Implications of Potential Federal Medicaid Reductions for Addressing the Opioid Epidemic
National opioid overdose deaths have declined since mid-2023 and provisional 2024 data suggest the decline is continuing. Despite recent improvements, opioids were still involved in over 79,000 deaths in 2023—well above pre-epidemic levels. The opioid epidemic’s impact remains widespread with nearly three in ten adults (29%) reporting in a 2023 KFF poll that they or a family member experienced an opioid addiction.
Medicaid provided coverage to nearly half (47%) of all nonelderly adults with opioid use disorder (OUD) in 2023, according to data from the National Survey on Drug Use and Health (NSDUH). State-level NSDUH data from 2021-2022 show even higher Medicaid coverage rates among adults with OUD in states that expanded Medicaid under the Affordable Care Act (ACA). In recent years, state Medicaid programs have also expanded access to OUD treatment and medications, which reduce the risk of overdose death.
The Trump administration’s opioid policies emphasize expanding access to medication treatment and naloxone. At the same time, the House and Senate are working on legislation to meet the requirements in the budget resolution, specifying cuts to Medicaid of up to $880 billion or more over 10 years. To meet the required federal budget cuts, a newly introduced House bill proposes a number of provisions that could affect Medicaid eligibility and coverage stability for adults with OUD including work requirements and increased eligibility determinations. Such changes would contribute to reductions in Medicaid enrollment and increases in the uninsured and would come at a tenuous moment for the opioid epidemic, as deaths have begun to decline, but future progress is not certain. Amid this evolving policy landscape, this brief analyzes Medicaid coverage and treatment of adults with OUD using data from NSDUH and Medicaid claims data.
Medicaid is the main source of coverage for adults with opioid use disorder and among those receiving treatment services.
Medicaid covers 47% of all nonelderly adults with OUD and is the primary coverage source among those receiving treatment services. Specifically, Medicaid covers over half (56%) of those receiving medication for opioid use disorder (MOUD) and roughly two-thirds (64%) of adults receiving outpatient treatment and peer support services (Figure 1). MOUD treatment, recommended by clinical guidelines, reduces risk of all-cause and overdose mortality.
Most adults with OUD in Medicaid are eligible through Medicaid expansion.
Overall, 61% of adult Medicaid enrollees diagnosed with OUD—about 900,000 adults—are eligible through Medicaid expansion (Figure 2), with state-level rates ranging from 33% in Arkansas to 95% in Illinois (Appendix Table 1). In expansion states, over two-thirds of Medicaid enrollees with OUD qualify through ACA expansion (Figure 2), facilitating access to medication treatment and other care. A number of provisions in the House bill would affect the expansion group, including work requirements and cost sharing requirements. Such changes could lead to coverage losses or disruptions, including for adults with OUD, potentially limiting or interrupting access to treatment. Research indicates that MOUD treatment cessation is linked to significantly increased mortality risk, with individuals experiencing a six-fold higher mortality risk in the four weeks immediately after discontinuing treatment.
Other federal actions may also affect opioid response efforts.
The restructuring of Health and Human Services (HHS) by the Trump administration folds the Substance Abuse and Mental Health Services Administration (SAMHSA) into a new agency, reduces staff, and may eliminate certain opioid-focused programs. Additionally, the reported dismissal of the entire staff administering the NSDUH—a key source of national data collecting data for over 50 years about trends in mental health and substance use disorders—-could limit access to key data used to monitor and respond to the opioid crisis. The President’s discretionary budget request for 2026–which has not been adopted to date–proposes just over $1 billion in cuts to SAMHSA programs, including cuts to programs funding clean syringe exchanges and safe supplies. The discretionary budget decisions will be part of the budget appropriations process.
Methods |
| Medicaid Claims Data:This analysis used the 2021 T-MSIS Research Identifiable Files including the inpatient (IP), long-term care (LT), other services (OT), and pharmacy (RX) claims files merged with the demographic-eligibility (DE) files to identify Medicaid expansion enrollees and those diagnosed with OUD and those who receive MOUD.
Identifying Opioid Use Disorder: OUD diagnoses were identified using an algorithm adapted from the Behavioral Health Service Algorithm (BHSA) reference codes provided by the Urban Institute. The BHSA identifies OUD using a combination of ICD-10 diagnosis codes, procedure codes, service codes, and National Drug Codes (NDCs) which are used to identify OUD and MOUD. Medication treatment (MOUD/MAT) includes medications that the FDA has approved for OUD treatment. (See: Victoria Lynch, Lisa Clemans-Cope, Doug Wissoker, and Paul Johnson. Behavioral Health Services Algorithm. Version 4. Washington, DC: Urban Institute, 2024.) Enrollee Inclusion Criteria:Enrollees were included if they were ages 19-64, had full Medicaid or CHIP coverage for at least one month, and were not dually eligible for Medicare. State Inclusion Criteria: To assess the usability of states’ data, the analysis examined quality assessments from the DQ Atlas for OT claims volume and OT managed care encounters and compared the share of adults diagnosed with any mental illness (AMI) in each states’ Medicaid data to estimates for adult Medicaid enrollees from the 2021-2022 restricted National Survey on Drug Use and Health (NSDUH). States were excluded if: (1) they received a “High Concern/ Unusable” rating on the relevant DQ Atlas assessment measure, and (2) their Medicaid estimate of AMI differed from the NSDUH estimate by more than 15.1 percentage points (the 75th percentile of all differences). If at least 70% of a state’s Medicaid enrollees were covered by either managed care or by fee for service, only the corresponding DQ Atlas indicator was considered (i.e. managed care encounters volume or claims volume (FFS)). For states with more mixed delivery systems, both sets of indicators were considered; in these cases; a “High Concern/Unusable” rating on either measure, combined with a difference above 15.1 percentage points, led to exclusion. Based on these criteria, Mississippi was excluded, leaving 49 states and D.C. in the analysis. Although Idaho and Virginia expanded Medicaid before 2021, their adult expansion enrollees primarily appear within the traditional adult eligibility group. Missouri is excluded due to its mid-2021 expansion. Consequently, these states are excluded from Figure 2. National Survey on Drug Use and Health: This analysis uses data from the 2023 National Survey of Drug Use and Health (NSDUH), a nationally representative survey that, among other topics, collects information about symptoms of substance use disorders, including OUD. Respondents meet NSDUH’s OUD definition if they meet DSM-V criteria related to prescription opioids or heroin. Following NSDUH’s current methodology, individuals who misuse only fentanyl are not included in the OUD treatment definition; sensitivity analyses indicate that this exclusion minimally affects results (adding 10 observations) and does not meaningfully alter rates reported in Figure 2. Consistent with NSDUH’s approach to calculating SUD treatment rates among those needing treatment, the denominator includes respondents receiving outpatient therapy for OUD or prescription medication for OUD (MOUD). |
