In a keynote interview at a March 25 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 health care industry media outlet.

The conference featured 13 top experts in 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.

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.”

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