Does the timely treatment of mental illness result in a drop in the cost of health care, and if so, what is the cost effectiveness? This study provides an overview, synthesis, and analysis of the medical offset effect. It demonstrates that a medical offset effect does exist and the size of the effect is significant. A behavioral model provides a precise method for ascertaining the dimensions of medical offset and an explanation of the underlying causal relationships. The offset effect for an important population group is analyzed through the use of Medicaid patient data from Georgia and Michigan. This clear, concise book will provide students, researchers, mental health professionals, insurance companies, and government agencies with an understanding of the current and potential future relationships between general medical care and mental health care services. The Medical Offset Effect begins with the historical and structural evolution of the mental health industry since World War II. The book then reviews medical offset literature. The behavioral model is followed by an empirical analysis and the book concludes with a general analytical framework for the development of a national mental health policy in light off the medical offset effect.