Cost of Health & Mental Health Care for Foster Youth By Payor and Service Type

Background/Purpose: The majority of youth in foster care have unaddressed health and mental health concerns. Between 35-45% of youth who enter foster care have an untreated medical problem, and up to 80% have unaddressed mental health problems compared with just 18% of youth in the general population. These conditions can complicate foster care stability, which is a well-known predictor of success, as well as the long-term health and well-being of youth transitioning out of foster care. These youth are already disproportionately affected by poor health and mental health, educational deficits, incarceration, homelessness, and financial insecurity. These health and mental health needs are significant contributors to high costs of child welfare, which is estimated to be $220 million dollars every day in the United States. Children in foster care incur substantial medical and mental health costs that far exceeds other children in the Medicaid system. Unfortunately, most states have not adequately addressed the health care needs of foster youth. While it is difficult to quantify the monetary and nonmonetary benefits of effective treatment, policymakers are concerned with implementing a cost-effective approach to improve outcomes while minimizing treatment expenditures.

The purpose of this study is to improve our understanding of the financial costs of mental and physical health care of youth in foster care. Using nationally representative data, this study is the first of its kind to review the costs of care by examining the cost by the payor and service type.

Methods: Data come from the household component of the Medical Expenditure Panel Survey (MEPS), a nationally representative survey of the U.S. civilian noninstitutionalized population across a 17 year period. MEPS – identified foster youth who were under 18 (n = 120) were included in analysis. This study examined healthcare utilization expenditure under Medicaid for office-based visits, outpatient visits, inpatient, and emergency department visits, prescription drugs, as well as any Medicaid expenditure. Two-part regression models for expenditure outcomes and hurdle regression models for utilization outcomes was used.

Results: The mean total expenditures were $2,230, with pharmacy expenditures contributing the highest amount (m = $701), followed by inpatient treatment (m = $509) and office-based encounters (m = $456). Poor mental health was the only factor with a statistically significant relationship with any Medicaid expenditures (OR: 4.61) as well as any Medicaid prescription expenditure.

Conclusions and Implications: The large number of medical encounters and prescribed medications among foster youth suggests that there may be pre-existing unmet needs for health and mental health care. There have been remarkable attempts to ensure child safety and to encourage family reunification and this effort has been funded by various legislative efforts. Despite funding provided by both the Adoption & Safe Families Act and the Family First Prevention Services Act, it is evident that increased expenditures are having little, or no impact on foster youth health. This study provides insight into how those funds are being spent, which could inform policy change around how and where to most effectively allocate Medicaid funding for foster youth.