Company Updates
Peerakeet is now live with an initial pilot cohort of peer specialists. Our current focus is on driving consistent usage within a core workflow and capturing early data on how structured peer activity translates into measurable value for organizations. These pilots will inform our upcoming organizational rollouts.
The implications of cutting behavioral health funding, even when peer services prevail
Natasha Faruqui, Healthcare Strategy at Peerakeet
On April 3rd, The U.S. Department of Health and Human Services’ FY 2027 budget proposal landed and the ripples are still spreading. At $111.1 billion, a 12.5% cut from the prior year, amounting to $15.8 billion stripped from the department’s discretionary budget, this is not a routine fiscal document; it is an expression of priorities (U.S. Department of Health and Human Services, 2026). While congress will have the final word, proposals like this one shape the playing field and define what is politically possible. In this case, the message is hard to misread: the behavioral health infrastructure is being targeted for cuts. And yet, within that contraction, peer services occupy a different position, one of the few gray areas that has maintained consistent political support across administrations and across party lines, making them more likely to survive what other programs may not. So what actually happens when you pull funding from mental health and substance use care, but leave peer services standing?
Behavioral health is a continuum, not a collection of separate programs
It is tempting to think of behavioral health as a menu of services, each capable of being evaluated and funded in isolation, but that is not how it works. Mental health and addiction care operate as an ecosystem, each component dependent on the others in ways that are not always visible until something breaks.
Federal investment, primarily through the Substance Abuse and Mental Health Services Administration (SAMHSA), has built out this ecosystem over decades. Crisis lines such as 988, outpatient and inpatient treatment programs, harm reduction initiatives, recovery community organizations, and workforce development pipelines each play a distinct role, and none of them operate in a vacuum (Substance Abuse and Mental Health Services Administration, 2023). Crisis lines depend on available treatment slots to refer people to. Peer support depends on care pathways that actually lead somewhere. Recovery organizations depend on stable community infrastructure to connect people to. The system functions as a whole, or it doesn’t really function at all.
We received a jarring preview of this fragility in January 2026. On the night of January 13th, SAMHSA sent termination letters to more than 2,000 organizations across the country, notifying them without warning that their federal grants were being cut effective immediately. The total scope approached $2 billion, representing over a quarter of the agency’s entire budget. Within hours, organizations were preparing for mass layoffs. Programs were shutting down mid-service. Providers were calling patients to explain that care they were in the middle of receiving might not continue (NPR, 2026; STAT News, 2026). The reversal came less than 24 hours later, after an outcry from providers, advocates, and lawmakers on both sides of the aisle (Behavioral Health Business, 2026). But the damage to organizational stability, staff morale, and the trust of the people those organizations serve had already been done.
What that episode revealed was not just the fragility of grant-dependent funding, but how quickly access to care can collapse. The assumption that behavioral healthcare systems can absorb sudden shocks and keep serving people is, in most cases, simply incorrect. These organizations operate lean, with very little slack, and when funding disappears, care does not taper, it disappears.
The downstream effects of that kind of access disruption are well-documented. When people cannot access outpatient mental health and addiction care, they do not simply manage without it, they end up in emergency departments, hospitals, jails, and detention facilities (National Academies of Sciences, Engineering, and Medicine, 2020; Substance Abuse and Mental Health Services Administration, 2023). The costs get shifted into more acute, more expensive settings and the human toll compounds. And, worst of all, the pathway back to stability gets longer and harder to find.
When peer services are left to stand alone
Within this landscape, peer services hold a particular position. Over the past decade, peer support has moved from the margins of the behavioral health system toward its center, recognized increasingly as a legitimate and evidence-supported component of recovery care, improving engagement, reducing hospitalizations, and helping people stay connected to treatment (Substance Abuse and Mental Health Services Administration, 2023; National Academies of Sciences, Engineering, and Medicine, 2020). That recognition has made peer services more politically durable than many other programs. Across administrations and across party lines, investment in peer support has maintained a degree of support that most behavioral health programs cannot claim.
But durability under pressure is not the same thing as adequacy. If peer services survive a wave of broader cuts while the surrounding system contracts, what peers are left with is not a complementary role but a compensatory one.
Peer support works best when it is embedded in a functioning system. When a peer specialist can connect someone to a therapist, a prescriber, a housing resource, a higher level of care, that is what recovery support looks like in practice. It is relational, it is connective tissue. Strip away the services on either side, and the peer is left holding a thread that attaches to nothing. They may be working with a patient who is ready for treatment but cannot access it, or a patient who needs medication management that isn’t available, or perhaps a patient who needs stable housing that doesn’t exist in the local landscape.
Over time, that dynamic does real damage, not just to the people being served, but to the peer workforce itself. Role strain, boundary erosion, and burnout are predictable consequences when peers are asked to fill systemic gaps rather than navigate within a functioning ecosystem (National Academies of Sciences, Engineering, and Medicine, 2020). The investment in peer services becomes less effective when the infrastructure it depends on is no longer there.
The structural shift: From grants to Medicaid
At the same time, this moment is accelerating a transition that has been underway for years: the movement of peer services from grant-funded programs to Medicaid-reimbursable services.
Grants have driven much of the growth in peer support. They have enabled organizations to try new approaches, expand into underserved communities, and demonstrate the value of the peer workforce. But grant funding is, by nature, volatile. It depends on shifting political priorities and on administrative decisions that can reverse overnight, as January’s episode made clear.
Medicaid operates on a different logic. As a joint federal-state program, it provides a more stable and predictable revenue base. Increasingly, states are including peer support as a reimbursable Medicaid service, allowing organizations to bill for peer services the same way they would for other clinical care (Kaiser Family Foundation, 2023). That shift changes the equation for organizations that have long lived from grant-cycle to grant-cycle. It makes it possible to hire, plan, and grow.
The implications of this shift are undeniable. Medicaid reimbursement allows organizations to build sustainable revenue models: To invest in workforce training, to integrate peer services into formal care delivery systems, and to scale in ways that grant timelines simply do not allow. For the peer workforce specifically, it creates a path toward the kind of legitimacy and stability that the field has long been working toward.
The uncomfortable paradox at the center of this moment
The uncomfortable truth is that the expansion of Medicaid-based peer services may be accelerated precisely by the broader cuts happening around them. In other words, peer services may become more financially stable and more institutionally central, not because the system is getting stronger, but because other parts of it are getting weaker.
This is the paradox the field is living in right now. The transition away from grant dependency toward sustainable Medicaid reimbursement is something advocates have pushed for, for years. It is the right direction. But there is a real difference between that transition happening in a context of expanding investment and it happening in the wreckage of a system that has been dismantled. Achieving sustainability in this way, rather than through genuine expansion, leaves peer services overextended and the people they help underserved. We thus cannot pretend that sweeping behavioral health cuts are anything other than damaging.
Why this is still, and has always been, a bipartisan issue
One of the most important things to understand about peer services is that their political support has never been partisan. Democrats and Republicans alike have championed peer support, whether framed as a cost-reduction strategy, a workforce innovation, or a patient-centered approach that centers lived experience (Kaiser Family Foundation, 2023; National Alliance on Mental Illness, 2026). Before the reversal, the SAMHSA grants cut in January drew criticism from lawmakers on both sides.
States across the political spectrum have been expanding Medicaid coverage for peer services, because the case for peer support is made in outcomes data and cost data, not in party platforms. Grant funding will always be subject to political winds, and while Medicaid billing is not immune to disruption, it is structurally more durable, and it keeps the work of building the peer workforce moving forward regardless of which direction those winds are blowing.
Framing peer services as a force multiplier within a functioning system, rather than as an alternative to traditional care, is part of what keeps them viable across the political divide. The moment peer support is positioned as a replacement for clinical services rather than a complement to them, it becomes easier to dismiss, and harder to fund at the scale the field actually needs.
What recovery looks like after disruption
If behavioral health funding contracts significantly, rebuilding is not automatic. It requires deliberate strategy. The continuum of care has to be reestablished, the connective infrastructure that makes peer services valuable has to be rebuilt, not just the peer services themselves. Medicaid-based peer services need to expand with genuine integration into care pathways, not as standalone programs floating in a vacuum. And funding models need to be diversified: Medicaid reimbursement as the durable core, supplemented by grants that allow for the innovation and experimentation that sustainability alone cannot accommodate.
Recovery from systemic disruption takes longer than the disruption itself. That is true in addiction recovery. It is also true in systems.
Why this matters at Peerakeet
Peerakeet operates at the intersection of peer support, technology, and recovery systems. As the policy landscape contracts and reshapes, aligning peer services with Medicaid reimbursement is not just a strategic advantage, it is what allows the work to continue. Organizations that remain solely grant-dependent will continue to experience exactly the kind of whiplash the field witnessed in January, while organizations that have built Medicaid-integrated revenue models will be positioned to grow through uncertainty rather than shrink from it.
At the same time, Peerakeet’s model depends on something beyond financial sustainability. It depends on connection to care pathways, to community resources, to the broader web of services that makes peer support meaningful rather than merely symbolic. A weakened behavioral health infrastructure makes that connection harder. It does not make it less important. If anything, a more fragmented system makes the work of building durable, integrated, technology-enabled peer support more urgent than ever.
The risk is not only that the system shrinks. It is that it becomes so fragmented that connection itself becomes the scarce resource. That is the problem Peerakeet exists to solve.
References
Behavioral Health Business. (2026, January 15). SAMHSA reverses $2B in grant cuts, but funding fears remain. https://bhbusiness.com/2026/01/15/samhsa-reverses-2b-in-grant-cuts-but-funding-fears-remain/
Kaiser Family Foundation. (2023). Medicaid behavioral health services: Peer support services. https://www.kff.org/data-collections/medicaid-behavioral-health-services/
National Academies of Sciences, Engineering, and Medicine. (2020). Key policy challenges and opportunities to improve care for people with mental health and substance use disorders: Proceedings of a workshop. The National Academies Press. https://doi.org/10.17226/25690
National Alliance on Mental Illness. (2026, January 14). NAMI reacts to abrupt termination of SAMHSA grants. https://www.nami.org/press-releases/nami-reacts-to-abrupt-termination-of-samhsa-grants/
NPR. (2026, January 15). 24 hours of chaos as mental health grants are slashed then restored. https://www.npr.org/2026/01/15/nx-s1-5677711/mental-health-addiction-grants-cut-then-restored
STAT News. (2026, January 14). SAMHSA reverses cuts to mental health, substance abuse grants. https://www.statnews.com/2026/01/14/samhsa-grant-cancellations-alignment-trump-priorities/
Substance Abuse and Mental Health Services Administration. (2023). National model standards for peer support certification (Publication No. PEP23-10-01-001). U.S. Department of Health and Human Services. https://library.samhsa.gov/product/samhsas-national-model-standards-peer-support-certification/pep23-10-01-001
U.S. Department of Health and Human Services. (2026). FY 2027 budget in brief.https://www.hhs.gov/about/budget/budget-in-brief/index.html