May 6, 2025
Drug Overdose Deaths Are Finally Slowing — Medicaid Cuts Would Undermine That Progress
May 6, 2025
State and federal actions to address substance use disorders (SUD) have begun to show progress. The provisional number of drug overdose deaths plummeted by nearly 24 percent from 2023 to 2024 and is lower now than it was at any point since June 2020. North Carolina, Virginia, Delaware, West Virginia, and Ohio had the largest percentage reductions in overdose deaths. That said, as former state officials with responsibility for health policy, we predict recent progress in curbing drug overdose deaths and harm would be reversed by Congressional proposals to cut Medicaid by up to $880 billion over ten years.
A View From The States: Medicaid’s Essential Role In Combating The Overdose Crisis
Declines in overdose deaths have coincided with rapid growth in coverage by Medicaid for substance use disorder treatment. Estimated Medicaid spending for opioid use disorder services was $29 billion in 2023, three times higher than spending in 2013 and nine times higher than the total of all other U.S. Department of Health and Human Services opioid-related spending in 2023. Overall, 4.9 million or 7.9 percent of Medicaid enrollees were treated for a SUD in 2021, with the highest percent of enrollees receiving treatment in Ohio, Louisiana, Maine, Vermont, and New Hampshire (See Exhibit 1),
Exhibit 1: Percentage of Medicaid enrollees treated for substance use disorders, by state, 2021
Source: Centers for Medicare and Medicaid Services. Report to Congress: T-MSIS Substance Use Disorder (SUD) Data Book: Treatment of SUD in Medicaid, 2021. (Department of Health and Human Services, Dec. 2023), https://www.medicaid.
In 2021, more non-elderly adult Medicaid enrollees had a substance use disorder diagnosis than had diabetes or asthma diagnoses (Exhibit 2).
Exhibit 2: Number (in millions) of adult Medicaid enrollees diagnosed with selected conditions, 2021
Source: Heather Saunders, Alice Burns, and Robin Rudowitz, “5 Key Facts About Medicaid Coverage for Adults with Chronic Conditions,” Henry J. Kaiser Family Foundation, April 10, 2025, https://www.kff.org/
Medicaid enrollees clinically-identified with a substance use disorder are more likely to be male, White, and qualify for Medicaid based on a disability or through Medicaid expansion than other enrollees. Medicaid expansion refers to the eligibility category created by the Affordable Care Act that enables states to expand coverage to individuals with incomes at or below 138 percent of the federal poverty level.
As former officials from the following states respectively, we were able to harness Medicaid to treat substance use disorder.
New Jersey
In New Jersey, in 2019, the Governor’s budget changed Medicaid policy to significantly expand treatment for opioid use disorder by removing Medicaid prior authorization barriers, creating Medicaid incentives for more providers to prescribe medications for opioid use disorder (MOUD), and establishing Medicaid Centers of Excellence to train and grow the number of providers offering treatment. Research found that as a result of these policy changes more patients were getting care: In just one year, we saw a 36 percent increase in the number of patients with opioid use disorder receiving MOUD buprenorphine treatment.
Of the 106,000 New Jersey Medicaid enrollees receiving substance use disorder services in 2021, 60 percent were covered thanks to Medicaid expansion and 43,000 received MOUD for an opioid use disorder. This year, for the first time in a decade, New Jersey’s preliminary data (reflecting the reporting period from 2022 to 2023) showed overdose deaths decreasing across all racial and ethnic groups..
Maine
In Maine, in 2019, the Governor’s first executive order expanded Medicaid and her second executive order initiated an urgent response to the opioid epidemic. Of the roughly 90,000 Mainers gaining Medicaid coverage, nearly 31,000 have received treatment for SUD. Around 94 percent of MaineCare (Medicaid) enrollees with SUD had an ambulatory or preventive visit in 2023. Treatment beds and outpatient capacity have expanded which has also helped rural hospitals that disproportionately treat SUD.
North Carolina
In North Carolina, Medicaid expansion began on December 1, 2023; by April 2025, enrollment numbers had reached over 650,000. An analysis
To achieve this progress, we worked in partnership with public safety leaders who prioritized Medicaid coverage alongside interdiction in the war on drugs. There has long been evidence that expanding access to substance use disorder treatment reduces local crime, finding that the “effects appear to be particularly pronounced for relatively serious violent and financially motivated crimes: homicides, aggravated assaults, robbery, and motor vehicle theft.”
Deep Medicaid Budget Cuts Would Set Back Progress In The Opioid Overdose Fight
The Congressional budget resolution assumes $880 billion in savings from Medicaid that threatens progress in treating SUD. The size of the proposed reductions is over 2.5 times as high as all federal spending on opioid use disorder – not counting spending on treatment for other substances like stimulants, which are growing in use, and alcohol.
Congressional Republican leadership claims that its Medicaid savings will not come from cuts to benefits, yet most of the proposals under consideration would result in loss of coverage. If people losing Medicaid do not gain another type of coverage, they would likely lose access to treatment and care they are currently receiving. Several of the policy proposals under consideration specifically threaten the care that individuals with substance use disorder need.
Rolling Back Medicaid Expansion Would Disproportionately Affect People With SUD
One of the proposals would roll back Medicaid expansion by reducing or eliminating the enhanced federal matching rate for the expansion population. The federal match rate for the expansion population is 90 percent. The rate for the original Medicaid population varies between 50 and 77 percent depending on the state, as does the enhanced federal matching rate for the Children’s Health Insurance Program which is 15 percentage points higher than the base rate.
Medicaid expansion has given people who long struggled with addiction the first real opportunity to be covered for the treatment they need. In 2021, more than half of Medicaid enrollees treated for opioid use disorder were covered through Medicaid expansion, even though only 40 states have adopted it. Ohio, Utah, Minnesota, New Hampshire, and Maine had the highest percent of expansion enrollees treated for an SUD (See exhibit 3).
Exhibit 3: Percentage of Medicaid expansion adults treated for substance use disorders, by state, 2021
Note: Virginia was suppressed due to insufficient data
Source: Centers for Medicare and Medicaid Services. Report to Congress: T-MSIS Substance Use Disorder (SUD) Data Book: Treatment of SUD in Medicaid, 2021. (Department of Health and Human Services, Dec. 2023), https://www.medicaid.
Reducing the federal share of payments for the Medicaid expansion would lead, under so-called trigger laws, to immediately terminating eligibility or requiring consideration of changes in 12 states: Arizona, Arkansas, Idaho, Illinois, Indiana, Iowa, Montana, New Hampshire, North Carolina, New Mexico, Utah, and Virginia. In these states alone, more than 100,000 enrollees would lose access to their MOUD treatment, the gold standard treatment for fentanyl and other opioid use disorders.
Reducing the federal share would also cause significant coverage loss in other expansion states that cannot afford to pay for the cost-shift from the federal government to state governments. Overall, more than 20 million people would be in danger of losing their Medicaid coverage, a meaningful proportion of whom are individuals in treatment and recovery.
These coverage losses would have dire downstream effects as well, including contributing to increased mortality rates. A detailed analysis found that, even controlling for non-Medicaid state policies to tackle SUD, individuals in expansion states saw a 9.4 percent reduction in annual overall mortality compared to those in non-expansion states. We’re likely to see increased arrests as well. One study found that in counties that had expanded Medicaid compared to those that had not, a 25 percent to 41 percent reduction in drug arrests; a 19 percent to 29 percent reduction in arrests for violence; and 24 percent to 28 percent reduction in low-level arrests.
Imposing Work Requirements And Other Administrative Hurdles Could Worsen Drug Dependence And Unemployment
The Congressional majority is also considering work requirements for certain Medicaid enrollees to meet its budget target, which would also reduce coverage. One study examining the first year of Arkansas’s 2018 work requirements found that the policy’s implementation was associated with a 7.1 percentage point increase in the uninsured rate, with no increase in employer-sponsored insurance. The same study found that the work requirement did not actually increase employment. The Congressional Budget Office echoed these conclusions in its own estimates.
Work requirements would pose a particular challenge for individuals with SUD for whom treatment – currently covered by Medicaid is often a prerequisite for work. According to a review of research, unemployment is a risk factor for SUD, and vice versa. This linkage suggests that a fundamental pathway to employment starts with treatment – a key step made possible for many by Medicaid. With support and coverage, recovery and employment are possible, as evidenced by more than 20 million adults reporting being in recovery. For example, in Rhode Island, Medicaid enrollees taking the medication buprenorphine experienced increased job-finding rates for higher paying employment. Breaking those linkages would have the opposite effect of that envisioned by proponents of work requirements.
Even though some Medicaid enrollees with SUD work – as do most non-elderly adults with Medicaid – the reality of a work requirement is that nearly one in four are likely to lose coverage for noncompliance with reporting (i.e., filling out paperwork to prove you are complying with the work rules or qualify for an exemption). Therapy compliance, not paperwork compliance, should be the priority for individuals in substance use disorder treatment. Consider methadone treatment that can require daily in-person clinic visits. This can force clients to have to choose between waiting in line every day for their medication or keeping their job. Other substance use disorder treatment settings – from inpatient treatment to intensive outpatient treatment to recovery supports – require extensive time and commitment just as physical complex chronic diseases would. Adding paperwork burdens to document compliance with administrative requirements in order to keep your Medicaid coverage would be a new – and substantial– barrier to recovery.
Protect A Key Tool In The Fight Against Fentanyl And Other Substances
The Trump Administration has made the supply-side of the fentanyl fight a priority in its policymaking – from tariffs to border policy to international relations. Yet, supply is only one part of the equation. To address the demand-side of this fight, a prevention and treatment-based approach is necessary, as state officials can attest. Medicaid, the largest payer of behavioral health services in the country, is key. It needs to be robust, readily available to the populations most likely to need it, and sustainable. Cutting Medicaid by up to $880 billion and reducing access for those most likely to need SUD treatment would drastically reduce the tools available to win this fight.
Authors’ Note
The analyses on which this article is based was supported by the Commonwealth Fund, a national, private foundation based in New York City that supports independent research on health care issues and makes grants to improve health care practice and policy. The views presented here are those of the author and not necessarily those of the Commonwealth Fund, its directors, officers, or staff. The authors also thank Emma Ford, Health Care Advisor at The Century Foundation, for research assistance.