California Mental Health Funding Gap Exceeds $9 Billion Annually; Services Need Expansion to Aid All Those in Need
For Release
Monday
April 7, 2025
California's county mental health systems require a substantial infusion of resources—more than $9 billion of initial additional investment—to meet the state's critical need for evidence-based outpatient mental health services among adults, according to a new RAND report.
As currently configured, the state's mental health system provides significantly less care than clinical guidelines recommend and serves only about 80 percent of those who are eligible for specialty mental health services. Both a restructuring of the services and increases in funding are required to aid those in need, according to the report.
While the state spent about $2.9 billion in 2021 to provide mental health services to adults who qualify for county-based mental health plans, more than $12 billion would have been needed to provide evidence-based mental health services to all those who had needs and were eligible for care through this system.
“This research makes clear that California's county mental health systems are profoundly underfunded to meet population needs—and this is just looking at adult outpatient care,” said Nicole Eberhart, lead author of the report and a senior behavioral scientist at RAND, a nonprofit, nonpartisan research organization.
“The resources just aren't there in terms of evidence-based guidelines,” she said. “Without added resources, counties will remain overstretched, leaving many Californians without adequate mental health care.”
The report provides the most comprehensive assessment to date of the discrepancy between existing mental health services and what is required to effectively serve California residents living with serious mental illnesses.
“Our counties are mandated to deliver comprehensive mental health care, but are vastly under-resourced to achieve this goal,” said Amie Miller, executive director of the California Mental Health Services Authority (CalMHSA), which sponsored the research. “Without increased funding, we simply can't fulfill our mission to provide accessible, effective mental health care for California's most vulnerable.”
Expanded mental health treatment is stated as a top priority for the California legislature and the governor, not least because of the vast need among the state's residents. One in 26 Californians lives with serious mental illness that results in significant impairment.
County mental health systems are responsible for providing specialty mental health treatment to those individuals with serious mental illness and significant impairment who are eligible for Medi-Cal—California's state Medicaid program—or have no other options for treatment.
Researchers from RAND were asked by state officials to examine existing spending levels and service volume associated with counties providing outpatient specialty mental health care for adults with serious mental health conditions.
In addition, researchers also estimated what spending levels and service volume would be under a fully funded system capable of providing evidence-based outpatient mental health care for all eligible adults who need services.
The analysis found that the county-based mental health systems provided outpatient mental health treatment to 509,600 adults at a cost of $2.9 billion, with an average annual cost of $5,648 per user.
If all eligible individuals received evidence-based care in a fully funded system, 598,314 adults would receive treatment at an average annual cost of $21,166 per user. The full cost of providing such care would be $12.7 billion.
Expanded coverage of evidence-based care would correspond to a 17 percent increase in individuals served, a 280 percent increase in costs per user, and a 350 percent increase in total costs relative to current service.
The report, “Funding the Service Gap for Adult Outpatient Mental Health Services in California: A Simulation-Based Cost Analysis of Specialty Care,” is available at www.rand.org.
Other authors of the study are Rachel M. Burns, Federico Girosi, Shannon D. Donofry, Jonathan H. Cantor, Roland Sturm, and Ryan McBain.
RAND Health Care promotes healthier societies by improving health care systems in the United States and other countries.
