The Murphy bill would reorient all of this and create a new HHS assistant secretary for mental health and substance-abuse disorders who would lead federal mental-illness efforts. The secretary would have to be a medical professional and would be responsible for promoting the medically oriented models of care adopted by the National Institute of Mental Health, or NIMH.

An example: One NIMH project showed that identifying the first sign of psychosis in an individual, and immediately treating it with lower-dose medication, could prevent a patient from developing full-blown schizophrenia and allow a functioning life. These are the treatments that federal dollars need to be supporting.

The new assistant secretary would take over the grant process; community centers that want money will have to prove they are meeting evidence-based standards. The new position will also be responsible for collecting data on treatment outcomes and shifting federal efforts based on the results.

The Murphy bill also uses grant money to push states to modernize their mental-illness laws. Some 23 states still allow for involuntary commitment only if a mentally ill person is an imminent danger to himself or others. This standard is nearly impossible to meet, and even psychotics are often able to present a brief façade of normality. Many are unaware they're even ill and won't voluntarily get help.

Community mental-health centers would only receive grants if their state's commitment laws include a "need for treatment" standard, which gives families and physicians greater ability to get help for the mentally ill. Grants would also flow only to centers in the 44 states that have assisted-outpatient treatment laws, in which courts can require the mentally ill, as a condition of remaining in a community, to receive treatment. New York's Kendra's Law has been a model for how these outpatient treatment laws can help the most vulnerable and save lives.

The bill includes other pressing reforms, like removing the federal bias against hospital psychiatric care. Medicaid currently won't reimburse for psychiatric care in any hospital that has more than 16 psychiatric beds. This restriction has led to the dismantling of psychiatric hospitals, releasing the mentally ill to commit crimes and receive subpar treatment in jails. Seventy years ago the U.S. had 600,000 inpatient psychiatric beds for a country half its current population. Today it has 40,000.

A similar shortage of psychiatric professionals—especially for children—has meant the average time between a first episode of psychosis and initial treatment can be 110 weeks. The Murphy bill addresses this by advancing tools like tele-psychiatry, which links primary physicians in underserved areas to psychiatric professionals. Speaking of children, the law finally fixes the federal privacy law known as HIPAA, once again allowing mental-health professional and families to share information about loved ones.

The Murphy legislation also addresses one of the more destructive forces in the mental-health system: the legal lobby. Many Americans may be shocked to know their tax dollars are funding a small army of self-anointed "advocates" who encourage the mentally ill to avoid treatment, and who fight parental and court attempts to get them care. The Murphy bill stops this funding. It also gives physicians legal safe harbor to volunteer at understaffed mental-health centers, something many currently won't do for fear of malpractice suits.

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These provisions may inspire the opposition of some Democrats beholden to the trial bar and ACLU. The Obama Administration may also resist a GOP initiative, and libertarians may oppose giving professionals more authority to intervene with care or object to creating a new government position.

They should think anew. The alternative is Vice President Joe Biden's proposal to throw another $100 million willy-nilly at a failed system. All the money in the world won't help the mentally ill if it isn't getting to them or is squandered on ineffective treatments. The Murphy bill is an informed attempt to overhaul a broken system. It might even prevent the next Newtown.