Paying for Mental Health Treatment Can Bankrupt Patients’ Families

Although the emotional toll of mental illness on a family is incalculable, the dollars and cents that must be spent can be counted. As Sheilah Hanson and her family learned, the total can amount to financial ruin.

The Hansons’ introduction to mental health care funding began in 1995. Tristan, their only child, had graduated from McGeorge Law School and was working at his first job when his mother began to notice wounds on his arms.

Realizing that he was suicidal, Tristan checked himself into a private hospital. He later was diagnosed with manic depression and schizo-affective disorder. He used pocket knives, paper clips, combs, whatever he could find, to hurt himself, even when he was on suicide watches.

Tristan had health insurance through his job. But although the policy would have covered hospital stays for a heart condition or some other physical problem, like most plans it did not include hospitalization for mental illness.

“It was a horrible surprise,” said Sheilah Hanson, a paralegal. “Who would think about this stuff? You don’t think about it unless you’re living it.”

Because Tristan was an adult--he is now 33--his parents’ health insurance policy did not cover him. So the Hansons did what most families do. They paid until they could pay no more.

The biggest cost was the hospital bills. There have been two extended stays, more than 20 days in all, at a cost of more than $30,000. Then there were sessions with psychiatrists and psychologists, sometimes twice a week, at $85 and $65 a visit.

Tristan lost his job and filed for bankruptcy in 1996. His parents filed for bankruptcy in 1997. At an age when most people contemplate retirement, the Hansons have little in savings and an adult son living at home. Unable to work, Tristan lives on government disability checks, plus disability insurance from his old job.

Treating a severe mental illness can cost $50,000 a year or more in hospital care, medication and visits to doctors and therapists, said Clarke Ross of the National Alliance for the Mentally Ill in Arlington, Va.

“Most families take second mortgages, hock everything they can, do everything they can to supplement their private insurance,” Ross said. “They try to stay out of the public mental health system. They want to use their own private doctors and hospitals.”

But the mental health benefits of private insurance are, in most cases, very limited. If the disease hits when a child is under 21, coverage usually lasts through the first episode or two, then is exhausted.

Benefits generally include 30 days of hospitalization a year, 20 visits to a therapist and $10,000 in assorted other expenses. They might or might not cover drugs, which can be expensive. For example, Clozaril, one of the newer anti-psychotic medications, costs $4,500 a year.

The financial picture for people such as Tristan Hanson has recently improved. The federal government and 28 states have approved mental health parity legislation that requires health insurance policies to cover mental illness just as they cover the costs of physical illness. California’s legislation, written by Assemblywoman Helen Thomson (D-Davis) and state Sen. Don Perata (D-Alameda), was approved this year and will take effect in July.

The new law assumes that early treatment averts major problems later in life. The bill makes it easier for families to get through the initial years of an illness financially, when their children are covered by their policies.

Severely mentally ill adults often are unable to work and so cannot obtain health insurance through a job. They must become indigent to qualify for federal Supplemental Security Income, generally $676 a month in California, and health benefits through Medi-Cal.

“The public system is a safety net, but only when they hit rock bottom,” Ross said.

Government benefits are not particularly secure, as Cyd Maxie, a homeless mentally ill woman in San Francisco, learned in 1997. She became one of the more than 125,000 people in the U.S. to lose Supplemental Security Income benefits as a result of Congress’ overhaul of the welfare system.

Evicted from a hotel for the mentally ill as her behavior deteriorated, she subsisted on San Francisco County’s general assistance program. That last-resort plan gave her $75 every two weeks, plus rent payments, for a total of $345 a month.

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A year ago, Maxie found her way to a legal clinic for homeless people in San Francisco. With the help of a lawyer for the poor, John Hotz of the Pension Rights Project, she got her federal benefits restored in March, including back payments of $3,965.

Even so, she has not been able to find subsidized housing, and ends her days by propping a wooden pallet in the doorway of a Howard Street warehouse, then curling up in a sleeping bag.

“I just hope no one hits me on the head with a brick or throws a match on me,” she said.

In Sacramento, some lawmakers are pressing for more public money for mental health care. The state now spends about $2.4 billion a year, including $1 billion that it gives to counties. But public spending on mental health is not like spending on most social programs. Welfare and education, for example, are “entitlements.” As need expands, the government pays more.

Not so with mental health care, at least for adults. Although funding has increased in recent years, the state sends counties a set amount each year. So counties, which are responsible for providing the care, have no incentive to bring more people into the system.

“The mental health care funding policy is incredibly ignorant,” said Thomson, a former psychiatric nurse. “It doesn’t acknowledge that putting a little money into a system at the front end to make it work saves a whole bunch of money later.”

Assemblyman Darrell Steinberg (D-Sacramento) and others are pushing the state to keep up its end of the mental health promise. Steinberg contends that California needs to spend at least $350 million more a year on community mental health care.

Retired Court of Appeal Justice Leonard Friedman, who worked on early efforts that led to emptying state hospitals in the 1960s, told Steinberg in a letter that California lawmakers had “formed a moral contract” that the state would continue to finance the care of the mentally ill.

“The Legislature’s failure to subsidize county care constitutes a breach of that contract,” he wrote.

Times staff writer Catherine Saillant contributed to this story.