsterdam. Dorwart, R.A., Schlesinger, M., Davidson, H., Epstein, S., Hoover, C., 1991. A national study of psychiatric hospital care. American Journal of Psychiatry 148 (2), 204–210. Frank, R.G., McGuire, T.G., 1999. Economics and mental health. Working Paper Series, National Bureau of Economic Research, Inc. Lessard v. Schmidt., 1972. 349, F. Supplement 1078 (E. D. Wis). Lysaker, P., Bell, M., Milstein, R., Bryson, G., Beam-Goulet, G., 1994. Insight and psychosocial treatment compliance in schizophrenia. Psychiatry 57, 307–315. Mark, T.L., 1996. Psychiatric hospital ownership and performance. Journal of Human Resources 31 (3), 631–649. McEvoy, J.P., Applebaum, P.S., Apperson, L.H., Geller, J.L., Freter, S., 1989, January/February. Why must some schizophrenic patients be involuntarily committed? The role of insight. Comprehensive Psychiatry 30 (1), 13–17. McCue, M.J., Clement, J.P., 1993. Relative performance of for-profit psychiatric hospitals in investor-owned systems and nonprofit psychiatric hospitals. American Journal of Psychiatry 150 (1), 77–82. Mill, J.S., 1956. On liberty (1859, reprint). Shield, D.V. (Ed.), Bobbs-Merrill Library of Liberal Arts, Indianapolis. Morse, S., 1982. A preference for liberty: the case against involuntary commitment of the mentally disordered. California Law Review 54–106. O’Connor, v. Donaldson, 1975. 422 U.S. 563, 573–576. Olfson, M., Mechanic, D., 1996, December. Mental disorders in public, private nonprofit, and proprietary general hospitals. American Journal of Psychiatry 153 (12), 1613–1619. Preston, A., 1989, October. The nonprofit worker in a for-profit world. Journal of Labor Economics 7 (4), 438–463. Rice, D., et al., (1990). The cost of alcohol and drug abuse and mental illness. USGPO, Washington. Rose-Ackerman, S., 1996, June. Altruism, nonprofits, and economic theory. Journal of Economic Literature 34, 701–728. Schlesinger, M., Dorwart, R., 1984, October. Ownership and mental-health services. New England Journal of Medicine 311 (15), 11959–11965. Shelton v. Tucker., 1960. 364 U.S. 479, 488–490. Smith, S.R., Lipsky, M., 1992. Privatization in health and human services: a critique. Journal of Health Politics, Policy and Law 17, 233–253. Sullivan, S., Jackson, C.A., Spritzer, K.-L., 1996, January. Characteristic and service use of seriously mentally ill persons living in rural areas. Psychiatric Services 47 (1), 57–61. Walsh, M., 1995, January. Annual report on American industry: health. Forbes 2, 80. Weisbrod, B., 1983, July. Nonprofit and proprietary sector behavior: wage differentials among lawyers. Journal of Labor Economics 1 (3), 246–263. Weisbrod, B., 1988. The nonprofit economy. Harvard University Press, Cambridge, MA. Young, D.A., Davila, R., Scher, H., 1993. Unawareness of illness and neuropsychological performance in chronic schizophrenia. Schizophrenia Research 10, 117–124.
The need for policy direction in the provision of care to the mentally ill: an interdisciplinary view Randall G. Krieg∗ Academic Affair, University of Mary, Bismarck, ND 58504-9652, USA
Abstract This paper argues that mental health care is underprovided, and that the role of nonprofit providers should be expanded for three major reasons. First, a positive externality exists since society, as a whole, benefits when those in need of mental health care consume care. External benefits include lower crime rates, lower unemployment, and less homelessness. Second, consumers of mental health care are mentally ill and often do not believe that they need care, underestimate their need, or believe that care is not worth the time or expense. Third, common law, to a large extent, is based on individual liberty, largely ignoring the benefits individuals receive from treatment. It is argued that government policy is needed to increase the supply of mental health care, through nonprofit agencies. © 2002 Elsevier Science Inc. All rights reserved.
1. Introduction This is an interdisciplinary study of the procurement of mental health care. It argues that mental health care is underprovided, and that the role of nonprofit providers should be expanded. A contention of this paper is that the provision of mental health care needs to be increased for three major reasons. First, a positive externality exists since society, as a whole, benefits when those in need of mental health care consume care. External benefits include lower crime rates, lower unemployment, and less homelessness. Second, the market requires rational thought on the part of consumers in order to work efficiently. Libertarian thought has played a role in the transfer of the decision making from mental health care professionals to the mentally ill themselves through the process of deinstitutionalization. Consumers of mental health care are mentally ill and often do not believe that they need care, underestimate their need, or believe that care is not worth the time or expense. Consequently, they do not receive care that could add to their quality of life and their ability to make rational ∗
Tel.: +1-701-255-7500; fax: +1-701-255-7687. E-mail address: [email protected] (R.G. Krieg). 1053-5357/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved. PII: S 1 0 5 3 - 5 3 5 7 ( 0 1 ) 0 0 1 1 5 - 9
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decisions. Third, common law, to a large extent, is based on individual liberty, largely ignoring the benefits individuals receive from treatment. Patients receiving adequate care may be more rational and better decision-makers in the market place than if they avoid necessary care. This paper considers these market limitations, particularly the role of the mentally ill as decision-makers, and it explores the wisdom of possible government influence in this market. It is argued that the market for mental health care needs some direction. Demand- and supply-side alternatives are considered with emphasis placed on supply-side initiatives. In addition, it is argued that because of their inherent advantages, the role of nonprofit organizations should be expanded relative to forprofit firms.
2. The mentally ill as decision makers Entrusting mental health agencies with some of the most vulnerable people in society is much different than contracting road or sewer work. It is not simply a matter of buying a service but a matter of trust and responsibility in providing a very personal service. Free markets work best when consumers are, in general, rational decision-making agents. When consumers are the severely mentally ill, markets may not reach a socially desirable outcome. What further complicates the consumer side of the market is that, unlike other interest groups, the mentally ill often are not aware of their need for services. It is often argued that many self-awareness deficits in schizophrenia are manifestations of the neuropsychological deficits associated with the disorder (Young et al., 1993). Over half of the patients with schizophrenia (57%) had moderate to severe unawareness of having a mental disorder (Amador et al., 1991). More and more findings suggest that lack of insight (severe self-awareness deficits) are a prevalent feature of schizophrenia, perhaps stemming from the neuropsychological dysfunction associated with the disorder and are more common in schizophrenia than in other psychotic disorders (Amador et al., 1991). Results from Young et al. (1993) support the hypothesis that at least in some cases, a lack of insight has an organic etiology probably mediated by the frontal lobes. Lack of insight becomes a problem when those who need treatment to function well in society choose not to obtain it. As expected, studies find that the mentally ill with greater insight into their condition are more likely to seek psychiatric help when needed and are also more likely to comply with treatment programs. McEvoy et al. (1989) found that among 52 patients with schizophrenia, those with insight into their own condition were more likely to admit themselves, whereas those with little or no insight were more likely to be admitted involuntarily. They also observed that committed patients were significantly less likely than were voluntarily admitted patients to acknowledge that they were in need of treatment. In a related study, Lysaker et al. (1994) found that those with schizophrenia and impaired insight were less likely to comply with work rehabilitation programs. Of course lack of insight may be partial, in the sense that some in need of help may think that they need some help but not to the extent that it is worth the time and money to seek care. When we consider cases of total lack of insight and partial lack of insight, we can see a bias towards the underprovision of mental health care in the market place, and the need to encourage the provision of more care.
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2.1. Liberty Many libertarians understand individuals as being naturally free to live their lives as they see fit. For the mentally ill, this means the right to choose whether to receive treatment and, if so, where to receive treatment. Morse (1982) argues that arguments to the contrary constitute social control, protecting society at the expense of individuals. Introducing the concept of positive liberty into the debate leads us to reconsider the role of government in deinstitutionalization. Philosophic debates of deinstitutionalization are sometimes couched in terms of liberty versus paternalism. This apposition can be reframed to reflect a debate between two types of liberty. Isaiah Berlin (1969) distinguishes between two types of liberty: “positive” and “negative” liberty. He classifies negative liberty as freedom from interference often stressed by libertarians and positive liberty as the freedom of self-mastery, or having the means to be self-reliant, often discussed by Hegel and Marx. In the ongoing dialogue evaluating the appropriateness of deinstitutionalization, arguments of furthering deinstitutionalization are based on negative liberty, stressing the need for government to play a more laissez-faire role in the provision of care for the mentally ill. Yet one should add a discussion of positive liberty to the dialogue. In the case of the mentally ill, further care may aid one’s ability to make autonomous deliberations, facilitating democracy rather than undermining it. In this light, a more active role in the care of the mentally ill can be seen as promoting the positive liberty of these citizens. From this perspective, severe mental illness can be seen as a constraint to positive liberty, which can be mitigated by increased care in residential care units. Their illness is preventing the mentally ill from self-awareness, depriving them of positive freedom. As Berlin states (p. 131) “the positive sense of the word ‘liberty’ derives from the wish on the part of the individual to be his own master.” Certainly the ability to make rational decisions on a consistent basis is a minimum prerequisite for positive liberty. Other prerequisites may include the ability to manage money, maintain adequate hygiene, take appropriate medication, maintain friendships, and so forth. People who generally function well, despite mental disorders, may have lapses of bad judgment stemming from failure to take medication or symptoms of, for example, bipolar disorder. Such lapses may include violence to others or to themselves. These lapses could be mitigated if the mentally ill are enabled to make rational decisions in these circumstances. For example, in a normal state of mind, suicide or other violence may not seem to be an attractive option. Negative freedom, enabling the severely mentally ill to go untreated allows occasional (possibly fatal) lapses to interfere with their decisions that would be made differently had agents been in a stable state of mind. This can be viewed as interfering with their positive freedom of reaching their potential with treatment. Thus interference with the negative liberty of nonrational agents, the mentally ill, must be balanced with the promotion autonomous decision-making, that is, increased positive liberty. The positive liberty argument can be reconciled with a traditional utilitarian perspective. John Stuart Mill argues that social welfare was not made up solely of hedonistic pleasure, but rather, depends on the value of people in society. He states, “The worth of a state in the long run is the worth of the individuals composing it (Mill, 1956, p. 141).” Thus from Mill’s perspective, society (or policy) must be judged according to how well it develops individuals
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composing society. Society benefits from mental health care not only from decreased crime, unemployment and homelessness, but also from the increased value of mentally ill citizens who have received treatment. In a series of cases (O’Connor v. Donaldson, 1975; Shelton v. Tucker, 1960) the courts have made it difficult for patients to receive involuntary treatment. California’s Lanterman–Petris– Short Act in 1967, and the 1973 Wisconsin federal district court decision Lessard v. Schmidt (1972), cite the need to show that patients pose a danger to themselves or to others in order to be institutionalized involuntarily for any period of time. Such rulings support the cause of libertarians (negative liberty), largely ignoring the cause of positive liberty. As a consequence, if we accept the merits of positive liberty in this case, we can argue that society underprovides mental health care. 2.2. External benefits of care Another justification for expanding government’s role is that because of the external benefits (benefits accruing to members of society other than consumers), the market will undervalue care for the mentally ill. Care given to those with severe mental illness means that social benefits (e.g., lower unemployment, crime, violence and homelessness) accrue to others in society. Social benefits are greatest when the most severely mentally ill (those most likely to become homeless and become a nuisance or even violent) are cared for properly. Rice et al. (1990) find that the direct costs of care are only half as much as the indirect costs to society. Existence of such externalities will cause the market to underprovide care for the mentally ill, other things being equal, since many of those in society receiving benefits from increased care are not represented in the market as consumers or suppliers. 2.3. Demand-side policy A demand-side policy is one that provides more revenue to consumers, enabling them to procure more quantity and/or quality of care. The federal government funds over 25% of health spending, but less than 20% of mental health expenditures (Frank and McGuire, 1999). Frank and McGuire (1999) contend that only about 25% of those in need receive treatment over a 12-month period. Among the most needy, only 36% of those with bipolar disorder or major depression are treated. One drawback of most demand-side policies that put money directly in the hands of the mentally ill is that individuals may choose to use such funds for consumption of goods other than appropriate mental health care (to the extent that this is possible). This is particularly a problem for those who lack adequate insight into the extent of their problem. 3. The supply-side of mental health care This section investigates the provision of care for the mentally ill in light of deinstitutionalization. More specifically, it examines preferred characteristics of mental health providers and the appropriate sector (among public, nonprofit and forprofit sectors) in caring for the
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mentally ill. There has been a trend towards contracting out mental health services, particularly to forprofit firms, which are generally treated the same as nonprofit firms. In the following discussion of desirable provider characteristics, however, nonprofits compare favorably to public and forprofit firms. 3.1. Efficiency Efficiency is often used as a rationale for states to contract out services to private firms rather than to provide the services directly (Clark and Dorwart, 1992). Private firms are deemed to be more efficient than public agencies because bureaucratically controlled public agencies often lack the flexibility of private firms and the downward pressure on price (and costs) characteristic of competitive markets. As a practical matter, contracting outside of the public sector may also be advantageous because private firms (forprofit and nonprofit) are less constrained by civil service regulations and labor unions, and they often pay lower salaries than those in the public sector (Smith and Lipsky, 1992). Nonprofit firms bring efficiency gains to the market for a number of reasons. Nonprofits often employ those who are willing to work for lower salaries in order to aid a cause that they value (Preston, 1989; Weisbrod, 1983), thus reducing price for customers. Motivation and morale may also be relatively higher for these employees, increasing productivity. Moreover, donors may fear that contributions to forprofit firms may become profits and, therefore, choose to give to nonprofits, thus increasing revenues for these firms. Nonprofits also facilitate market efficiency by providing consumers “insurance” against asymmetric information. Economists note the existence of asymmetric information in markets where consumers do not have full knowledge of a product or service (Arrow, 1972). In the absence of such knowledge, consumers may chose to trust nonprofit firms more, depending on perceived notions of altruism on the part of nonprofits (Mark, 1996). Results from Mark (1996) indicate that nonprofit psychiatric hospitals have a welfare-enhancing role in markets characterized by asymmetric information. 3.2. Caring for the needy Society may benefit the most from mental health care when it is given to those who are homeless, unemployed, or otherwise financially needy. Such care may decrease the burden on taxpayers and lower the incidence of crime. Patients are often admitted to private hospitals based on the ability to pay (Dorwart et al., 1991, p. 206), leaving the needy without proper care. Olfson and Mechanic (1996) view treating the needy as an important role of nonprofit and public hospitals. Preservation of public and nonprofit firms is important because if forprofit firms are to subsidize care for the needy it must be through cross-subsidization. Forprofit firms must first serve patients who are able to pay (using their own resources or insurance coverage), before having the ability to subsidize those in need with any surplus revenue. Moreover, forprofit firms have less of an incentive to use profits to subsidize the needy. Public providers, however, receive a larger percentage of their revenue from government sources. Nonprofits also may be
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able to aid the needy since they receive private and public donations from those who wish to help those in need. Community mental health agencies (CMHAs) provide most outpatient services treatment in the United States. These agencies tend to be nonprofits (in states such as Iowa this is a requirement) and a great deal of the care is given at below the cost of the services (Clark and Dorwart, 1992, p. 517). In many areas, CMHAs are the only provider of mental health services to those who cannot afford to pay the full price. If the pressure to compete with proprietary firms threatens the health of CMHAs, the quantity and quality of care to the needy may be in jeopardy. Clark et al. (1994) examine competition between public and private mental health agencies. They contend that increased competition may adversely affect the quality of care to the needy. Greater competitive pressure is associated with higher probabilities of using financial incentives, emphasizing fee collection (charging fees for missed appointments and using collection agencies), and having separate facilities for insured and uninsured clients. In addition, competition may cause public and nonprofit firms to follow forprofit firms and pursue the goal of profit-maximization. While competition may decrease costs, it may also encourage larger care sites, which may further decrease the quality of care. 3.3. Pragmatism From a pragmatist’s perspective, nonprofits may foster experimentation, since their mission may be to make progress towards a goal other than profit-maximization, namely, patients’ mental health. Theories concerning care for the mentally ill are varied and often at odds with one another. It may be beneficial to patients to be in an environment that is open to experimentation in a variety of practices. Experimentation is more likely in smaller nonprofit groups. This is because experimentation with new methods and programs may be politically and/or administratively difficult to initiate for large proprietary firms and government agencies due to extensive regulations and established procedures. 3.4. Social welfare As taxpayers and potential crime victims, members of the community have a vested interest in quality mental health care. Moreover, nonprofits may attract personal donations that may benefit consumers in terms of quality and/or price, as well as contributors who may feel fulfilled when contributing to a cause of their choice. (Rose-Ackerman, 1996, p. 720). Schlesinger and Dorwart (1984) contend that nonprofits borne out of a strong sense of responsibility are more likely to develop services benefiting the community. They find that forprofit psychiatric hospitals are less likely to supply services providing benefits to the community. The role of nonprofits also promotes civic life. Voluntary action not only serves to solve social problems but it functions to strengthen citizen interaction in communities. Another advantage of nonprofit providers is that many of them are neighborhood or community-based, which is conducive to establishing a good rapport between patients, caregivers and the community.
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3.5. Quality of care Given the vulnerable state of the mentally ill, care and nurturing are more important components of quality mental health care than in other service industries. A nonprofit may possess a mission or vision that may attract employees that care more about consumers than typical employees might. To some extent, this may be true for proprietary firms in the industry, but the lower wages in nonprofit firms (Preston, 1989; Weisbrod, 1983) implies that employees must be gaining other nonpecuniary compensation from working for nonprofit firms. Quality can also be demonstrated by a low patient/staff ratio in care facilities. Nonprofit hospitals have the lower patient/staff ratios than proprietary and public agencies (Dorwart et al., 1991), suggesting that for profit firms may seek less labor-intensive methods of care. The same is true in private nursing homes, where more money is spent on sedatives (as opposed to more labor-intensive means to calm patients) than in nonprofit homes (Weisbrod, 1988). In another study, McCue and Clement (1993) find that nonprofit hospitals had significantly more full-time employees at one given time with less need for sedatives. Quality care is often hard to find in rural areas. Sullivan et al. (1996) found that rural patients received less case management services, fewer home visits, and participated in fewer day treatment programs than urban patients. Proprietary firms may overlook rural areas because they are not as profitable as urban areas where there is a greater concentration of people. Grassroots nonprofit organizations would be well suited to provide care in rural areas from both an organizational and financial standpoint. 3.6. Supply-side policy Government has a role as a protector of public safety. Consumers are drawn to firms offering lower prices. If competition between forprofit and nonprofit firms continues to increase, policy makers may increasingly consider consumer protection because monitoring and auditing may become more of an issue. Government should also consider guidelines in managed care. Cutler and Zeckhauser (1998) argue that managed care plans can discriminate by consumer group, selecting the more profitable risks from the insurance pool, prohibiting high-cost individuals from joining their plan. In order to promote good service, some states have implemented various types of performance assessments. Small grants to increase community experimentation in care were common in the past. Such grants would work well with nonprofit firms with ties to the community (Smith and Lipsky, 1992). A pragmatic approach may be beneficial to society in the long-run. Any increase in the role of the federal government need not include the provision of mental health services. A more viable alternative would be a revenue sharing arrangement, whereby state and local governments could use revenues to contract out services at the local level. There has been a consolidation and growth of large forprofit health care firms. Some contend that this will replace much of the nonprofit care (Walsh, 1995). Should policy makers be concerned and promote policies that favor nonprofit mental health care providers? Some advantages already exist such as tax privileges and real estate financing. Other policies, determined by individual states, are currently used in the provision of health care. In Minnesota, for example, legislation supports the development of integrated service delivery systems that
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provide a comprehensive set of services to a designated consumer group. Such systems are required to be nonprofit. The many advantages of nonprofits in the procurement of mental health services do not mean that competition from proprietary firms should be eliminated. Some competition may be good. Trash collection and electricity provision are examples illustrating that forprofit firms can successfully take over services formerly provided by the government, but these services are qualitatively different than mental health care. It may be beneficial to further promote the provision of care by nonprofit organizations relative to public or proprietary agencies.
4. Conclusion This paper has argued that the market for mental health care needs some direction. The market will underprovide care for three reasons. First, many of those who need mental health care do not realize it or do not think that it is worth the expense in terms of time and money because of lack of knowledge or insight. Second, our current policy, developed in part by the courts, is based on the concept of negative liberty, and largely ignores the benefits of or the “right” to become more rational and self-reliant (positive liberty). Third, external benefits to society accrue to society from mental health care in terms of less crime and violence, lower unemployment, less homelessness, and a more valuable workforce. Various policy options are available. Demand-side policies are already being employed. This policy promotes the negative liberty of recipients (although not for taxpayers) who have flexibility as to how the government assistance is spent. While the current policy may be a good solution for many of the mentally ill, those who lack insight as to the extent of their problem may not always take advantage of care available to the extent necessary. A supply-side policy may be a better alternative. Expanding the supply of care available would have two effects. First, the price of care would decrease to consumers without altering the prices of other goods, encouraging those, who are otherwise hesitant, to obtain care. Second, increased availability of care would decrease the time commitment to potential consumers, thus further encouraging those who are hesitant, to receive care. Moreover, the increase in supply of care would ultimately decrease its price and further encourage consumption to those in need. Such an increase in supply of care can be done in the public sector or contracted out to the proprietary or nonprofit sector. While some degree of competition can be healthy, the nature of the service makes the public sector and nonprofit sectors attractive options. Proprietary firms are touted for efficient provision of goods, but in some ways, for example, the case of asymmetric information, nonprofit firms may be more efficient. Public sector provision is likely to be the least efficient due to bureaucratic constraints. Nonprofits may not only add to efficiency in markets, but also lend themselves to a nurturing environment. Nonprofit also may best fill the much-needed niche in rural areas where care is sparse. In such areas, proprietary firms may not be viable, and public agencies may be scarce. Small nonprofit halfway houses and other residential living may be best in a nonprofit environment with government assistance when needed.
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