Managed behavioral health care in the public sector: Will it become the third shame of the states?

Managed behavioral health care is increasingly being used in public mental health systems. While supporters cite potential benefits, critics describe dire consequences for individuals with serious, long-term mental illness. The situation has parallels with the major changes resulting from deinstitutionalization some four decades ago. Believing that analyzing history may prevent repeating some of its mistakes, the authors compare the antecedents, benefits, and negative effects, of deinstitutionalization with those of the public-sector managed behavioral health care systems being developed today. Lessons learned from the earlier era include the need for careful general and technical planning; for assignment of responsibility, including monitoring, to the public sector; and for a focus on clients and the special needs generated by severe mental illnesses.