The Center on Budget and Policy Priorities (CBPP) released a brief examining the impact of health reform's Medicaid expansion on individuals with disabilities and chronic conditions, including mental illnesses.  The brief suggests that the expansion of Medicaid will result in increased coverage for that population, and that Medicaid is well suited to meet their needs because it often covers services not fully covered by private insurance. 

From the report: The new health reform law will cover over 30 million uninsured Americans, including 16 million low-income adults and children through Medicaid. A substantial number of the people who will gain Medicaid coverage under health reform have disabilities or chronic health care conditions. Medicaid is particularly well-suited for these individuals because it is both affordable and comprehensive, covering a number of services that they need (such as case management and mental health care and therapy services) but that private insurance typically does not cover or covers only to a limited extent.

Full report: Health Reform Expands Medicaid Coverage For People with Disabilities (PDF | 109.2 KB)  

Center on Budget and Policy Priorities.  (2010).  Health reform expands Medicaid coverage for people with disabilities.  Solomon, J.