People with mental and/or substance-use (M/SU) problems and illnesses receive care from a range of provider organizations and individual clinicians—most often from private providers operating in market settings. However, while the majority of individuals have their general and mental health care paid for by private insurance, most payments for M/SU treatments are made by government, either in the form of payments from public insurance (Medicare and Medicaid) or through states’ direct purchase of services from providers. This section reviews the key features of the marketplace for M/SU health care that distinguish it from that for other types of care.

Recent estimates suggest that payment for roughly 63 percent of mental health care and 76 percent of substance-use treatment is made by public sources (Mark et al., 2005). Figure 8-1 shows the distribution of spending for M/SU care by major sources of payment as of 2001. In the case of mental health care, the majority (54 percent) of all public spending (direct public purchasing and public insurance) makes use of health insurance

FIGURE 8-1 Financing methods for mental health/substance-use care in 2001.

SOURCE: Mark et al., 2005.