Young adulthood is a critical time in human development. During this period, individuals transition into roles that they maintain long into the future. This transition can involve completing school; securing full-time employment; becoming financially independent; establishing a residence; entering into a stable, long-term relationship; and becoming a parent. To successfully accomplish these things, young adults must develop good interpersonal skills, sound judgment, and a sense of personal responsibility and purpose. The transition from child to adult roles can be a challenging one, and evidence suggests that this period has become longer and more complex over the years. During the 1950s, young people often completed their education and secured employment, married, and became parents all in their early 20s. Since then, the economy has grown increasingly information-driven, while wages have declined and the cost of living has increased, when adjusted for inflation. Consequently, young adults require greater technical skills and education to support themselves and may alternate living in an educational setting, with their families, or independently well into their adult years. As they transition to adulthood, some young people may experience a mental illness, which is generally defined as a health condition that changes a person’s thinking, feelings, or behavior and causes the person distress and difficulty in functioning. Some young adults develop their mental illness during childhood, while it is typical for others, such as individuals with schizophrenia, to experience the onset of symptoms as young adults. Although research shows that 50 percent of mental disorders begin by age 14, it can take several years for the illness to be detected and appropriately treated. Early detection and treatment of mental disorders can result in a substantially shorter and less disabling course of mental illness. The symptoms associated with a given type of mental illness can vary in frequency and severity across individuals and for each individual over time. Mental illnesses with particularly severe symptoms can have a dramatic impact on an individual’s ability to function in everyday life. The fatigue experienced by an individual with major depressive disorder can be so severe that it is difficult to summon the energy to work every day. The delusions associated with paranoid schizophrenia can make it impossible to maintain stable personal relationships with spouses, co- workers, or friends. Certain other mental illnesses are known for the unpredictable and episodic nature of their symptoms and the harmful effect this has on the ability to function consistently over time. For example, individuals with bipolar disorder can alternate between periods of mania, relative normalcy, and profound depression. For a young adult, such unpredictable mood swings can stymie progress in securing and maintaining a job or beginning and sustaining a long-term relationship. Individuals with mental illnesses who have particularly severe symptoms can qualify for certain federal supports. The Alcohol, Drug Abuse, and Mental Health Administration Reorganization Act of 1992 uses the term serious mental illness to identify individuals whom states are allowed to treat using federal dollars from the Community Mental Health Block Grant program. In response to the requirements of this Act that HHS develop a definition, SAMHSA defined “adults with a serious mental illness” as those who are: “age 18 and over, who currently or at any time during the past year, have had a diagnosable mental, behavioral, or emotional disorder of sufficient duration to meet diagnostic criteria specified within DSM-III-R, that has resulted in functional impairment which substantially interferes with or limits one or more major life activities.” These major life activities can be basic living skills, such as eating or bathing; instrumental living skills, such as maintaining a household; or functioning in social, family, or vocational/educational contexts. States are free to establish more restrictive eligibility guidelines for their treatment population in several ways: by narrowing the list of qualifying diagnoses, specifying the length of time the individual must have had symptoms, or requiring that individuals function below a certain level. As a result, the criteria used by states to qualify adults for public mental health services can vary. Some individuals with a serious mental illness may be unable to work because of their impairments. These individuals aged 18 or older may qualify for Supplemental Security Income (SSI) or Disability Insurance (DI) provided by SSA if they can demonstrate that their mental illness results in the inability to engage in any kind of substantial gainful activity and has lasted or can be expected to last at least 12 months. DI pays benefits related to prior earnings to those with a work history sufficient to obtain insured status. Children can receive DI benefits based on their parent’s work history. SSI provides cash benefits for those who have limited or no work history and whose income and assets fall below certain levels. Children can receive SSI benefits if they have a qualifying disability themselves. Individuals may receive concurrent payments from both DI and SSI if their work history qualified them to receive DI payments but their income and assets—including the amount of their DI payments— were sufficiently low that they also qualified to receive SSI payments. In fiscal year 2006, approximately 8.6 million individuals received DI payments and 6.9 million received SSI payments, for a total of $126.4 billion in benefits paid out over the course of the year. Many people with serious mental illness receive treatment through the public mental health system, which serves as a safety net for those who are poor or uninsured or whose private insurance benefits run out in the course of their illness. State mental health departments have primary responsibility for administering the public mental health system. In doing so, they serve multiple roles, including purchaser, regulator, manager, and, at times, provider of mental health services. Services are delivered by state-operated or county-operated facilities, nonprofit organizations, and other private providers. The sources and amounts of the public funds that mental health departments administer vary from state to state but usually include state general revenues and funds from Medicaid and other federal programs. The services provided by the public mental health system to individuals with serious mental illness have changed over time. Historically, state-run public mental health hospitals were the principal treatment option available to them. By the 1960s the reliance on inpatient care was viewed as ineffective and inadequate because of patient overcrowding, staff shortages, and other factors. At the same time, improved medications were reducing some of the symptoms of mental illness and increasing the potential for more individuals to live successfully in the community. A recovery-oriented, community-based approach to mental health treatment has since emerged. Under this approach, individuals are to receive services and supports uniquely designed to help them manage their mental illness and to maximize their potential to live independently in the community. These services and supports are to be multidimensional— intended to address not only mental illness but also employment, housing, and other issues. When feasible, these multidimensional services are provided in what is referred to as a “wrap-around” manner—that is, they are uniquely targeted to the nature and extent of each individual’s needs. When services are provided by multiple agencies, those agencies are to coordinate their activities and funding so that the individual experiences the services and supports seamlessly—as if from one system, not many. Services and supports relevant to young adults with serious mental illness that are funded or provided by federal programs include mental health treatment, education and employment assistance, housing, and income support. In all, the Judge David L. Bazelon Center for Mental Health Law (Bazelon) identified 57 relevant programs in 2005. (See app. II.) These programs are administered by a variety of agencies, including DOJ, HHS, Education, HUD, Labor, SSA, and U.S. Department of Agriculture (USDA). The federal government funds mental health services that are provided by programs administered by state agencies. Table 1 lists five examples of such programs. In particular, Medicaid and the Community Mental Health Block Grants are major sources of federal funding for mental health services for young adults with serious mental illness. Medicaid is a health insurance program for certain groups of low-income individuals, including elderly and disabled individuals and children. Funded jointly by the federal government and the states, and administered federally by the Centers for Medicare & Medicaid Services (CMS), Medicaid is the primary federal payer for public mental health services provided by states. In order to receive federal Medicaid funding, states are required to provide certain broad categories of services, such as inpatient and outpatient hospital services and physician care. Reflecting their medical focus, Medicaid mental health services have traditionally been provided by physicians, including psychiatrists, who work at hospitals, clinics, and other institutions. While Medicaid will cover services provided to individuals in facilities with 16 or fewer beds, the program specifically excludes coverage provided in large state-run psychiatric institutions for adults aged 22 through 64. States may choose to provide certain optional categories of services. For example, states may use the Medicaid “rehabilitation option” to cover a broad range of services related to rehabilitation from a mental illness or other condition or disability. States may also participate in certain Medicaid demonstration programs that allow them greater flexibility in the services they choose to cover. Medicaid spending by the federal government and the states totaled $317 billion in 2006. To supplement the Medicaid program, CMS administers several smaller grant programs that states can use to fund improvements to their mental health systems. For example, CMS established Medicaid Infrastructure Grants to support state efforts to enhance employment options for people with serious mental illness and other disabilities. States may use these grants to plan and manage improvements to Medicaid eligibility determination and service delivery systems or to improve coordination between the state Medicaid program and employment-related service agencies. Nearly $43 million was available to states under this grant program in fiscal year 2008. CMS also administers Real Choice Systems Change Grants to help states and others build the infrastructure that will result in improvements in community-integrated services and long-term care supports for individuals with long-term illnesses and disabilities, such as serious mental illness. The goal of the program is to help these individuals live in the most integrated community setting suited to their needs, have meaningful choices about their living arrangements, and exercise more control over their services.