The Effects of a Large-Scale Mental Health Reform: Evidence from Brazil

Abstract

This paper studies the Brazilian Psychiatric Reform, which reorganized the public mental health care provision by introducing mental health centers (CAPS) as a community-based substitute for inpatient care. Our research design exploits the rollout of CAPS in a difference-in-differences framework. We show that these centers increased outpatient mental health care production and reduced psychiatric hospitalizations. These reductions were more pronounced for long-stay admissions and among patients with schizophrenia. We find that the savings implied by fewer admissions do not offset the cost of the policy. Also, the reform did not reduce mental health mortality and it increased violent crimes. (JEL H51, I12, I18, O15)