Yesterday, the White House released President Obama’s FFY 2015 budget proposal. Though some historical tables will be released later this month, the proposal released yesterday highlights several new initiatives important to children, including one specifically aimed at improving behavioral health outcomes for foster children.

Foster youth are a uniquely vulnerable population who often have a range of unique physical and mental health needs, physical disabilities and developmental delays far greater than other high-risk populations. Children in foster care are more likely than other children on Medicaid to experience emotional and psychological disorders and have more chronic medical problems. In fact, studies suggest that nearly 60 percent of children in foster care experience a chronic medical condition, and one-quarter suffer from three or more chronic health conditions. Roughly 35 percent have significant oral health problems. Nearly 70 percent of children in foster care exhibit moderate to severe mental health problems, and 40 percent to 60 percent are diagnosed with at least one psychiatric disorder. For children in foster care, Medicaid is an essential resource, providing critical care, services, and supports, and helping them heal and move forward on the path to recovery.

Medicaid supports the Early Periodic Screening, Diagnosis, and Treatment (EPSDT) program and also funds long-term mental health care for children, including those in foster care, who need more intensive or restrictive services including hospitalizations and residential treatments. In recent years, Federal spending on prescription medications has consumed a greater portion of Medicaid budgets. This can be partly attributed to growing Medicaid expenditures on new and more costly psychotropic medications for children, many of which have not been tested for use in children.

Research has shown that children enrolled in Medicaid generally experience greater chronic health conditions and impairment, and have a higher prevalence of psychotropic medication use than those who are privately insured. In fact, in one study, the rate of psychotropic drug use was nearly double among Medicaid-insured children as compared to privately insured children; and, a greater proportion of Medicaid enrolled children were given prescriptions for multiple psychotropic medications, even though fewer received outpatient mental health services. Within the Medicaid program, children in foster care are much more likely to use psychotropic medications than children who qualify for Medicaid through other aid categories.

Studies have shown that kids in foster care are prescribed psychotropic medications at a much higher rate than other children – 2 to 3 times higher. For instance, a 2003 study found that in Connecticut, while children in state custody represented only 4.8 percent of the Medicaid population, they accounted for 17.8 percent of the psychotropic prescriptions filled–a 4.5 fold higher usage rate. And, youth in foster care are often prescribed two or three medications, the effects of which are not well known in combination. A 2007 GAO report identified over-prescribing of psychotropic medications to foster children as one of the leading issues facing child welfare systems in the coming years.

The President’s budget includes a new five-year initiative, a collaborative demonstration involving ACF and CMS, designed to encourage states to provide evidence-based psychosocial interventions to children and youth in foster care and to reduce the inappropriate use and over-prescription of psychotropic medications for this population.

The Medicaid demonstration is funded at $500 million over five years in performance-based incentive payments to states though CMS, to improve outcomes for children and youth in foster care, and is paired with $250 million in mandatory funding for ACF over five years to support infrastructure and capacity building.

In recent years, states have made notable progress in implementing policies and procedures to curb inappropriate prescribing practices but more remains to be done. The new Medicaid demonstration and ACF investment proposed in the President’s budget will provide critical support for states as they continue efforts to improve behavioral health services for youth in care.