“Everybody’s Going to Feel the Pain”: Medicaid Cuts Threaten Addiction Treatment
New York Commissioner Warns University of Pennsylvania Conference That Funding Losses Could Force States to Ration Care and Risk Rising Overdose Deaths
This article was produced in conjunction with the University of Pennsylvania Leonard Davis Institute.
In a keynote interview at a March 25th University of Pennsylvania virtual conference on the impact of upcoming Medicaid funding changes for substance use disorder treatment programs, New York’s top addiction official warned that the sweeping federal changes could destabilize the nation’s addiction treatment system, forcing states into painful tradeoffs that may ultimately cost lives.
Speaking at a one-day event organized by Penn’s Leonard Davis Institute of Health Economics (LDI) and the research collaborative the Center for Health Economics of Treatment Interventions for Substance Use Disorder, HCV, and HIV (CHERISH), Chinazo Cunningham, MD, MS, Commissioner of the New York State Office of Addiction Services and Supports, said her state could face a $13 billion loss in Medicaid funding and that “there’s no state that’s going to make up $13 billion somewhere. That’s just not going to happen.”
Increase in Overdose Deaths
She added, “If these cuts happen and people lose access to treatment, I don’t see how we wouldn’t see an increase in overdose deaths.”
On stage, Cunningham was interviewed by journalist Dan Gorenstein, LDI Adjunct Senior Fellow and Executive Producer of the Tradeoffs Podcast, an influential non-profit news organization.
The conference featured 13 top experts in Medicaid and substance use disorder treatment organization, finance, and management, covering topics including forecasting the impacts of Medicaid policy change on SUD outcomes using simulation modeling, the implementation challenges and opportunities related to Medicaid work requirements and SUD patients, and strategies for preserving access to SUD care as Medicaid changes. (See other panel reports below)
The event occurred against the backdrop of the Trump administration’s One Big Beautiful Bill, representing the largest rollback of federal Medicaid funding in the program’s history, reducing spending by roughly $1 trillion over 10 years. An estimated 10 to 12 million people are expected to lose coverage, while new administrative requirements are expected to make enrollment and retention more difficult. Some provisions begin taking effect in late 2026, but the largest coverage losses — and the most significant impact on access to substance use disorder treatment — are expected to begin in January 2027.
1.6 Million Could Lose Access
These cuts will have an outsized impact on addiction treatment operations because Medicaid is the single largest payer for addiction care throughout the 50 states. An analysis issued by the Center for American Progress in June estimated that 1.6 million Medicaid enrollees in substance use disorder treatment programs would lose their coverage and their access to medication-assisted treatment, counseling, outpatient care, and residential programs.
In a July 2025 research memo to House Speaker Mike Johnson and Majority Leader John Thune, researchers at Penn and Boston University estimated that the loss of Medicaid-funded SUD program funding would result in a doubling of the overdose death rate among those cut from treatment.
In New York state, the Center for American Progress estimates that 166,500 current Medicaid enrollees in substance use disorder programs will lose their coverage.
“If treatment funding is cut, we have a finite amount of dollars,” Cunningham said. “We’re going to have to take those dollars from somewhere. Everybody’s going to feel the pain.”
She went on to explain that New York state’s system adds another layer of non-obvious strain: State-supported providers cannot turn patients away for lack of insurance. That means clinics must find ways to continue treating patients even as reimbursement declines.
Unclear Federal Instructions
“Our number one priority is stabilizing the system so programs remain viable,” Cunningham said. She also noted how difficult this was to plan for because “communication from the federal government has been anything but clear.” She cited frequently shifting federal announcements and “late-night” notices about funding changes.
She said that as funding losses materialize, officials may be forced to decide which parts of the system — prevention, treatment, harm reduction, and recovery — to protect.
“The resources may not be enough to sustain them equally. It’s like your children are fighting: ‘I love all of you — but we may have to make very difficult decisions,’” she said, noting those decisions will likely prioritize communities at highest risk of overdose.
Moderator Gorenstein asked Cunningham about state discussions focused on the possibility of using opioid settlement funds to backfill the Medicaid losses.
Using Opioid Settlement Funds?
The $50 billion being paid out by the pharmaceutical industry over about 15 years goes to states and local governments as a settlement resolving thousands of lawsuits alleging manufacturers’, distributors’, and retailers’ roles in fueling the opioid crisis. But these funds come with restrictions on their use. In most states, the money is split between state and local governments and overseen by advisory boards or statutory guidelines intended to ensure the money is used for public health purposes rather than general budget relief. In New York, there is a state Opioid Settlement Fund Advisory Board overseeing the money.
“At one of our Advisory Board meetings, this issue was discussed quite robustly,” Cunningham said. “There were many advisory board members who felt the funds should be used to cover Medicaid cuts, but others felt they shouldn’t be used. There was no consensus on the board, so they didn’t make a recommendation to the state on whether these dollars should be used to backfill the cuts. So, when we do get those recommendations, we will follow them to the extent possible by law.”
Panel Two: Forcasting Impacts on Medicaid Policy on SUD Outcomes Using Simulation Modeling
A new simulation analysis presented in the second panel of the LDI/CHERISH substance use disorder policy seminar suggests that proposed Medicaid work requirements could significantly increase overdose deaths among people with substance use disorder (SUD), even under optimistic assumptions about how the policy would be implemented.
The presentation featured Benjamin Linas, MD, MPH, a Boston University researcher and infectious disease physician at Boston Medical Center. He used two linked simulation models to estimate how coverage losses under the Big Beautiful Bill would ripple through treatment access and health outcomes. The conclusion was direct: reducing Medicaid enrollment will reduce access to lifesaving medications and lead to more deaths.
“Loss of Medicaid coverage leads to loss of access to treatments … which then leads to an increased risk of overdose death,” Linas said, describing the core mechanism his model tested.
Medicaid plays a central role in the addiction treatment system, covering nearly half of U.S. adults with substance use disorder and significantly increasing access to medications such as methadone and buprenorphine, which are known to reduce mortality. The model simulates how, when people lose coverage, their ability to enter or remain in treatment drops sharply.
Administrative Hurdles
Even accounting for exemptions in the policy—such as for people deemed medically frail—the simulations showed substantial declines in coverage across all scenarios. Administrative hurdles were a key driver. Individuals whose eligibility could be verified automatically through claims data were likely to retain coverage, but those required to self-attest faced high failure rates, based on prior state experiences.
As coverage fell, so did time spent in treatment. The downstream effect was a sharp rise in overdose deaths. In some modeled scenarios, overdose mortality increased by roughly 30% to 35%, levels, Linas said. That could effectively erase recent progress in reducing overdose fatalities.
“That looks like giving back all the progress … in one fell swoop,” he said.
The analysis also found that implementation details could significantly influence outcomes. Differences between best- and worst-case scenarios—largely driven by how efficiently states verify eligibility—produced mortality variations of up to 40%. “The details of policy implementation are not ‘details,’” Linas said. “They have a large impact on outcomes”.
Costs Would Rise
Contrary to the policy’s goal of reducing spending, the model projected that total health system costs would rise. While Medicaid spending might decline as people lose coverage, those individuals would still require care, shifting costs to hospitals, uncompensated care pools, and other parts of the system.
“We’re going to pay for that outcome because costs are going up, not down,” Linas said.
He emphasized that policy exemptions do not eliminate harm. Even under favorable assumptions, the simulations showed persistent increases in mortality. “They mitigate the harm, but they do not eliminate all harm,” he said.
Linas suggested that states could reduce some of the negative effects by streamlining eligibility verification, minimizing paperwork, proactively contacting enrollees, and extending eligibility review periods. But he cautioned that these steps would only lessen—not reverse—the projected impacts.
“Even in the best-case scenario,” he concluded, Medicaid work requirements would still lead to “increased coverage losses, overdose deaths and costs”
Panel Three: Medicaid Work Requirements with SUD: Implementation Challenges and Opportunities
As states prepare to implement new Medicaid work requirements the third panel of the LDI/CHERISH seminar warned that the policy’s real-world impact may hinge less on employment outcomes and more on the administrative systems used to enforce it—systems that have historically led to widespread coverage losses, particularly among vulnerable populations.
Moderated by LDI Senior Fellow Paula Chatterjee, MD, MPH, the panel included Pete Croughan, MD, Deputy Secretary of the Louisiana Department of Public Health; Farah Erzouki, MPH, Senior Policy Analyst at the Center for Budget and Policy Priorities; and Kristin Underhill, MSc, JD, Associate Dean of Faculty Research and Professor of Law at Cornell University.
Under the new work requirement rules, most adults enrolled through Medicaid expansion must complete at least 80 hours per month of work or other qualifying activities to maintain coverage. While exemptions exist—including for people with substance use disorder (SUD)—panelists emphasized that eligibility on paper does not guarantee protection in practice.
Evidence from Arkansas
“The dominant outcome we’ve seen is coverage loss,” said Underhill, who has studied prior state experiments. Evidence from Arkansas, the only state to fully implement and enforce such requirements, showed that more than 18,000 people lost coverage in a single year—many of whom were already working or qualified for exemptions but failed to navigate the reporting process.
The central issue, panelists agreed, is administrative burden. Medicaid work requirements effectively push enrollees through a complex “funnel”: determining whether the rules apply, identifying exemptions, and repeatedly documenting compliance. Even minor breakdowns—missed paperwork, confusion over rules, or lack of internet access—can result in disenrollment.
For people with substance use disorder, the risks may be particularly acute. While those in treatment or classified as “medically frail” are exempt, the system often ties exemption to documentation or engagement with care. “That conflates having a substance use disorder with having access to treatment,” Underhill noted, pointing to a critical gap for individuals in relapse or not currently receiving services.
State officials are attempting to mitigate these risks. In Louisiana, health leaders say they are designing systems to minimize coverage loss by relying heavily on existing data—such as diagnosis codes and pharmacy claims—and allowing simple self-attestation for exemptions. “When in doubt, we err on the side of exemption,” said Croughan.
Limited Federal Guidance
Still, challenges remain. Many states face tight implementation timelines and limited federal guidance, while also attempting to modernize outdated data systems. Experts warn that individuals who are not captured in existing databases—such as those in rural areas or outside formal treatment systems—may be especially vulnerable.
Ultimately, panelists said, the policy’s success will depend not just on its design, but on how effectively states can reduce administrative barriers. Past evidence suggests that without careful implementation, work requirements may do little to increase employment while significantly increasing the number of uninsured.
Panel Four: Cuts, Copays, Churn: Preserving Access to Care as Medicaid Changes
New federal Medicaid changes could unintentionally push thousands of people with substance use disorder out of care—not because they are ineligible, but because they cannot navigate an increasingly complex system, according to experts speaking the fourth panel of the LDI/CHERISH seminar.
Moderated by Beth McGinty, PhD, MS, Co-Founding Director of the Cornell Health Policy Center and Chief of the Division of Health Policy and Economics at Weill Cornell Medicine, the panelists were Christina Andrews, PhD, Professor of Health Service Policy and Management at the University of South Carolina; Lydia Gottesfeld, JD, Managing Attorney of Health & Independence Unit at the Community Legal Services of Philadelphia; and Arthur Robin Williams, MD, MBE, Associate Professor of Clinical Psychiatry at Columbia University Division on Substance Use Disorders and Chief Medical Officer of Ophelia.
The Churn Concern
At the center of concern about pushing patients out of care is what advocates call “churn”—the loss of coverage due to administrative hurdles rather than actual ineligibility.
Under the new rules, Medicaid recipients in expansion populations must reestablish eligibility every six months instead of annually, often requiring documentation of income, work status, or medical exemptions. For many patients, especially those struggling with addiction, these requirements can be overwhelming.
“What does red tape actually look like?” asked Gottesfeld. She described scenarios in which patients receive renewal paperwork just days before a deadline, scramble to gather documents, and ultimately lose coverage because forms are incomplete or processing is delayed.
Even those who follow the rules can fall through the cracks. “People who are eligible and doing everything right are still going to lose coverage,” she said.
The risks are especially acute for people with substance use disorder, where continuity of care can be lifesaving. Medications such as buprenorphine reduce the risk of death by as much as 50%, panelists noted. But those benefits disappear quickly when treatment is interrupted.
High Failure Rates
Research presented by Andrews, shows that even modest administrative burdens reduce Medicaid enrollment—and that people with substance use disorder are particularly vulnerable. The condition itself can make it difficult to manage paperwork, track deadlines, or navigate bureaucratic systems.
New copay requirements, though they exempt addiction treatment directly, may also create indirect barriers. Patients may avoid routine medical visits that could otherwise serve as entry points into treatment. “We don’t want to close doors that could be pathways into care,” Andrews said.
Meanwhile, broader eligibility restrictions will leave some populations—particularly certain immigrants—without any insurance options at all, forcing them to rely on already strained safety-net providers.
Struggling Addiction Treatment System
Even before these policy changes, experts said, the addiction treatment system was struggling to engage patients. Despite Medicaid expansion under the Affordable Care Act, overdose deaths tripled over the following decade.
Williams, who oversees a national telehealth addiction treatment program, argued that insurance coverage alone is not enough. “People with SUD are disconnected from routine care settings,” he said, pointing to persistent barriers in how care is delivered and reimbursed.
Telehealth has emerged as a promising solution, expanding access and lowering costs. But outdated Medicaid payment structures—designed for in-person care—have not kept pace, limiting its potential.
Panelists emphasized that policy choices made now will determine whether the new Medicaid rules exacerbate or mitigate these challenges. Solutions include automating eligibility verification, reducing paperwork, and improving communication so patients can better understand what is required of them.
Without such changes, they warned, the system risks losing not just coverage—but lives as well.