The Department of Health and Human Services (HHS) abruptly cancelled more than $12 billion in federal grants to states that were being used for mental health and addiction services and responses to other urgent health issues.

The administration is clawing back funding that was part of supplemental COVID relief funding, including $1 billion from the Substance Abuse and Mental Health Services Administration (SAMHSA) and $11.4 billion from the Centers for Disease Control and Prevention (CDC).

The details:

The funds were appropriated through the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 and the American Rescue Plan Act of 2021.
The CDC funds had originally been designated for COVID-related uses but then were opened up beyond that, with states using the funds for data surveillance, to study chronic diseases, etc.
The SAMHSA funds ($1 billion allocated through the block grants) were not earmarked for COVID programs; they were intended to address the increase in mental health and addiction issues arising from the COVID pandemic.
These funds were set to expire September 30, 2025. State health departments began receiving notices last Monday that the funds were being terminated, effective immediately.

What HHS is saying: A spokesperson for SAMHSA said, “The Covid-19 pandemic is over, and HHS will no longer waste billions of taxpayer dollars responding to a non-existent pandemic that Americans moved on from years ago.”

But: The grants were authorized and appropriated by Congress. Several states already announced a lawsuit challenging the cuts.

Why it’s important: Overdose deaths, symptoms of anxiety and depression, and suicide rates all increased during the pandemic, leading to these supplemental funds.

The money was used to pay for mental health and substance use disorder treatment, and many states had included it in their budgets, meaning they were relying on that funding through its expected expiration at the end of September. The move could trigger layoffs and treatment/services disruptions.
Funding cuts to SAMHSA grants and potentially to Medicaid might reverse recent progress on reducing overdose deaths.