This guide is intended primarily for state agency officials, with supporting insights for state legislators and other stakeholders, to illustrate how changes under H.R. 1, the “One Big Beautiful Bill Act,” may affect Medicaid’s role in financing and delivering mental health and substance use services. It focuses on the practical challenges and opportunities that states face in sustaining access to care while maintaining fiscal balance and program integrity.
Medicaid as a State-Federal Partnership
Medicaid is a cornerstone of state mental health systems*, supporting care for children, parents, veterans, seniors, and people with disabilities in every state. Medicaid provides both physical and mental health services and is the nation’s single largest payer for mental health and substance use treatment, funding a wide range of services—from primary care screening and counseling to treatment for opioid use disorder and postpartum depression. This state-federal partnership helps states improve health, strengthen family stability, increase public safety, and reduce uncompensated care in hospitals and communities.