JIM LEHRER: Our second health story is about identifying young people with mental illnesses before their problems become worse. It comes after the Tucson shootings and when other states have already cut their budgets.
NewsHour correspondent Spencer Michels reports from California.
SPENCER MICHELS: Andrew, a high-school senior in San Francisco, whose last name we're withholding for privacy, was 15 years old when he realized something was wrong. First, it was insomnia, then confusion and anxiety, and before long, extreme paranoia.
ANDREW, high-school senior: I was deeply, deeply, deeply convinced that I was being followed by the police or by the FBI, and that I had done something terribly wrong. And I had no idea what I did, but that I had done something bad and that people were looking for me, and people were trying to follow me around. And I thought my computer was hacked.
SPENCER MICHELS: His mother, Simone, could see the changes in her son.
SIMONE, mother of Andrew: You were very upset, and when -- and to the point of tears. And I hadn't seen Andrew cry in several years. He was 15 years old at the time and not prone to hysteria or tearfulness. And by the end of the week, he had a complete psychotic break.
SPENCER MICHELS: The onset of Andrew's symptoms was very fast. Soon, he began hearing voices.
ANDREW: Mainly in music. I don't know how to explain it, but the song -- the song lyrics would change, and they would say hateful things, racist things, homophobic things. They would tell me to harm people. They would talk about harming people.
SPENCER MICHELS: Andrew says he resisted those messages.
ANDREW: My parents brought me up well. And I knew that this is something that's totally unacceptable in society -- in society, to hurt anyone.
SPENCER MICHELS: But it was more than just his upbringing. Both Andrew's parents and he agree that today, two years later, his symptoms appear under control. And they give credit to a pioneering program designed to identify and treat young people showing early signs of psychosis or schizophrenia.
The program, called Prevention and Recovery in Early Psychosis, or PREP, is run by the nonprofit Family Services Agency of San Francisco, whose CEO is Bob Bennett.
BOB BENNETT, Family Services Agency of San Francisco: There's a lot of schizophrenia in my family. One of our family members was actually client number one for our early psychosis program. And I can tell you, it transformed our lives.
SPENCER MICHELS: The National Institute for Mental Health says that one in four adult Americans suffer from a diagnosable mental disorder in any given year, and one in 17 has a serious mental illness.
But, sometimes, finding and treating those people is challenging. Traditional psychotherapy often doesn't work. Bennett adapted an approach that has been used abroad but that is only now being tired in the U.S. Its goal is to identify schizophrenic patients early, before major symptoms develop, and to treat the disease as manageable and chronic.
BOB BENNETT: We actually believe that medication is more effective if you don't overmedicate and if you use only one drug. Beyond that, though, the goal is to train people in lifestyle changes that can minimize the effects of the disease and make it manageable.
SPENCER MICHELS: The PREP approach is one of several new programs mostly funded by a statewide initiative called Proposition 63, passed by California voters in 2004. The campaign to increase mental health funding was intense.
NARRATOR: How? By taxing only the super-rich. Proposition 63 imposes a new 1 percent surcharge on personal income over $1 million.
SPENCER MICHELS: The money goes to pay for increased treatment and innovative approaches to early intervention. It has raised more than $6 billion so far.
California stands in contrast to most other states, which have cut mental health programs to the tune of more than $2 billion since 2009. This year, 10 states are planning on slashing their mental health budgets.
SPENCER MICHELS: The homeless mentally ill were the original targets of Prop 63, according to Rusty Selix, a lobbyist who represents California mental health agencies and was the co-author of the initiative.
RUSTY SELIX, California mental health lobbyist: But, as we were developing it, it became obvious to everybody, why do they have to become homeless and hospitalized and incarcerated before they can help -- get help? Why can't we try to do the things that we know would work of identifying their mental illnesses early in their onset, when they're still living a normal life, but are showing the early signs of mental illness?
SPENCER MICHELS: Selix says that the actions and words of Jared Loughner, the alleged assailant from Tucson, had attracted attention, but as far as is known, he didn't get treatment.
RUSTY SELIX: There's no question that he fits the profile of the kind of person that our systems have not been able to get to. Obviously, he's the extremely rare exception. Go out and commit a violent act like that, that is not a normal thing.
But the fact is, there are plenty of people who look just like him in terms of obviously showing signs of being disturbed, not getting help, no one around them really knowing exactly what they need and how to go about it.
RACHEL LOEWY, University of California at San Francisco: So when you call our intake worker, she will talk to you: How do you approach the family? How do you talk to the kid about...
SPENCER MICHELS: One way Family Service Agency and its PREP program tries to connect with disturbed individuals is by talking with clinicians and teachers who may run into people with early symptoms.
RACHEL LOEWY: Kids say, you know, people are against me at school. It's hard to tell what's real.
SPENCER MICHELS: Rachel Loewy, a psychologist on the faculty of U.C. San Francisco, is also clinical director for the PREP program.
RACHEL LOEWY: A lot of times, of course, kids are scared by those experiences, or they're embarrassed or ashamed, and they don't tell anyone. So some of our outreach is trying to encourage kids directly to be more comfortable talking about these things.
SPENCER MICHELS: Loewy, like many mental health workers, believes the Jared Loughner case is relevant to her own work.
RACHEL LOEWY: People at school knew something was going on. They were noticing his very bizarre behavior, but they really didn't know what to do about it. So, from what I understand, they kicked him out, but it doesn't sound like he really got treatment that was effective.
SPENCER MICHELS: What is effective in early psychosis, Loewy and others say, is something called cognitive behavioral therapy, especially a model developed in England. It's one key part of the approach used in San Francisco.
RACHEL LOEWY: It helps people look at their thoughts, and be able to differentiate between what are -- what's reality and what are their distorted thoughts, as well as look at their behaviors that can increase some of the symptoms. It helps them cope with things like voices or other early symptoms.
WOMAN: You look a little anxious.
ACTOR: Yes, I'm -- I'm a little -- I'm a little anxious, yes.
SPENCER MICHELS: In training sessions for clinicians, Family Service Agency uses an actor playing a pre-psychotic patient and an actual therapist to show how cognitive behavioral therapy works.
ACTOR: There was a guy. He was -- he was in a really -- he was in a suit. And he was sitting in the back of the bus. And he had sunglasses on. And he was kind of looking forward, you know, at me. I thought he was going to just, like, come up and, like, grab me.
SPENCER MICHELS: The psychologist explains how the patient can change his viewpoint, laying it out on a white board.
WOMAN: So, the A stands for activating event. The B is for belief. And the C is for consequences. So, in this case, do you know what the activating event would have been?
ACTOR: I got on the bus?
SPENCER MICHELS: And by changing the viewpoint, the theory goes, the behavior changes.
WOMAN: If we changed that belief from, he's out to get me or hurt me or he wants something from me to, he's looking at my clothes, maybe he likes my clothes...
WOMAN: ... do you think that would change the consequence? Do you think you still would have felt like running away, getting off the bus?
SPENCER MICHELS: Like many patients, Andrew was reluctant to start such therapy, but his parents insisted.
ANDREW: Right off the bat, we started with the relapse prevention plan, and we decided what the early warning signs of those were, and if I was experiencing those early warning signs, what would I then do to combat these symptoms.
She would put notes up on the -- on a white board. We would say, if I'm feeling like this, instead of doing this, I would do something that would probably benefit me.
SPENCER MICHELS: Family Service Agency CEO Bennett says the early identification program has had tremendous success.
BOB BENNETT: Our hospitalization rate is probably 10 percent of what you'd expect for the population we have. Almost three-quarters of our clients are in school or work. We have only a 7 percent dropout rate.
SPENCER MICHELS: Though it's too early for a full independent evaluation of the model, Andrew and his family say the program has worked for him.
ANDREW: It's been probably a year or more than a year since I heard the last voices, but as of now, no voices, no paranoia, normal energy. And I don't have to even take any medications. I have a good social life. I play sports. I'm interested in listening to and making music. I like going to school.
SIMONE: Going to college.
ANDREW: Yes, I'm going to college next year, with the rest of my graduating class.
SPENCER MICHELS: With California's budget in bad shape, the governor is proposing taking some money from the Prop 63 mental health fund. The legislature will begin to debate the issue shortly.
Meanwhile, mental health advocates say they may have to fight to save a program showing early signs of success.