Mental health experts weigh in on measure to make sweeping changes in mental health, housing and addiction services
On March 5, California voters will decide the future of a tax that millionaires pay to help fund state mental health programs. Since 2004, when voters approved the Mental Health Services Act (MHSA), the tax it created has poured a total of $31 billion into the state’s poorly funded mental health system. Each year, MHSA revenues provide roughly one third of the money that counties have available to spend on mental health services.
But now, key supporters of the original measure, including the elected official who drafted it 20 years ago, say it’s time to make sweeping changes in the way it works to ensure that the money goes where it is most needed – to make a dent in the enormous number of people with severe mental illness who are living in plain sight on California’s streets.
Sacramento Mayor Darrell Steinberg was a state legislator when he authored the 2004 measure that levies a 1% tax on personal income above $1 million. Now Steinberg is supporting Governor Gavin Newsom’s plan to reform that levy by increasing state oversight, boosting the small portion of revenues from the tax that goes to the state and requiring counties to spend a larger portion of their share on housing and services for people with severe mental illness.
Proposition 1 would require counties to dedicate 35 percent of MHSA dollars to treating mental illness associated with homelessness, 30 percent to housing to support such treatment, and 35 percent to behavioral health services and supports. The measure also would allow MHSA dollars to pay for substance abuse services for people who don’t also have a diagnosed mental illness.
These changes would eliminate the current mandate for counties to spend money on early intervention and prevention services (although they could choose to do so from their behavioral health services dollars). Gone completely: a category called innovation, which directed 5% of revenue to incentivizing the creation of new models of care and collaboration.
Voter approval or rejection of Proposition 1 will not affect the taxes paid by Californians with incomes above $1 million a year. The state will continue to collect a penny on every dollar they earn above their first million, and the tax should continue to generate $3 billion to $4 billion annually, although receipts rise and fall in concert with the financial markets and the capital gains of the wealthy and have fallen well below expectations before.
Prop 1 also includes a $6.4 billion bond, two-thirds of which would go to build new treatment facilities for people with mental illness and addictions. The rest would go to build permanent supportive housing, with half of the housing dollars earmarked for veterans.
The looming vote is the latest effort by California to reform a mental health safety net that has, over the decades, failed spectacularly at meeting the needs of distressed Californians.
In the 1960s and 1970’s, the state shut its psychiatric hospitals and made it made it more difficult to confine people involuntarily, instead favoring voluntary treatment in community facilities. But the state’s failure to adequately fund community programs, combined with the massive loss of affordable housing, fueled a surge in instability and homelessness among people with mental illness that worsened over time.
Now, as voters prepare to pass judgment on Proposition 1, MindSite News asked six key players in the state’s constellation of mental health services to weigh in on its likely impact. Will it finally succeed in helping the state address a trio of crises: worsening mental illness, homelessness and addiction?
1. The Thought Leader
Thomas Insel enrolled in college at 14 and by 17 he had finished his pre-med requirements on his way to becoming a neuroscientist and director of the National Institute of Mental Health from 2002 to 2015. Then he left the slow-moving government world and dove into California’s quick-paced startup scene. In 1999, he advised Governor Newsom on mental health reform and in 2021, he became a co-founder and early backer of MindSite News. Along the way, he also wrote a book, Healing, that examined the failings of the mental health system – and his ideas on how to fix them.
Today, Insel is no longer directly involved in either of those efforts but devotes his time to start-up companies he has helped start and to advising both companies and nonprofits working in the mental health space. He offered this expert’s overview of what he described as California’s three concurrent mental health crises.
The first and most visible crisis is the explosion of people on the street who are experiencing a serious mental illness, including schizophrenia and bipolar disorder. It’s not, he says, that there are more people with serious brain disease: “This is a failure of the medical system to identify and deliver efficacious treatments.”
The second crisis is the spike of overdoses and deaths from substance use disorders, from alcohol to methamphetamine to the most recent and deadly, fentanyl. Insel notes that California was less affected than Appalachia by the opioid epidemic but was unprepared for the lethality of fentanyl, which is 100 times more potent than heroin. More than 112,000 Americans died of drug overdoses in 2023, nearly twice as many as in 2020, with no sign of a slowdown.
Finally, Insel said, a youth mental health crisis began to emerge in 2010, driven in part by social media and “COVID really put this on steroids.” From 2000 to 2021, suicides for people age 10 through 24 jumped 52%, according to the Centers for Disease Control and Prevention.
Insel took off his professor’s cap to declare himself “a huge fan of what this governor has done” to confront the state’s mental health woes, taking Newsom’s side on a key point – the idea that California’s 58 counties have too much control over the mental health services it offers to residents in need.
“As far as I know, California is the only state out of 50, certainly the only large state, in which counties have so much authority over their behavioral health care systems,” Insel said. “It’s hard to play the piano when you have 58 fingers on the keys.”
But some county officials sing a different tune, arguing that the state ties their hands by attaching too many strings to the money it sends to local entities.
2. The Proponent
Karen Larsen serves as chief executive of the Steinberg Institute, a Sacramento power center that advocates on mental health policy issues and was founded by Darrell Steinberg.
Before joining the Institute two years ago, Larsen was director of Health and Human Services in Yolo County. In that role she ran public health, behavioral health, and social service programs for 220,000 people, near the midrange of California’s 58 counties in terms of population.
Larsen believes Prop 1 would set California up to do statewide what Yolo did on a small scale – “braid together” services that are now separately funded and delivered to deal holistically with mental illness, homelessness, and substance abuse.
“The nuance here in California and several other states is that we pass responsibility to the counties to deliver on these state-driven initiatives and ensure their successful implementation,” she said. “Historically, that just hasn’t happened.”
Notably, California started closing state psychiatric hospitals in the 1960s but failed to invest in community health with the result that more mentally ill people became homeless or landed in jails. Larsen argues that while the MHSA has raised billions of dollars in additional funding, it has failed to make clear that its priority was to help the sickest of the sick – homeless people with severe mental illness – to get off the streets. It also failed to hold counties accountable for how they measure and report the results of their efforts.
She said that over the last 10 years, the amount of money going to counties for behavioral health from all sources, including the MHSA, more than doubled – from $7.5 billion in Fiscal Year 2011-2012 to $16.7 billion in FY 2021-2022. But “our access to care, the people who actually receive the care, that percentage hasn’t increased at all,” Larsen said.
“There are counties that would say we don’t need your help or guidance, give us local control and leave us alone.” Larsen said. “The state is saying no, these are taxpayer dollars, homeless numbers have increased dramatically, and a significant percentage of folks experiencing homelessness are struggling with mental health and substance use disorders. We can no longer accept the status quo from counties that have failed to prioritize these populations.”
3. The Iconoclast
In his first annual evaluation as director of Los Angeles County’s Department of Mental Health, Jonathan Sherin got top marks for performance, coupled with advice that he was moving so fast that he and his staff might burn out. “I saw it a bit like a badge of honor, but it turned out to be a cautionary tale,” said Sherin, who resigned in 2022 after six years heading a department that serves a county of 10 million people.
Sherin says his strategy still guides the county’s 10-year plan to serve its 250,000 low-income clients, but he derides the power of “bean counters” at the state or federal level to undermine it. He offers an example: A social worker could spend two hours on a sidewalk talking to a client who’d been repeatedly forced into hospitals and jails trying to convince them to enter a program. “In many cases that’s 10 times more important than a psychiatrist writing a prescription,” he says. But months or years later, a county or state bureaucrat might decide it wasn’t a reimbursable expense and shouldn’t be paid.
The brokenness of the current system has been obvious for years, Sherin said, and especially in L.A. County, which is home to more than 69,000 homeless people. Before the pandemic, some governmental and nonprofit players had been considering fixes he favored: giving counties money, specific performance goals and a free hand to meet them. This could include requiring a county to get 10% of homeless people with psychosis into treatment and housing each year.
If the mental health director wants to buy hotels for housing, or use more peer counselors than licensed therapists, fine. “If you succeed in hitting the target, tell us how you did it,” Sherin said. “If you don’t, you’re fired.” Instead, Sherin says, Prop 1 would prescribe more spending rules and recordkeeping requirements and launch big plans in motion, like the $6.4 billion housing bond — despite the fact that a similar, $2 billion housing bond approved by voters in 2018 has built only a fraction of the 2,000 units promised.
“This gets back to a cynical thing, which is that certain entities like the developers, have an undue influence,” Sherin said.
Sherin says the state could rehouse and help stabilize people with severe mental illness quicker, faster, and cheaper by bolstering and expanding the network of board and care homes that sprang up to serve mentally ill people in the late 1960s, when California was closing its state mental hospitals. The board-and-care owners – often mom-and-pop operators – are paid with federal money supplemented by state dollars.
A recent Los Angeles Times story found that only one-quarter of the 3,000 board and care homes in the county would accept mentally ill residents, opting instead to take in people over 60 with developmental disabilities, whose care is reimbursed at significantly higher rates.
“These are essentially small businesses,” Sherin said. “And they’re disappearing off the face of the earth.”
Sherin sits on the board of the Steinberg Institute. He likened his relationship to its founder as “brothers who love and hate each other,” and said that during the six years he ran LA County’s mental health system, “I spoke my mind, which I’m doing right now.”
4. The Ambivalent
In 1999, psychologist David Pilon joined a pilot program funded by legislation authored by then-Assemblymember Darrel Steinberg. It developed a model to provide funds that program operators could spend with considerable discretion to help people who were homeless and experiencing serious mental illness stay out of emergency rooms and jails and start on the road to recovery.
Efforts to achieve these goals could go far beyond standard psychiatric assistance by employing unconventional tactics such as rewarding clients who stuck with the program by, for example, taking them to a concert at the Hollywood Bowl.
In 2004, satisfied that the model’s “whatever-it-takes” approach had achieved both objectives, Steinberg and Rusty Selix, an attorney and mental health advocate, coauthored the Mental Health Services Act (MHSA) to create a funding stream that would help roll out these techniques to all 58 California counties.
Today, Pilon is deeply torn about Prop. 1 and its efforts to provide real help and effective services to the most desperately ill and needy people in California. Like Tevye, the lead character in Fiddler on the Roof, he can see both sides.
One the one hand, his central critique of the prevailing approach to mental health services is that it relies too much on “meds and beds.” “There’s this belief that if we could just get everybody to take their medications, everything would be fine,” he says.
Pilon knows very well the complexities of helping this group of people – homeless, severely mentally ill people who almost universally have histories of trauma and negative experiences with police and mental health providers. The keys, he says, are persistence in reaching out, again and again, to bring them into services, and then helping them manage those services, which are offered by different people at different places and times.
The full-service partnerships (FSPs) that provide this kind of service were endorsed and amplified with MHSA funds and they “do an excellent job with care coordination,” he says. Prop. 1’s revisions of the program would likely enhance these partnerships and that, he adds, would be a good thing.
On the other hand, too little attention is now paid to helping people with what Pilon calls psychosocial rehabilitation – “helping people to establish purpose and meaning in their lives and a sense of belonging in their community. Every human being needs purpose and belonging, but somehow our system is set up so that we just address their crisis.”
“The goal,” he adds, “is advanced recovery, where even if a person has an underlying mental illness, you’d never know because they keep it under control and they have lives with purpose and meaning and belonging.”
And that’s where the FSPs fall short, he says.
“I would virtually guarantee that less than 1% of all FSP funds are being used on those psychosocial rehabilitation services that help people to find jobs or integrate into the community and that sort of thing.” And he worries that Prop. 1 will do nothing to change that.
Although Prop. 1 funds could still be used for this kind of psychosocial work, Pilon worries that counties facing a bevy of state-imposed changes – from the major changes now rolling out to Medi-Cal, as well as from Prop. 1 – will be hard-pressed to manage all this at scale.
In the end, despite his misgivings, Pilon said he’s supporting Prop 1 because it includes housing to help people transition from homelessness. “When we started our pilot program in Long Beach, we could find affordable housing,” Pilon said. “Kudos to this governor for realizing that without it, everything else we do is a Band-Aid.”
5. The Stakeholder
Le Ondra Clark Harvey is chief executive officer of the California Council of Community Behavioral Health Agencies (CBHA), the association that represents nonprofit agencies large and small that contract with counties to deliver services for mental health and substance use disorders to 1 million people a year.
That makes CBHA’s members stakeholders in the workings of the MHSA, which was created by the council’s founder, Rusty Selix, and Darrell Steinberg back in 2004. Selix died in 2019.
“They had a great partnership,” Clark Harvey said. “Darrell was the champion and Rusty was the nuts and bolts.”
Clark Harvey said CBHA has taken no position on Prop 1 given that the initiative would affect so many of its members either positively or negatively. She thinks it’s likely to pass, though, and when it does, she said, “we will work with the state on the details to ensure the smoothest possible transition for our members and the clients they serve.”
That transition will be far from easy. Her member agencies are already buried under “an avalanche of change” as a result of CalAIM – the sweeping changes the Newsom administration is bringing to Medi-Cal, the state’s version of the federal Medicaid program. The goal of CalAIM is to broaden the range of services available to 15 million low-income Californians – especially those who are struggling with mental illness and homelessness.
The reforms, already approved by the federal government, should allow counties to pay for nonmedical services such as housing a formerly homeless person or peer support for someone coping with mental illness or addiction. But providers don’t yet know exactly which new benefits CalAIM will cover and have been discovering – to their chagrin – that it doesn’t pay for some services they’d been offering, such as driving to visit clients who can’t reliably make it to the office, or spending time to help people fill out forms. These changes have already led some agencies to shutter programs.
“The MHSA was never meant to provide backbone funding,” Clark Harvey said. “It was to pay for the ‘whatever-is-necessary’ part of programs” that wouldn’t qualify for Medi-Cal funds.
Selix came to regret leaving substance use disorders out of the original MHSA and advocates, including Clark Harvey, have been talking for years about the need to add it, coupled with much more accountability in how funds are used. If passed, Prop 1 will now do that – along with building housing and treatment facilities. But in the process, it would also shrink the funds available for its original mental health mission, including services for children, prevention and early intervention, crisis response and peer support.
“I get that you can’t help a person who doesn’t have a place to live,” Clark Harvey said. “But to do that at the expense of mental health [services] seems like robbing Peter to pay Paul.”
6. The Pragmatist
Phebe Bell runs the Behavioral Health Department in tiny Nevada County, whose eastern border abuts the state of the same name. As a former president of the California Behavioral Health Director’s Association, she has represented all 58 counties, big and small, and knows that the departments she and her colleagues run are at the center of attention statewide.
“I can’t speak to what it’s like to operate a behavioral health system in Los Angeles County, it’s such a massively different beast,” she said. What she can offer is a common-sense, day-in-the-life view from her small-county perch.
Bell shares the sense of frustration Californians feel at the continuing spread of homelessness, often coupled with mental illness and substance abuse.
“We live in one of the wealthiest countries in the world and one of the wealthiest states in the country, yet we have people living in deplorable conditions,” she said. “That’s not right. It must change.”
But as she looks at the onslaught of changes occurring simultaneously, she sees the homeless housing mandate as “the wrong solution to the right problem,” CalAIM as a forward-thinking policy that would deliver benefits after a “painful transition,” and the linkage of substance abuse with mental illness and homeless as long overdue.
“I would be joyful if it came with new money,” she said.
But she also thinks that behavioral health directors are being handed a series of near-impossible tasks: Like building housing for homeless people when almost no one in California has been able to. Delivering ever more services while being unable to find or pay for the clinicians and other workers that would deliver then. Not to mention overhauling billing systems to comply with new CalAIM requirements and those that may come from Prop. 1.
In the long run, though, she’s optimistic about these new directions. Once counties and providers learn the ins and outs of CalAIM, she says, they’ll be able to improve and extend the lives of the sickest of the sick. And she believes the changes California is making to the entire system – jails and prisons included – can create a model that leads the nation.
“People with mental illness die 20 years younger than people without, but they don’t die from their mental illness, they die from their untreated diabetes or hypertension,” she said. CalAIM may finally help correct this longstanding failure of the mental health and medical systems to work together.
One exciting change: Last year, California became the first state in the nation to win approval from the federal government to enroll incarcerated people onto Medicaid starting 90 days before their release. Jails and prisons are now creating CalAIM billing systems to handle that, she said, and the state has started pilot efforts to learn whether “people’s overall health gets better and care costs go down when you link them from jail to treatment,” Bell said.
She acknowledges that more money has been more flowing into the system. But she also says the complexity of the problems facing behavioral health departments – the increased numbers of unhoused people in a state with a massive housing crisis and the “horrific numbers of people dying of overdoses” – has outstripped the additional funds.
“The behavioral health system is filled with people working incredibly hard to treat people who have complicated complex needs,” Bell said. “We’re doing the best we can with what’s available.”
