Who will pay for health reform? Consequences of redistribution of funding for mental health care.

Current health care reform proposals will expand coverage and alter the delivery of mental health services. Much of the debate has focused on the cost of coverage rather than on the question "Who will pay?" This paper analyzes the consequences of redistribution of the financial burden of care. The analysis reveals two concerns. First, current employer-based proposals are somewhat regressive because premium costs fall disproportionately on lower-income workers. Second, the increase in federal government subsidies may lead to a significant decline in state and local government financing for mental health services. Both of these concerns have been partly addressed in reform proposals, but there are political barriers to more progressive, non-employer-based approaches and to strategies to retain state and local dollars for mental health services. These distributional issues are critical for a mental health system serving the poor and depending so heavily on state and local resources.