How Medicaid Cuts Are Likely To Reverse Positive Trend In Overdose Deaths
Last Thursday, the Centers for Disease Control and Prevention announced that overdose deaths in the U.S. had decreased by almost 27% between 2023 and 2024. The number of overdose deaths in the U.S. remains unacceptably high. However, this announcement follows a promising pattern that began in 2023. It is a response to a broad set of interventions, championed both by Democrats and Republicans, that focused on increased accessibility of substance use disorder prevention and treatment services. The announcement came during the debate over the House Republicans’ reconciliation plan that would cut Medicaid funding by $800 Billion. The irony is that, if this bill becomes law, it would threaten the reduction in overdose deaths that we all celebrated last week and will lead, once again, to increased suffering and higher number of deaths associated with substance misuse and overdose.
Medicaid is the single largest payor of SUD services
Medicaid accounts for 21% of all spending for and provides coverage to 14% of all individuals with SUD. Medicaid is the single largest payer of SUD services. Medicaid expansion was a lifeline during the worst years in the overdose epidemic for states like Ohio, West Virginia and Kentucky. Medicaid’s effectiveness in addressing the overdose crisis is also related to the program’s comprehensiveness. All states are required to cover a minimum level of SUD services, but states often cover additional SUD services under several optional categories of benefits or by taking advantage of demonstration opportunities.
Despite being exempt, work requirements will impact Medicaid beneficiaries with SUD
The biggest “savings” from the reconciliation bill would come from cuts in eligibility that apply particularly to Medicaid expansion populations. Work requirements are one way the bill will reduce the number of Medicaid recipients. These requirements lead to a significant reduction in eligibility, but not because they increase employment as claimed by the proponents. The majority of individuals who lose coverage already work or are eligible for an exemption, but are unaware about the requirements or end up caught in a web of administrative red tape and deficient reporting systems that result in unnecessary loss of coverage.
This is precisely what is likely to happen to Medicaid beneficiaries with SUD. The bill contains language that exempts individuals with SUDs from the work requirements. The bill does not define the term “substance abuse disorder” nor provide any additional information on how individuals can prove the presence of SUD. This is problematic, as SUD is not a condition that is well-defined in terms of onset, progression and duration. While there are widely accepted clinical guidelines for diagnosing SUD, it is still subject to clinical interpretation that could make an exemption difficult to implement.
The bill appears to give wide latitude to states in implementing the SUD exemption. Will individuals with SUD face increased scrutiny or will a doctor’s letter confirming the diagnosis of SUD suffice? What happens if an individual is in recovery, but needs maintenance treatment to prevent relapse? What is the point at which an individual loses their exemption in the recovery process? SUDs may be chronic conditions, but they are still mental health conditions. Therefore, behavioral change is required for a successful recovery. By tying Medicaid coverage to the presence of an SUD, the policy disincentivizes full recovery based on the fear of losing access to life-saving treatment.
Individuals with SUD will also lose coverage because the system for reporting is inadequate or fails to account for their needs. Medicaid beneficiaries with SUD, for example, are often homeless and unable to use a computer to submit the necessary documentation. Due to the nature of addiction, people with SUD may have difficulty seeking care and obtain a certificate from a provider. They may not have transportation to get to appointments with providers or Medicaid offices. They may also be battling stigma and discrimination from providers and state employees.
All of these factors will make the SUD exemption incredibly hard to obtain and will result in work requirements introducing significant coverage losses in states hardest hit by the overdose epidemic. In Arizona, for example, it is estimated that 43% of expansion recipients will lose coverage. Of these, only 14% do not work and are not eligible for an exemption. This means that many people with SUD who are eligible for exemptions will likely lose coverage. That trend repeats itself in other states still struggling with SUD (New Hampshire: 35% will lose coverage, and only 14% do not qualify for an exemption; New Mexico: 31% will lose coverage, and only 9% do not qualify for an exemption; Ohio: 37% will lose coverage, and only 10% do not qualify for an exemption; Pennsylvania: 32% will lose coverage, and only 9% do not qualify for an exemption; West Virginia: 33% will lose coverage, and only 11% do not qualify for an exemption).
Other Medicaid cuts will lead to elimination of coverage for certain SUD services
The reconciliation bill will also likely result in states cutting services that are essential for individuals with SUD. The bill would severely limit the use of provider taxation, which helps states finance their non-federal share in Medicaid spending. If this state revenue source is reduced, states may consider cutting coverage for services that are not explicitly mandated by the federal law. This could include coverage for care coordination services and OTC naloxone, which the FDA shifted to OTC in order to facilitate access. The bill also reduces the share of federal Medicaid funding for states that cover certain populations of immigrants. This puts states in a difficult position, where they must choose between providing essential but optional services to people with SUD and providing coverage to low-income individuals who are only prevented from accessing care because of their immigration status. Evidence shows that they are actually harming low-income people with complex medical conditions, including those with SUD or at risk of an overdose. Millions of people will lose their coverage, including many who are receiving treatment for SUD. If we want to maintain the recent progress in reducing the burden caused by the overdose epidemic we must protect, preserve, and build on the current levels of Medicaid.
