The opioid epidemic, the high prevalence of mental illness among prison inmates, and the national shortages of psychiatric beds and providers are constant reminders of the poor state of American mental health care. Not only is the U.S. mental health care system fragmented and disconnected from the broader health system, it also faces numerous distinct problems, such as severe resource constraints, low provider reimbursement rates, and long-standing stigma. In light of these problems, reform of mental health regulation is crucial. One controversial feature of the national mental health regulatory regime is the decades-long exclusion of Medicaid payments for so-called Institutions for Mental Diseases (IMDs). The IMD exclusion prevents state governments from using federal Medicaid dollars to pay for adult inpatient care provided in most long-term mental health care facilities. The regulation dates to the original Medicaid legislation—the Social Security Amendments of…
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