The U.S. health care system is subject to policies being proposed, revised, challenged, delayed, revived, and sometimes discarded altogether.
In 2024, more than 61 million adults in the United States experienced a mental illness.1 In response, lawmakers responded with many proposals that affected behavioral health services, insurance rules, crisis response systems, and research priorities.
However, most of the policies in 2025 leaned towards a stricter law-and-order approach. In fact, some of them were immediately challenged and reserved.
In this post, we summarize what adults need to know about mental health legislation in the United States and their impact on treatment access and coverage.
Founded in 2010, A Mission For Michael (AMFM) offers specialized mental health care across California, Minnesota, and Virginia. Our accredited facilities provide residential and outpatient programs, utilizing evidence-based therapies such as CBT, DBT, and EMDR.
Our dedicated team of licensed professionals ensures every client receives the best care possible, supported by accreditation from The Joint Commission. We are committed to safety and personalized treatment plans.
U.S. Mental Health Policy Updates 2025
Numerous federal mental health legislations were introduced in 2025, many of which received instant backlash and were reversed. Below, we describe the key policy trends in adult mental health care U.S. and what they mean for treatment.
The MAHA Commission and the Federal Reframing of Mental Health
In February 2025, the Make America Healthy Again Commission, also known as “MAHA,” was launched through an Executive Order.2 The aim of MAHA is to include mental health into a larger narrative about long-term disease burden and systemic overreach in medicine.
Within the next 100 days, the Commission delivered its first assessment focused on children’s health. It described the rising rates of distress among young people associated with reduced physical movement, disrupted sleep, chronic stress, loneliness, and heavy technology exposure.
The report also raised alarms about the prescribing patterns of antidepressants, antipsychotics, mood stabilizers, and stimulants.
Later, the Commission released a strategy document to describe the expected next steps. In other words, the further study of prescribing trends and an increased focus on pediatric mental health. It did not, however, include specific timelines and funding mechanisms.
Federal Budget Proposals
When the White House released its fiscal year 2026 budget proposal in May 2025, it called for budget cuts in mental health agencies.
The proposal would have reformed the Substance Abuse and Mental Health Services Administration (SAMHSA) into a new entity under the Department of Health and Human Services. It would also have cut down more than a billion dollars from its funding.
The budget blueprint also proposed a sweeping reduction to the National Institutes of Health research funding. The plan was to merge the nation’s leading research arms on mental illness, substance use, and alcohol research into one entity.
The proposed cuts to the Department of Housing and Urban Development would also affect programs that support people living with serious mental illness who rely on stable housing. Further, the Office of National Drug Control Policy also faced dramatic downsizing under the proposal.
However, Congress passed the Consolidated Appropriations Act in February 2026, and all the proposed budget cuts have been rejected. SAMHSA funding is preserved at roughly the prior year’s level. The agency has not converted into an administrative structure as well.
Medicaid Work Requirements and Adult Coverage
The July 4, 2025, reconciliation law, better known as the “One Big Beautiful Bill Act,” is one of the most consequential shifts for adult mental health coverage in years. It restructures Medicaid spending on a massive scale and introduces new reporting conditions for many adults enrolled in the program.
Medicaid is the backbone of mental health financing in the United States. It covers one in four adults overall and a far higher share of adults with serious mental illness.3
Under the new framework, people must document work activity or qualifying exemptions to maintain their coverage. Individuals considered “medically frail,” including some people with disabling mental disorders or those engaged in substance use treatment, are exempt on paper. However, the law currently does not outline which psychiatric diagnoses qualify as “disabling.”
Previous state-level evidence regarding work requirement experiments has not been very pleasant. In Arkansas, for example, more than 18,000 people lost Medicaid coverage in less than a year after work requirements were implemented.4 Yet the reconciliation law does allow states to grant short-term hardship exemptions, including those for psychiatric hospitalization.
Federal officials have also released new guidance in September 2025, encouraging states to strengthen their crisis care continuum under Medicaid and CHIP. It guides states on how to use existing authorities to fund mobile crisis teams, stabilization units, and coordinated response systems.
Mental Health Parity Enforcement
The Mental Health Parity and Addiction Equity Act of 2024 mandated health insurance plans to treat mental health and substance use benefits no more restrictively than medical benefits. It required insurers to prove, with actual data, that their mental health coverage was comparable in practice.5
In May 2025, however, the Departments of Health and Human Services, Labor, and Treasury announced a pause in full enforcement of the new requirements. Therefore, provisions that require insurers to gather and assess detailed comparative data will not be enforced for now.
Parity law without monitoring tools becomes an empty promise. So if insurers are not required to measure disparities in denial rates or network design, unequal insurance patterns for mental health will persist. But more updates on the final implementation of the parity laws are yet to come.
Crisis Services and 988
988 is a three-digit number that connects anyone in emotional distress to trained counselors. Over time, the system expanded to include a specialized routing option for LGBTQ+ youth and young adults. People could select a prompt that connected them with counselors trained in identity-affirming crisis support.
In mid-June 2025, the specialized routing option was discontinued due to depleted funding and concerns about segmenting callers into separate channels. Yet, before it was removed, the route handled 10% of all 988 contacts and 20% of text-based conversations.
988 in itself has not been discontinued. The core hotline remains operational nationwide around the clock. But the guaranteed access to a counselor with targeted training in LGBTQ+ crisis realities is no longer available.
Naturally, the decision triggered bipartisan concern in Congress. Lawmakers from both parties sent letters to federal health officials asking for reconsideration. By September 2025, legislation was introduced in both chambers to restore the specialized LGBTQ+ services within 988.
HUD Continuum of Care Funding Changes
Housing policy is a huge contributor to mental health treatment infrastructure.
In November 2025, the Department of Housing and Urban Development (HUD) announced revisions to its Continuum of Care program. This is the primary federal funding stream that supports local homelessness response. The change would reduce the share of funds allowed for permanent supportive housing, capping it at 30%.
Under the revised funding notice, more resources would move toward transitional housing models. Applications could be rejected if programs were viewed as having racial preferences or if they were using non-binary definitions of sex.
However, objections were raised to this policy since the changes could destabilize housing programs serving people with severe psychiatric conditions.
In December 2025, HUD withdrew the funding notice after a multistate lawsuit challenged the revisions. By January 2026, the applications have reopened under the prior year’s terms.
Extension of Pandemic Telemedicine Flexibilities
During the COVID-19 pandemic, clinicians were, for the first time, allowed to evaluate patients by video and prescribe certain medications without requiring an initial face-to-face visit.
Since then, federal officials have extended those flexibilities, for the fourth time in 2025, to continue the telehealth policy.The current extension keeps telemedicine prescribing in place through December 31, 2026. It preserves remote access to medications classified as controlled substances, including stimulant treatments and certain medications used in substance use care.
Future-Ready Mental Health Care at AMFM Healthcare
The legal back-and-forth of mental health care can add another layer of uncertainty among people already coping with mental health issues. We at AMFM Healthcare understand how exhausting this can be. And we also know that mental health treatment should not hinge on political turbulence.
Our team provides compassionate mental health care under licensed clinicians and trained support staff in a respectful environment, regardless of background, identity, income level, or diagnosis.
Further, we work with major insurance providers and actively apply mental health parity protections so your benefits are honored as they should be.As new behavioral health policies are introduced, we are open to adapting any rules that improve behavioral health care for adults. If you’re interested in learning about the treatments we offer, or simply how new legislation could affect your care, reach out to us today.
References
- National Alliance on Mental Health. (2025, December 22). Mental health by the numbers. NAMI. https://www.nami.org/mental-health-by-the-numbers/
- The White House. (2025, May 23). MAHA. The White House. https://www.whitehouse.gov/maha/
- kffheathers. (2025, February 21). 5 key facts about Medicaid coverage for adults with mental illness. KFF. https://www.kff.org/mental-health/5-key-facts-about-medicaid-coverage-for-adults-with-mental-illness/
- Sommers, B. D., Chen, L., Blendon, R. J., Orav, E. J., & Epstein, A. M. (2020). Medicaid work requirements in Arkansas: Two-year impacts on coverage, employment, and affordability of care. Health Affairs, 39(9), 1522–1530. https://doi.org/10.1377/hlthaff.2020.00538
- Centers for Medicare & Medicaid Services. (2024). The mental health parity and addiction equity act (MHPAEA). https://www.cms.gov/marketplace/private-health-insurance/mental-health-parity-addiction-equity
