Financing and Delivery of Behavioral Health Services and the Patient Protection and Affordable Care Act

Amanda K. Sarata
Specialist in Health Policy

Erin Bagalman
Analyst in Health Policy

Behavioral health disorders (including both mental disorders and substance use disorders) affect a large number of people and contribute costs to the health care system, even as indicated treatment is often not received by individuals in need. In the United States, an estimated 26% of noninstitutionalized adults experience behavioral health disorders in a given year; over the course of a lifetime, the estimate rises to 46%. One study estimated spending on behavioral health care in 2005 to be $135 billion, of which $40 billion was paid by the federal government (including $10 billion by Medicare) and $44 billion by state governments. Both higher and lower cost estimates have been found in other studies. Among U.S. adults suffering from a behavioral health disorder severe enough to interfere with major life activities in 2009, 40% received no treatment; despite spending on behavioral health care, cost remains the most common barrier to treatment reported by adults with unmet need.

The federal government has a role in both the financing and delivery of behavioral health care services, as a payer, regulator, and provider, and as such, Congress may have an interest in behavioral health care broadly. This interest was reflected in the recently enacted health reform law (Patient Protection and Affordable Care Act [PPACA], P.L. 111-148, as amended). Although transforming the behavioral health care delivery system was not an explicit focus of the law, it includes sections that are expected to increase access to behavioral health services through changes to the financing and delivery of health care services.

This report provides an overview of sections in the health reform law that are expected to affect the financing and delivery of behavioral health care services. Access to health care services is determined by multiple factors, including (among other things) financing arrangements and covered benefits. PPACA may increase access to behavioral health services by increasing the availability and affordability of financing arrangements; the law also contains sections that will affect both the coverage of behavioral health services, as well as the conditions under which those services are covered. In addition, PPACA contains sections that are likely to affect the way in which health care services are delivered, specifically through changes to the workforce, the safety net, and new care delivery models.

The report concludes by presenting the relevant sections in a series of nine tables: (1) essential health benefits; (2) mental health parity; (3) private health insurance; (4) Medicare; (5) Medicaid; (6) safety net services; (7) workforce; (8) miscellaneous sections (e.g., sections on research, education, or community-based services, among others); and (9) relevant Indian Health Service (IHS) sections (in an appendix).


Date of Report: September 19, 2011
Number of Pages: 35
Order Number: R42009
Price: $29.95

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Health Care: Constitutional Rights and Legislative Powers

Kathleen S. Swendiman
Legislative Attorney

The health care reform debate raises many complex issues including those of coverage, accessibility, cost, accountability, and quality of health care. Underlying these policy considerations are issues regarding the status of health care as a constitutional or legal right. This report analyzes constitutional and legal issues pertaining to a right to health care, as well as the power of Congress to enact and fund health care programs. Following the passage of the Patient Protection and Affordable Care Act, P.L. 111-148, legal issues have been raised regarding the power of Congress to mandate that individuals purchase health insurance, and the ability of states to “nullify” or “opt out” of such a requirement. These issues are also discussed.

The U.S. Constitution does not set forth an explicit right to health care. While the Supreme Court would likely find that the Constitution provides a right to obtain health care services at one’s own expense from willing providers, the Supreme Court has never interpreted the Constitution as guaranteeing a right to health care services from the government for those who cannot afford it. The Supreme Court has, however, held that the government has an obligation to provide medical care in certain limited circumstances, such as for prisoners.

While the U.S. Constitution and Supreme Court interpretations do not identify a constitutional right to health care for those who cannot afford it, Congress has enacted numerous statutes, such as Medicare, Medicaid, and the Children’s Health Insurance Program, that establish and define specific statutory rights of individuals to receive health care services from the government. As a major component of many health care entitlement statutes, Congress has provided funding to pay for the health services provided under law. Most of these statutes have been enacted pursuant to Congress’s authority to “make all Laws which shall be necessary and proper” to carry out its mandate “to … provide for the … general Welfare.” The power to spend for the general welfare is one of the broadest grants of authority to Congress in the U.S. Constitution. The Supreme Court accords considerable deference to a legislative decision by Congress that a particular health care spending program provides for the general welfare.

Recently, Congress enacted comprehensive health care reform legislation, P.L. 111-148, which includes a requirement, effective in 2014, that individuals purchase health insurance, and which significantly expands the Medicaid program. A number of lawsuits have been filed challenging various provisions of this legislation, including the power of Congress to enact an individual mandate to purchase health insurance under the Commerce Clause or other provisions of the U.S. Constitution. These lawsuits are in various stages of litigation. Significantly, there is now a split in the circuit courts, with the 11th Circuit Court of Appeals invalidating the individual health insurance mandate, the Sixth Circuit Court of Appeals upholding the same provision, and the Fourth Circuit Court of Appeals dismissing two cases for lack of standing, making it likely that one or more of these cases will eventually reach the Supreme Court. In addition, several states have passed laws, or amended their state constitutions, to attempt to “nullify” or “opt out” of the federal individual health insurance mandate. Direct conflicts between federal laws and state nullification statutes or state constitutional amendments would raise constitutional issues which are likely to be resolved in favor of federal law under the Supremacy Clause of the U.S. Constitution. A number of state constitutions contain provisions relating to health and the provision of health care services. State constitutions may provide constitutional rights that are more expansive than those found under the federal Constitution since federal rights set the minimum standards for the states.


Date of Report: September 9, 2011
Number of Pages: 20
Order Number: R40846
Price: $29.95

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Definition of Income in PPACA for Certain Medicaid Provisions and Premium Credits

Janemarie Mulvey, Coordinator
Specialist in Aging and Income Security

Evelyne P. Baumrucker
Analyst in Health Care Financing

Bernadette Fernandez
Specialist in Health Care Financing

Christine Scott
Specialist in Social Policy

Under the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148, as amended), the definition of income for eligibility for certain Medicaid populations and premium credits in the exchanges is based on modified adjusted gross income (MAGI). The initial intent of using MAGI was to standardize the definition of income for Medicaid eligibility purposes to reduce some of the variability and complexity that exists under the current program and to provide consistency between Medicaid and the health insurance exchange. The use of MAGI, however, has raised some concerns among Congress and the Obama Administration as it excludes some types of income either partially or altogether. Of particular interest has been the potential impact of eligibility for Medicaid and premium credits for early retirees (aged 62 through 64) receiving Social Security benefits, as some or all of their Social Security income may be excluded from the MAGI definition of income. By excluding some types of income, individuals and families with a higher percentage of total income relative to the federal poverty level may qualify for Medicaid and premium credits. A recent cost estimate by the Congressional Budget Office finds that changing the MAGI income calculation to include all Social Security benefits would reduce the deficit by $13 billion over the 2012-2021 period.

Legislative proposals have been introduced in both chambers of Congress to change the definition of income to be more inclusive and consistent with other low-income programs. In evaluating these proposals, a number of issues might be considered. First, an alternative definition may add complexity compared with the use of MAGI. Specifically, because adjusted gross income (on which MAGI is based) can be computed largely from information on an individual’s federal tax return, verification of income is streamlined. If an alternative definition is used that is not based on tax return information, the administrative complexity of verifying nontaxable income from different sources comes into play. Second, the definition was developed to ensure coordination between Medicaid and premium credits in the health insurance exchange. A change in the definition of income for Medicaid should then also apply to premium credits to ensure consistency between Medicaid and the premium credit offered to selected individuals who purchase private health insurance through the exchanges. Finally, many of the current legislative proposals have focused largely on the inclusion of Social Security benefits in income definitions for eligibility purposes. However, most other low-income programs include other types of income (e.g., nontaxable pensions) and asset holdings that are also excluded from MAGI.


Date of Report: September 13, 2011
Number of Pages: 24
Order Number: R41997
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Medicaid: The Federal Medical Assistance Percentage (FMAP)

Evelyne P. Baumrucker
Analyst in Health Care Financing

Alison Mitchell
Analyst in Health Care Financing

Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term care. Medicaid is jointly funded by the federal government and the states. Historically, eligibility for Medicaid was generally limited to low-income children, pregnant women, parents of dependent children, the elderly, and people with disabilities; however, recent changes will soon require coverage for certain other low-income individuals, such as childless adults. The federal government’s share of a state’s expenditures for most Medicaid services is called the federal medical assistance percentage (FMAP). The remainder is referred to as the nonfederal share, or state share.

Generally determined annually, the FMAP is designed so that the federal government pays a larger portion of Medicaid costs in states with lower per capita incomes relative to the national average (and vice versa for states with higher per capita incomes). For FY2011, regular FMAPs—that is, excluding the impact of a temporary increase—range from 50.00% to 74.73%.

A vast majority of states have experienced and continue to experience fiscal stress as a result of the recession that lasted from December 2007 to June 2009. In response, the federal government provided fiscal relief to states through the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). While the federal government assistance was significant, the federal funding did not fully offset the decreases in state tax revenues and caseload-related growth in state expenditures. As a result, even with the increased federal assistance, most states continue to face budget issues.

The ARRA assistance to states included a temporary FMAP increase that was later extended by P.L. 111-226. In total, the temporary FMAP increase ran for 11 quarters, from the first quarter of FY2009 through the third quarter of FY2011 (i.e., October 2008 through June 2011), subject to certain requirements. The Congressional Budget Office (CBO) estimates that the original ARRA provision increased federal Medicaid payments to states by about $84 billion and that the sixmonth extension in P.L. 111-226 provided an additional $16 billion.

The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as amended by P.L. 111- 152) also contains a number of provisions affecting FMAPs. Most notably, it provides FMAPs of up to 100% for certain newly eligible individuals. It also provides—subject to various requirements—increased FMAPs for certain disaster-affected states and other changes to the Medicaid program.

The FY2012 House budget resolution proposes changing the financing structure of the Medicaid program. Specifically, the proposal would restructure the Medicaid program from an individual entitlement to a block grant, starting in FY2013. According to CBO’s long-term analysis of the proposal, when compared to long-term estimates of current law, federal spending for Medicaid would be 35% lower in FY2022 and 49% lower in FY2030.

This report describes the FMAP calculation used to reimburse states for most Medicaid expenditures, and it lists statutory exceptions to that rule. In addition, it discusses other Medicaid financing-related issues, including state fiscal conditions, the temporary FMAP increase, FMAP changes in PPACA, the Medicaid proposal included in the House budget resolution, and the Budget Control Act of 2011.


Date of Report: September 9, 2011
Number of Pages: 41
Order Number: RL32950
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How FDA Approves Drugs and Regulates Their Safety and Effectiveness

Susan Thaul
Specialist in Drug Safety and Effectiveness

The Food and Drug Administration (FDA) is a regulatory agency within the Department of Health and Human Services. A key responsibility is to regulate the safety and effectiveness of drugs sold in the United States. FDA divides that responsibility into two phases: preapproval (premarket) and postapproval (postmarket). FDA reviews manufacturers’ applications to market drugs in the United States; a drug may not be sold unless it has FDA approval. The agency continues its oversight of drug safety and effectiveness as long as the drug is on the market. Beginning with the Food and Drugs Act of 1906, Congress has incrementally refined and expanded FDA’s responsibilities regarding drug approval and regulation.

The progression to drug approval begins before FDA involvement. First, basic scientists work in the laboratory and with animals; second, a drug or biotechnology company develops a prototype drug. That company must seek and receive FDA approval, by way of an investigational new drug (IND) application, to test the product with human subjects. Those tests, called clinical trials, are carried out sequentially in Phase I, II, and III studies, which involve increasing numbers of subjects. The manufacturer then compiles the resulting data and analysis in a new drug application (NDA). FDA reviews the NDA with three major concerns: (1) safety and effectiveness in the drug’s proposed use; (2) appropriateness of the proposed labeling; and (3) adequacy of manufacturing methods to assure the drug’s identify, strength, quality, and identity. The Federal Food, Drug, and Cosmetic Act (FFDCA) and associated regulations detail the requirements at each step. FDA uses a few special mechanisms to expedite drug development and the review process when a drug might address an unmet need or a serious disease or condition. Those mechanisms include accelerated approval, animal efficacy approval, fast track applications, and priority review.

Once a drug is on the U.S. market (following FDA approval of the NDA), FDA continues to address drug production, distribution, and use. Its activities, based on ensuring drug safety and effectiveness, address product integrity, labeling, reporting of research and adverse events, surveillance, drug studies, risk management, information dissemination, off-label use, and directto- consumer advertising, all topics in which Congress has traditionally been interested.

FDA seeks to ensure product integrity through product and facility registration; inspections; chain-of-custody documentation; and technologies to protect against counterfeit, diverted, subpotent, adulterated, misbranded, and expired drugs. FDA’s approval of an NDA includes the drug’s labeling; the agency may require changes once a drug is on the market based on new information. It also prohibits manufacturer promotion of uses that are not specified in the labeling. The FFDCA requires that manufacturers report to FDA adverse events related to its drugs; clinicians and other members of the public may report adverse events to FDA. The agency’s surveillance of drug-related problems, which had primarily focused on analyses of various adverse-event databases, is now expanding to more active uses of evolving computer technology and linking to other public and private information sources.

The FFDCA allows FDA to require a manufacturer to conduct postapproval studies of drugs. The law specifies when FDA must attach the requirement to the NDA approval and when FDA may issue the requirement after a drug is on the market. To manage exception risks of drugs, FDA may require patient or clinician guides and restrictions on distribution. The agency publicly disseminates information about drug safety and effectiveness; and regulates the industry promotion of products to clinicians and the public.


Date of Report: September 1, 2011
Number of Pages: 22
Order Number: R41983
Price: $29.95

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