State Impacts of the One Big Beautiful Bill Act of 2025
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Key Takeaways:

  • States are increasingly prioritizing behavioral health interventions for incarcerated individuals, with 56% of state prison populations indicating mental health problems, as lawmakers seek to reduce recidivism and social service reliance post-release.
  • Legislative approaches vary from initial judicial encounters through mental health treatment courts and competency evaluations to specialized programs providing behavioral health support during incarceration and pre-release Medicaid services.
  • Mental health treatment courts are expanding across states as alternatives to traditional judicial systems, offering specialized rehabilitation approaches that connect individuals with treatment options and address underlying conditions contributing to criminal behavior.
  • Future investment in behavioral health programs for incarcerated populations faces uncertainty due to federal revenue pressures and potential budget constraints, particularly as states confront Medicaid funding reductions in coming years.


In recent years, states have become increasingly focused on behavioral health diagnoses and interventions for incarcerated individuals. Research shows that 56% of all incarcerated people in state prisons nationwide have indicated some form of mental health issue. In prioritizing behavioral health support, states believe they can reduce criminal recidivism and potential reliance on social services once released.    


Legislative Approaches to Behavioral Health in Criminal Justice

In 2025, state legislatures are taking different approaches to addressing behavioral health in the criminal justice system. States like Colorado, Georgia, and Missouri enacted legislation this year focused on addressing an individual’s initial encounter with the judicial system through screenings of one’s mental capacity to stand trial and allowing mental health treatment courts to exist in any circuit court. 

Mental Health Treatment Courts Expand Across States

A range of states introduced legislation this session relating to mental health treatment courts including, but not limited to California, Maine, Missouri, New York, Tennessee, Oregon, and Wyoming. Missouri’s implementation of mental health treatment courts aims to improve rehabilitation outcomes through an alternative to the traditional judicial system. In St. Louis, Missouri eligibility for these courts requires that defendants have clear indicators of mental illness, have been charged with a non-violent felony offense, and can competently agree to participate in the 14-month program. This style of court adopts a more specialized approach, connecting individuals with treatment options and addressing potential underlying conditions that contribute to criminal behavior.  

Competency Evaluations and Restoration Services

In May, Georgia enacted legislation requiring an additional evaluation of an individual’s ability to regain competency to stand trial within 90 days after being charged with a misdemeanor DUI. This bill is one of at least 25 bills that were introduced across the country this legislative session related to a defendant's competency to stand trial and restoration services. Colorado passed legislation allowing the state department to continue providing inpatient restoration services for up to 90 days after charges are dismissed for a person determined incompetent to proceed. This type of legislation intends to authorize states to provide treatment to incompetent individuals while retaining jurisdiction over the accused. 


Behavioral Health Support During Incarceration

Other states, such as Washington, Wyoming, and Florida, have passed legislation this year focused on behavioral health support once incarcerated. WA SB 5388 requires the implementation of standards and annual inspections of behavioral health services provided to individuals in correction facilities. Wyoming enacted WY SF 160 which expanded court-supervised treatment programs to include mental health treatment. FL SB 168 authorized communities to apply for grant funding to establish mental health diversion programs to divert defendants from jails to treatment centers. 


Pre-Release Medicaid Services and Federal Approval

This session, Washington built from existing Medicaid authority to provide pre-release services to eligible juveniles. This continues the work that 24 states have received federal approval for or are seeking federal approval to extend Medicaid coverage pre-release. While an increasingly popular trend over the past four years, it remains unclear how the current federal Administration will respond to requests to provide pre-release Medicaid services to incarcerated individuals. During the first Trump Administration, the Centers for Medicare & Medicaid Services had previously denied requests from the District of Columbia and Illinois, for instance, to waive the inmate exclusion policy which would have authorized pre-release services. 


Budget Pressures Threaten Future Investment

Given budgetary pressures states are likely to face, particularly as it relates to Medicaid and health-related programs over the coming years, it’s unlikely that investments in behavioral healthcare for incarcerated individuals will continue at the same pace as they have in recent years.


Tracking State Behavioral Health Legislation 

MultiState’s team is actively identifying and tracking behavioral health care issues so that businesses and organizations have the information they need to navigate and effectively engage. If your organization would like to further track health care or other related issues, please contact us.