Medicaid Coverage of Psychological Treatment Prevents Crime

Does expanding access to mental healthcare reduce crime rates? Prior research indicates that targeted psychological treatment programs prevent criminal behavior, but whether expanding access to treatment prevents crime depends on who seeks treatment and whether the treatments people seek for themselves are effective. To shed light on this question, I study five states that expanded their Medicaid programs to cover adult psychological treatment between 2004 and 2010. I show that the coverage expansions reduced the index crime rate by 7.8% of the pre‐coverage expansion mean crime rate. The social cost of just the property crimes averted conservatively total to 10% of the total cost of non‐disabled, non‐elderly adult Medicaid spending during this period, and appear to be of similar magnitude to the cost of psychological treatment coverage itself. Beyond effects on crime, the coverage expansions increased employment in industries related to psychological treatment without generating offsetting reductions in employment among mental health specialist physicians or at physician's offices more broadly. Overall, my results indicate that broad expansions in access to mental healthcare can reduce crime rates, even in the absence of targeted efforts to encourage take‐up among persons at a high risk of criminal behavior or efforts to tailor the services covered toward a goal of crime‐prevention.