Can additional funding improve mental health outcomes? Evidence from a synthetic control analysis of California’s millionaire tax

Abstract

California is the only one of its peers with a state-wide tax earmarked for mental health programs. The voter-approved levy applies to personal income above $1 million and has generated over $20 billion since 2005. But whether the additional funding improved population mental health remains unknown. This study applies the synthetic control method to the CDC’s National Vital Statistics System data to determine how the tax affected suicide deaths in California. Findings show that the state’s suicide mortality rate increased more gradually after the tax’s implementation than it would have otherwise. By 2019, the cumulative impact was approximately 5,500 avoided deaths. Multiple robustness and sensitivity checks confirm that result. However, the effect did not appear immediately, nor was it present within all demographic groups. Nevertheless, additional revenue was associated with improved mental health in California. Other governments may likewise yield beneficial outcomes.

Earmarked Taxes for Mental Health Services in the United States: A Local and State Legal Mapping Study

“…The California tax has been the focus of more research than other taxes identified. For example, studies have used quasi‐experimental, multistate difference‐in‐difference designs to evaluate the effects of the tax on suicide death 53 ; single‐state pre‐post designs have compared client and provider outcomes between mental health clinics that did and did not receive tax revenu, 54 used claims data to assess the effect of the tax on the reach of prevention/early intervention services, 55 explored barriers and facilitators to the sustainment of evidence‐based treatments following tax adoption, 56 and evaluated a statewide mental illness stigma reduction campaign funded by the tax 57 . A study also assessed whether the mental health tax prompted households with income exceeding $1 million to leave the state, finding little evidence that the tax had this effect 58…”

“…There is tremendous opportunity to develop research in this area. With the exception of California's millionaire's tax [52][53][54][55][56] -which is unique in terms of its design and the amount of revenue it generatesvirtually no research has assessed the impacts of earmarked taxes on mental health, clinical, or service outcomes. Studies have also generally not assessed policymaking or implementation processes related to these taxes or examined factors that could improve tax design or implementation outcomes.…”

Perceptions Matter: Quasi-Experimental Evidence on the Effects of Spain's New Minimum Income on Households' Financial Wellbeing

“…Following other studies using RASCM (e.g. Bouvet, Bower and Jones, 2022;Charotti, Palma and Santos, 2022;Esaka and Fujii, 2022;McGinty et al, 2022;and Thom, 2022), I do not include covariates other than the pre-treatment outcome variable.…”

A policy implementation study of earmarked taxes for mental health services: study protocol

“…The California Mental Health Oversight and Accountability Commission oversees highly structured spending and reporting requirements. Studies have assessed the impact of the California tax and tax-funded programs on effectiveness outcomes (e.g., suicide death, mental illness stigma) [ 46 – 48 ] and implementation outcomes related to the adoption and sustainment of tax-funded services [ 49 , 50 ]. Prior research has not, however, focused on the processes of tax implementation in California, perceptions of tax design, or perceptions of strategies that could improve implementation.…”