Most people think that the era of closing large, state psychiatric hospitals and dumping the mentally ill on the streets is a thing of the past. Florida is proving them wrong by threatening to close another 350 hospital beds for its most severely mentally ill citizens.

The primary blame lies not in Tallahassee, however, but in Washington. Because their illness prevents them from obtaining private insurance through employment, many people with severe mental illness rely on Medicaid to pay for their treatment. For every dollar Florida spends on Medicaid, the federal government reimburses more than 56 cents -- unless the patient is between the ages of 21 and 65 and treatment is in a psychiatric hospital or other "Institution for Mental Diseases" (IMD).

The IMD exclusion to Medicaid unfairly discriminates against patients solely on the basis of their diagnosed psychiatric disorder.

States such as Florida fill the financing gap created by the IMD exclusion by relying on Medicaid's "Disproportionate Share Hospitals" (DSH) payments for hospitals providing care to a "disproportionate share" of poor or indigent patients. But Florida's DSH payments have been trimmed some $47 million per year from 1998 to 2002. Rather than picking up the entire tab for state psychiatric hospital care, Florida is proposing to close 350 beds that are used to treat the most severely ill.

The IMD exclusion created an incentive for Florida and other states to empty their psychiatric hospitals and provide "treatment" in general hospitals to save money. Although care of the severely mentally ill in general hospitals costs as much as $300 per day more than in state psychiatric hospitals, it costs less to the state because treatment is reimbursable with federal Medicaid dollars.

Unfortunately, general hospitals are ill-equipped to provide long-term treatment for severe mental illnesses. And having fewer beds available to treat those who are acutely ill means that the psychiatrically ill are quickly released to the streets, where many fall through the cracks and receive no treatment whatsoever. This lack of treatment ultimately costs society more not less.

Today, a person in Florida with severe mental illness is five times more likely to be behind bars than receiving treatment in a state hospital. Based on national statistics, there are at least 15,870 inmates in Florida's jails and prisons who are mentally ill. The Miami-Dade County jails alone hold nearly 1,000 mentally ill inmates. Many of these individuals are locked up because of behavior caused by their untreated illness.

There are an estimated 150,000 to 200,000 mentally ill homeless in the United States, three times the number who are receiving treatment in state psychiatric hospitals.

Medical research has established that severe mental illnesses such as schizophrenia and manic-depression are physical diseases of the brain. They are no more the fault of the sufferer than is Alzheimer's disease, Parkinson's disease or multiple sclerosis -- yet federal Medicaid does not accord them the same level of care.