Medicaid: The Backbone of Behavioral Health—And What Happens If We Break It

If you care about access to substance use disorder (SUD) and mental health treatment in America, you care about Medicaid—even if you don’t know it yet. Medicaid is the largest single payer for behavioral health services in the country, covering about 24% of all mental health and SUD treatment costs. It’s a lifeline for people with the fewest resources and the highest needs.

The Whitehouse and congress have been sending mixed signals about the status of Medicaid funding. The President says it won’t be touched. Congress included big cuts in its spending bill. The President has since said he supports the spending bill with the cuts.

Medicaid’s Role in Behavioral Health Care

A 2024 Kaiser Family Foundation (KFF) analysis found that 7.2% of Medicaid enrollees aged 12 to 64 have an SUD diagnosis—a significantly higher percentage than among the privately insured. But here’s where it gets really interesting: three-quarters of those with an SUD on Medicaid receive some form of treatment or supportive services (KFF, 2024). That’s not just a number; it’s a testament to the role Medicaid plays in getting people into care.

Overdose prevention has been a national priority, and Medicaid plays an important role here, too. 63% of Medicaid enrollees with opioid use disorder receive medication for opioid use disorder (MOUD).

In Michigan, Medicaid’s impact is particularly pronounced. The state’s Medicaid and Behavioral Health budget for fiscal years 2024-2025 is $28.3 billion, with 70% of it funded by federal dollars—primarily through Medicaid and the Healthy Michigan Plan (Michigan House Fiscal Agency, 2024). If federal funding is slashed, that means billions vanish overnight, forcing the state to either fill the gap or cut services—neither of which is easy or realistic.

What Happens If Medicaid Gets Cut?

We don’t need to speculate. We’ve seen it happen before. When states restrict Medicaid eligibility or benefits, people lose access to care. When people lose access to care, untreated SUDs and mental health conditions spike. That leads to more emergency room visits, higher overdose rates, increased homelessness, and greater strain on law enforcement and jails—all of which cost taxpayers more in the long run (Center on Budget and Policy Priorities, 2023).

A 2020 report from Medicaid.gov (CMS, 2020) emphasized how Medicaid expansion has been directly linked to increased access to SUD treatment, lower rates of unmet need, and reduced racial disparities in care. Rolling that back would be catastrophic.

The bottom line? If you care about people with addiction, access to treatment, and recovery, you should care deeply about Medicaid funding. Without it, our already fragile behavioral health system will collapse under the weight of increased demand and decreased funding—and the consequences will be measured in lives lost.