In February 2020, the Trump administration released its proposed budget for fiscal year (FY) 2021, outlining a sweeping $4.8 trillion spending plan. While many observers agree that the proposal has little chance of being passed unchanged, it provides a clear roadmap of the administration’s priorities—particularly when it comes to behavioral health.
For providers, patients, and policymakers, the budget raises important questions. On one hand, it significantly increases funding for programs tackling the opioid epidemic and expands access to mental health care. On the other, it introduces major cuts to Medicaid—the single largest payer of behavioral health services nationwide.
This combination of funding increases and proposed rollbacks creates both opportunities and risks for the nation’s already strained behavioral health system.
Expanding Certified Community Behavioral Health Clinics (CCBHCs)
One of the most notable provisions in the FY 2021 budget is the expansion of the Certified Community Behavioral Health Clinic (CCBHC) Medicaid demonstration program. If passed, the proposal would allocate $906 million to extend and expand this initiative.
CCBHCs play a vital role in providing comprehensive mental health and substance use disorder (SUD) services. In exchange for higher Medicaid reimbursement rates, these clinics are required to offer a broad range of services to patients, including those who are underinsured or uninsured.
Currently, the demonstration program only operates in a select group of states and was set to expire in 2020. The proposed budget would extend it through 2021 for the eight states currently participating. Additionally, it includes $225 million in expansion grants, which allow providers outside the demonstration states to adopt the CCBHC model—though funding is capped and limited to two years.
Chuck Ingoglia, President and CEO of the National Council for Behavioral Health, praised this portion of the budget:
“We applaud the White House and bipartisan leaders in Congress for their continued efforts to expand access to high-quality addiction and mental health treatment,” Ingoglia said. “Much work remains to ensure that every American has access to life-saving treatment available at CCBHCs.”
The expansion underscores the growing recognition, across both political parties, of the need to address the nation’s mental health crisis.
Boosting Opioid Epidemic Funding
Another central piece of the proposed budget is a significant investment in combating the opioid epidemic. The administration earmarked $5 billion in new federal funding for the Department of Health and Human Services (HHS), with $1.6 billion of that designated for states through opioid response grants.
The remaining funds would support research, prevention, treatment, and other opioid-related initiatives. This proposal reflects the urgency of addressing the epidemic, which continues to claim tens of thousands of lives annually.
The budget also proposes $44 million in distance learning and telemedicine grants, with 20% directed specifically toward addressing the opioid crisis in rural communities. This is particularly important, as rural areas often lack the same level of treatment resources available in urban centers. By leveraging telehealth solutions, the administration hopes to expand access to care for underserved populations.
Modifying the IMD Exclusion Rule
The FY 2021 budget also takes aim at the Institutions for Mental Diseases (IMD) exclusion rule—a longstanding Medicaid policy that prevents federal Medicaid dollars from being used to pay for treatment in residential behavioral health facilities with more than 16 beds.
Critics of the IMD rule argue that it creates unnecessary barriers to care, particularly for individuals with serious mental illness who need inpatient treatment. The budget proposes modifying the rule to give states more flexibility, allowing Medicaid beneficiaries to access inpatient services as part of a broader community-based care strategy.
This change could significantly improve treatment options for some of the nation’s most vulnerable patients. However, the proposal stops short of fully eliminating the exclusion, opting instead for a targeted approach that balances inpatient access with continued investment in outpatient and community-based services.
The Medicaid Cuts: A Step Backward?
While expansions to CCBHCs and new funding for the opioid crisis are promising, the broader budget raises serious concerns among behavioral health advocates. The proposal calls for roughly $1 trillion in cuts to Medicaid and parts of the Affordable Care Act (ACA) over the next decade.
Specifically, the budget includes Medicaid work requirements and reduced federal support for coverage and benefits. Health policy expert Larry Levitt of the Kaiser Family Foundation warned that these cuts could significantly restrict access to care:
“President Trump’s budget is not going to be passed this year,” Levitt tweeted. “But, it signals that he would look to dramatically scale back the Affordable Care Act and Medicaid if he’s reelected and Republicans control Congress.”
Given that Medicaid is the largest payer of behavioral health services in the U.S., these cuts could undermine many of the proposed gains. For providers, reduced reimbursement rates and stricter eligibility requirements would likely lead to fewer covered patients and increased financial strain. For patients, particularly those with low incomes, it could mean losing access to critical mental health and addiction services.
Bipartisan Support for Behavioral Health
Despite the partisan battles over Medicaid and the ACA, there is bipartisan consensus on the importance of addressing the nation’s behavioral health crisis. Suicide rates remain high, and the opioid epidemic continues to devastate communities nationwide.
Chuck Ingoglia highlighted this rare area of agreement:
“In an era defined by partisan differences, one thing is clear: There is broad bipartisan support across the nation and in Washington, D.C., for addressing the nation’s suicide and opioid epidemic with expanded access to mental health and substance use treatment.”
This bipartisan support gives hope that, regardless of the fate of the FY 2021 budget proposal, lawmakers will continue working to strengthen the nation’s behavioral health system.
Looking Ahead
The Trump administration’s FY 2021 budget is unlikely to pass in its current form, given opposition from both Democrats and Republicans in Congress. However, it provides valuable insight into the administration’s priorities and potential policy directions.
For the behavioral health community, the message is mixed. On one hand, the expansion of CCBHCs, increased opioid funding, and proposed modifications to the IMD exclusion represent important steps forward. On the other, deep Medicaid cuts threaten to undermine progress by limiting access for the very populations who need care the most.
The ultimate outcome will depend on congressional negotiations, election-year politics, and the balance of power in Washington. In the meantime, providers, advocates, and patients must remain engaged, pushing for policies that expand access to treatment without sacrificing coverage for millions of Americans.
Conclusion
The FY 2021 budget proposal underscores the complexities of U.S. health policy, where progress in one area can be offset by setbacks in another. Expanding CCBHCs, increasing opioid funding, and adjusting the IMD exclusion rule all reflect genuine steps toward improving behavioral health care. Yet, the shadow of Medicaid cuts looms large, threatening the sustainability of these gains.
For behavioral health providers and patients, the key takeaway is this: the fight for accessible, affordable, and effective care is far from over. As the budget process unfolds, continued advocacy will be essential to ensure that the nation’s most vulnerable individuals do not get left behind.
