Michigan losing $93M in federal funds for drug treatment, recovery programs

• Michigan is losing $93 million in federal grants for substance use disorder programs
• The loss — almost a third of state spending on the drug war — will impact services around the state
• Michigan may use opioid settlement funds to fill the funding gap for existing programs

Michigan health officials fear the Trump administration’s cuts to drug prevention, treatment and recovery programs could stymie recent success fighting the opioid epidemic.

Michigan has lost $93 million in federal grants for substance use disorder programs in recent months, according to officials at the Michigan Department of Health and Human Services. That’s 31% of the $300 million the state government is distributing this budget year to programs around the state.

In addition to those losses, some Michigan substance use disorder providers have been notified of cuts to their own federal grants. While there is no tally for those individual losses, Bridge Michigan confirmed a  medically assisted treatment program in the Upper Peninsula is endangered by grant cuts and $3 million was stripped from a planned treatment facility in Sault Ste Marie.

The cuts have sent state leaders scrambling to determine how to save services, including the distribution of Naxolone, a nasal spray that can revive overdose victims and is credited with helping prompt last year’s dramatic decline in drug deaths in Michigan.

One potential solution: offsetting lost funding with money from the opioid lawsuit settlement, which is intended to expand services. .

‘It would be very difficult for us to fill all the gaps,” said Dr. Natasha Bagdasarian, chief medical executive for the state of Michigan. “If we're no longer able to do some of those things that we've been doing for the last few years, it will set us back.”

More than 13,000 Michiganders have died from opioid overdoses since 2018, with the vast majority the victims of fentanyl, a potent, cheap, easy to transport synthetic opioid.

Michigan is receiving $1.6 billion from a national settlement with opioid manufacturers and distributors over 18 years, with the money intended to address the epidemic. The funds are split roughly evenly between the state and local counties and cities.

The first payments arrived in early 2023. 

By 2024, opioid deaths had plummeted by about 1,000, from almost 3,000 to just under 2,000. Still, opioid deaths occurred in 2024 at a rate of more than 1 every 5 hours across the state.

Now, there’s concern that progress could be reversed by the loss of funds.

“It’s going to close programs,” said Cara Poland, chairperson of the Michigan Opioid Advisory Commission. “And that’s going to result in people not getting evidence-based care.

“We’re going to have to make tough decisions on where and how to prioritize resources.”

The federal Substance Abuse and Mental Health Administration has shrunk by a third since Trump took office in January. The administration’s budget proposal, approved by the House, cut $1 billion from the agency’s $7.5 billion budget.

Those initial cuts are part of a government-wide effort to rein in the federal budget. Since the coronavirus pandemic, the federal deficit has doubled to nearly $1.8 trillion, while debt has grown 121% in 10 years. Interest payments alone on that debt cost $881 billion this fiscal year — more than the government spends on veterans or children.

Tommy Stallworth, a senior adviser to Gov. Gretchen Whitmer, said the state is mapping scenarios to respond to the federal cuts, including the possibility of using some of the about $250 million in opioid settlement funds the state now has in the bank to fill the gaps in the budgets of existing services.

RELATED: 

• Steep drop in Michigan overdose deaths, thanks in part to Narcan
• Read Bridge Michigan’s coverage of opioid settlement funds

“We're proud of the progress we've made,” Stallworth said. “To the degree we have to reroute some of the funds to backfill some of these cuts, we face the risk of undermining our current progress and experiencing some regression.”

Stallworth said he believes the state will do its best to continue the delivery of free naloxone, commonly known by the brand name Narcan, to communities, many of which distribute the life-saving drug in free vending machines.

Michigan’s attorney general office blasted the federal cuts.

“Unexpected federal funding cuts, threats of grant terminations, and even unlawful cuts eventually reversed by court orders have upended many organizations and public service functions across our state,” said Danny Wimmer, a spokesperson to Attorney General Dana Nessel. 

“Cuts to local, community-based work combatting the opioid crisis would be especially devastating, at a time when progress is being made and fewer lives are being lost than have been in years.”

Local communities and providers also are scrambling to respond.

Kalamazoo County may use its opioid settlement money to replace promised federal funding for drug treatment housing that has now been canceled.

A $6.2 million drug treatment facility in Sault Ste. Marie planned by the Upper Peninsula-based Great Lakes Recover Centers lost a $3 million federal grant.

CEO Greg Toutant said the facility, currently under construction, “may have to be scaled back.”

A medically assisted treatment program in the Eastern Upper Peninsula may have weeks before it will be forced to close down, because the LMAS District Health Department lost an $80,000 federal grant. 

Thirteen people in recovery from substance use disorder would lose a service that is helping keep them sober.

“In rural areas, there aren’t a lot of outside entities to fill those gaps,” said Nicholas Derusha, director and health officer for the Michigan Association of Local Public Health Departments. 

“When federal sources are reduced, it’s a tough void to fill.”