Public sector spending accounts for approximately 56 percent of all mental health and substance abuse treatment services spending. In comparison, the public sector is the payor for 47 percent of total personal health care spending. Most types of mental health services are available in both the private and public sectors, and mental health consumers often receive services in both sectors. The public mental health system, which serves 6.1 million people annually in all 50 states and 5 territories, also provides a range of impatient and outpatient mental health services. The public system often serves people who lack a private health insurance or whose private health insurance has bumped up against inpatient or outpatient visit limitations.
Many states rely on counties and county-based providers to deliver services in the community.
The public mental health system has undergone dramatic changes over the last three decades. On any day in 1970, more than half a million people received services as inpatients in state-operated psychiatric hospitals. Since that time, a growing body of evidence has demonstrated that most people with mental illnesses can be treated more effectively and at less cost in community settings than in traditional psychiatric hospitals. In response, states have moved rapidly to downsize and close state hospitals. In 1993, for the first time, state spending on community mental health services exceeded spending on state hospital inpatient services.