Protecting Behavioral Health During Economic Downturns

Preventing overdose and other drug-related harms is a priority for the nation’s Governors, and the illicit supply of drugs remains more lethal than ever.

Economic downturns are linked to adverse outcomes from behavioral health conditions, including riskier drug use and an increase in symptoms from mental health conditions, including anxiety and depression. During a time when Governors are working to reduce negative outcomes from drug use and other behavioral health conditions, while concurrently planning for the potential of a cooling economy, it is important to consider how bolstering support for behavioral health infrastructure can be a worthwhile investment for states. Prioritizing the support of vulnerable populations during budget planning can promote individual and community resilience should an economic downturn occur

In recent years, Governors have had larger-than-average budget surpluses because of an influx of federal funding provided to states during the COVID-19 pandemic. With the end of the COVID-19 public health emergency, the United States is entering a new phase of pandemic response with less federal funding going to states for mitigation efforts. Additionally, economists have been warning about the potential for an economic slowdown, and states are beginning to evaluate their spending priorities. 

Although national unemployment rates remain low and inflation rates appear to be slowing, there have been some signs of a worsening economic forecast, with layoffs occurring in certain sectors. Labor force participation among working age adults—particularly men— was negatively impacted by substance use during the pandemic and continues to remain a challenge post-pandemic. History has shown that during challenging economic times and increased unemployment, behavioral health conditions can worsen. When unemployment rates increase during periods of economic instability or recession, people experience poorer mental health, and risky substance use increases.

Following the onset of the COVID-19 pandemic, unemployment rose to over 13% through the second quarter of 2020 and declined to 6.7% by the end of the year. Part-time workers and those employed in hospitality and service industries were the most impacted by higher unemployment.

During the pandemic, there was a 30% increase in overdose deaths between 2019 and 2020. In 2021, deaths attributable to overdose reached historic highs with approximately 107,000 dying from drug-and-alcohol-related intoxication in the United States. Although data indicate that overdose deaths may be plateauing, the number of people dying from overdose remains at historic highs. Preventing overdose and other drug-related harms is a priority for the nation’s Governors, and the illicit supply of drugs remains more lethal than ever. As Governors prepare for potentially leaner fiscal times, they can plan to respond to increase behavioral health needs.

Governors cannot predict precisely when an economic downturn may occur in their state, but they can build their state’s economic resilience and mitigate the potential harms that may impact those most vulnerable to poorer outcomes due to economic challenges, including those with mental health conditions and substance use disorders, by considering ways to ensure a continuity of support for people with behavioral health conditions during their budgetary planning.

Governors’ Actions to Support Behavioral Health Resilience  

As Governors develop future budgets that may be more constrained than those formulated in recent years, they could consider continuing investments to support individuals with behavioral health conditions. Some actions may include: 

  • Investing in evaluating current programming to identify which programs are working effectively so they can shift resources accordingly.
  • Supporting programs that foster supportive peer networks and structure for people with behavioral health conditions.
  • Supporting low-barrier access to treatment and harm reduction services, such as targeted naloxone distribution and syringe services programs for people who use drugs.
  • Assessing behavioral health service capacity and bolstering the investment into services based on the need.
  • Reviewing funding for safety net programs including Supplemental Nutrition Assistance Programs (SNAP) benefits, unemployment benefits, and rental assistance to ensure they are responsive to those with behavioral health issues.
  • Directing Governor-appointed state workforce development boards to work with community partners on a strategy to support people with behavioral health conditions or in recovery from substance use disorders in accessing education and employment opportunities.

Recent State Actions to Bolster Behavioral Health Services & Infrastructure

Governors are investing in behavioral health infrastructure to support growing needs. Below are a few state examples: 

Indiana- Governor Eric Holcomb proposed $5.5 billion in funding in his annual budget to support behavioral health infrastructure. Funding supports the expansion of crisis services, the implementation of the 988-crisis hotline, suicide prevention efforts for veterans, as well as the implementation of Certified Community Behavioral Health Clinics (CCBHCs).

Maryland– Governor Wes Moore signed into law the Behavioral Health Model for Maryland, which will establish a commission to study behavioral health service delivery in the state and requires the Maryland Department of Health to pilot a value-based purchasing program (where reimbursement is tied to patient outcomes), apply for federal funding to expand CCBHCs, as well as extend certain telehealth provisions for behavioral health services. 

New Hampshire– Recognizing that untreated addiction costs the state of New Hampshire over $2.3 billion annually, Governor Chris Sununu has committed to supporting and expanding the Recovery Friendly Workplace Initiative, which encourages positive environments for communities, employers, and employees to eliminate barriers to work for people impacted by addiction. Funded through grants from the U.S. Department of Labor and an additional $1.5 million in state funds, participating workplaces have access to free training on creating a recovery-friendly workplace culture, advisors to consult on meeting business needs, and access to relevant community resources to support employees.

Oregon– Governor Tina Kotek championed Senate Bill 1044, which called for an $80 million investment to expand the state’s behavioral health system. Funding would support behavioral health workforce expansion, case management, suicide prevention initiatives, and residential treatment capacity.

Virginia– Governor Glenn Youngkin announced Virginia’s “Right Help, Right Now” initiative, which is a comprehensive approach to expanding behavioral health infrastructure. The plan includes a focus on expanding crisis services and tele-behavioral health services and will increase awareness of fentanyl.  

For more information on this topic, please contact Marianne Gibson (