- H.R. 1 cuts roughly $990B from federal Medicaid/CHIP over 10 years, projecting about 10M more uninsured by 2034 and squeezing behavioral health coverage.
- The 2024 MHPAEA parity Final Rule faces an ERIC lawsuit, and regulators have paused enforcing its new requirements until a final ruling plus 18 months.
- The FY 2026 budget would fold SAMHSA and HRSA into a new agency and cut about $1B from core mental health and SUD programs.
- Additional policy changes (e.g., Medicaid/CHIP rule delays, reduced crisis and school mental health funding, VA privacy issues) compound access risks for vulnerable groups.
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Policymakers have implemented or proposed several changes that collectively reduce access to mental health and substance use disorder (SUD) services, especially for low‐income, marginalized, or disabled populations. The scale of these changes—ranging from enormous federal budget cuts under H.R. 1, legal uncertainty around parity enforcement, and structural agency reorganizations—threaten both short‐term care access and long‐term behavioral health system stability.
Medicaid and Insurance Coverage Cuts Under H.R. 1: The budget law slashes almost $1 trillion in federal funding for Medicaid and CHIP over 10 years; resulting eligibility, verification, and cost‐sharing changes are expected to push 7.5–8 million people out of Medicaid and add more uninsured via changes to Obamacare marketplaces. These cuts disproportionately affect behavioral health care, where Medicaid plays an outsized role in delivering community mental health, SUD treatment, and services for individuals with serious mental illness.
Parity Rule Delays and Legal Disputes: The Final Rule under MHPAEA enhances nonquantitative treatment limitation (NQTL) comparative analyses, imposes ‘‘meaningful benefits’’ standards, and mandates audits of outcomes data. However, following a lawsuit by ERIC, the Departments of Labor, Health and Human Services, and Treasury have paused enforcement of any new requirements until legal resolution plus an additional 18 months. This delay risks re‐exposing patients to coverage disparities and discouraging provider participation in insurance networks.
Restructuring of Federal Agencies and Program Funding: The FY 2026 budget proposal would dissolve standalone agencies like SAMHSA and HRSA, consolidating them into a new entity (“Administration for a Healthy America”), while cutting program funding by about $1 billion. This risks eroding institutional expertise, disrupting grant support for community mental health centers, suicide prevention, workforce training, and access in underserved areas—services that are difficult to rebuild once lost. [Primary]
Cumulative Impact on Vulnerable Populations: Other policies—such as reduced 988 lifeline/LGBTQ+ crisis services funding, halted school mental health professional grants, and VA facility confidentiality constraints—compound access losses for children, LGBTQ+ youth, veterans, and rural communities. Because behavior health needs are distributed unevenly, these populations are more likely to suffer severe consequences, including higher morbidity, emergency‐level care needs, and elevated economic costs.
Open Questions & Strategic Implications:
- How states will respond: states receive block grants and matching funds from Medicaid; cuts in federal contribution may force reductions in coverage, benefits, or provider payments, particularly for behavioral health programs that are optional. Monitoring state policy choices will be crucial.
- Legal outcome of ERIC suit: if the 2024 parity rule is modified or rescinded, the standard for behavioral health coverage enforcement may revert toward 2013 levels, potentially weakening protections.
- Implementation of agency restructuring: institutional continuity for SAMHSA and HRSA functions (like community services and workforce training) depends heavily on transition planning—loss of specialists or funding could create service gaps.
- Health system cost externalities: prevention programs and early behavioral interventions reduce long‐term costs; cuts risk increasing emergency and inpatient costs, and increasing non‐insurance burdens (e.g., criminal justice, homelessness).
Supporting Notes
- CBO estimates under H.R. 1 (One Big Beautiful Bill Act) project gross Medicaid and CHIP spending cuts of approximately $990 billion over ten years, with net Medicaid, CHIP, and Marketplace cuts totaling about $1.1 trillion. These cuts are estimated to raise number of uninsured by ~10 million by 2034; of which 7.5 million are attributable to Medicaid/CHIP provisions.
- Under the same law, new Medicaid work requirements (80 hours per month for non-disabled, non‐caregiver adults age 19-64) and more frequent eligibility verification are projected to cause significant losses in Medicaid enrollment.
- The ERISA Industry Committee (ERIC) filed suit in January 2025 challenging the September 2024 MHPAEA Final Rule, alleging it exceeded statutory authority and is arbitrary and capricious.
- On May 12-15, 2025, the Departments granted non-enforcement relief: they will not enforce the novel provisions of the 2024 MHPAEA Final Rule until after a final court ruling, plus an additional 18 months. Meanwhile, existing Medicaid parity obligations (2013 rules and CAA 2021 NQTL clauses) remain in effect.
- Biden’s FY 2026 budget proposes dissolving SAMHSA and HRSA into a new “Administration for a Healthy America” with about $1 billion in cuts to programs central to behavioral health (community mental health, suicide prevention, workforce training). [Primary]