D.C. Faces Backlash Over Plan to Use Opioid Settlement Funds for Medicaid and Existing Treatment Costs
The approval of the district's fiscal 2027 budget in June. She said the budget makes use of available local resources, including the opioid settlement fund, to provide grants to 17 community-based organizations.
According to the department, those organizations served nearly 9,800 residents during the previous year, including apprWashington, D.C., is preparing to redirect millions of dollars from its opioid settlement fund toward expenses that have traditionally been covered by the city’s general budget. The proposed shift is prompting concern among addiction-recovery advocates, people affected by the opioid crisis, and members of the commission responsible for advising the district on how settlement funds should be spent.
For years, Washington, D.C., has financed its share of Medicaid—the joint federal and local health insurance program serving low-income residents—through its general operating budget. Beginning next year, however, the district plans to use opioid settlement money to cover a portion of that recurring multimillion-dollar obligation.
The proposal has raised questions about whether money intended specifically to address the opioid crisis is instead being used to replace funding that the city would otherwise have provided from its regular budget.
Settlement Funds Were Intended to Address the Opioid Crisis
The opioid settlement payments come from pharmaceutical manufacturers, distributors, and other companies accused of contributing to the nation's opioid epidemic through the production, distribution, or marketing of prescription pain medications.
Across the United States, state and local governments are expected to receive more than $50 billion over nearly two decades through various opioid settlements. Washington, D.C., is projected to receive more than $100 million.
The funds are generally intended to support efforts that reduce the damage caused by opioid addiction and overdose. That can include expanding treatment services, establishing prevention programs, improving recovery resources, increasing access to medications for opioid use disorder, and supporting other initiatives designed to address the consequences of the crisis.
However, governments across the country are facing increasing financial pressure because of inflation, reductions in federal funding, and rising healthcare and operating costs. Those pressures have led some jurisdictions to consider using opioid settlement money to cover expenses that would otherwise come from general government revenues.
Such practices, often described as supplantation, have generated controversy because advocates argue that settlement funds should provide additional resources rather than simply replace money that was already allocated to addiction services.
“These funds were awarded to D.C. for very specific reasons and with a specific mandate, which are to remediate issues related to the opioid crisis in new and innovative ways,” said Queen Adesuyi, a partner at Reframe Health and Justice, a consulting organization that works with community-based groups.
Adesuyi has criticized the district's proposed fiscal year 2027 budget and questioned whether the planned use of settlement money is consistent with the purpose of the funds.
Millions Could Replace Existing Budget Dollars
Documents related to the district's fiscal 2027 budget show that approximately $2.3 million in opioid settlement funds could be directed toward Washington, D.C.'s Medicaid contribution.
The proposal would also allocate at least $5.5 million in settlement money to addiction treatment centers that had previously received funding from the city's general budget.
Critics argue that this approach does not represent a meaningful increase in addiction-related spending. Instead, it would allow the district to replace existing general-fund dollars with settlement funds, effectively keeping overall spending on treatment relatively flat.
Shelly Weizman, associate director of the Center on Addiction and Public Policy at Georgetown Law's O'Neill Institute, said settlement money should not be treated as a backup source of revenue for obligations the government already has.
“Opioid settlement dollars are not meant to be a rainy-day fund for existing government obligations,” Weizman said.
More than 80 individuals and 30 organizations signed a letter objecting to the proposed use of the money. The letter accused the district's Department of Behavioral Health of using opioid settlement funds to effectively cover existing financial obligations rather than expanding the district's response to the opioid crisis.
The letter was addressed to Department of Behavioral Health Director Barbara Bazron, D.C. Council Health Committee Chair Christina Henderson, and Attorney General Brian Schwalb.
Advisory Commission Raises Supplantation Concerns
Chad Jackson, who is in recovery and chairs the district's Opioid Abatement Advisory Commission, has also criticized the proposal.
The commission was established to provide guidance on how Washington, D.C., should use the opioid settlement funds it receives. Jackson characterized the proposed budget approach as supplantation—a strategy in which money from one funding source replaces money that would otherwise have been provided from another source.
“If the opioid settlement funds were not there, I feel pretty confident that these things would have been funded, because they have to be funded,” Jackson said.
Jackson also argued that the proposed approach conflicts with the district's opioid litigation law.
Under that law, money in the district's opioid abatement fund is required to “supplement, and not supplant” existing resources.
Weizman described the statutory language as particularly clear.
“It’s a pretty tightly written law where the intent is very clear: Do not supplant,” she said.
Adesuyi likewise argued that the district is failing to follow the intent of the law. She described the situation as deeply frustrating for people who have been directly affected by substance use and overdose.
Officials Question Whether Spending Is Authorized
The controversy has also drawn attention from elected officials.
Councilmember Christina Henderson and Attorney General Brian Schwalb raised concerns about the proposed spending in a July 17 letter to the Department of Behavioral Health.
The officials specifically highlighted the approximately $2.3 million planned for the district's Medicaid contribution and requested that the department explain how it determined that using opioid settlement funds for that purpose complied with the law.
It remains unclear whether the Department of Behavioral Health provided a response by the requested July 31 deadline. The department, Henderson's office, and the attorney general's office did not provide an answer to that specific question.
The Department of Behavioral Health, however, said it remains committed to complying with the legal requirements governing opioid settlement funds.
Department spokesperson Denise Reed said the agency's position is that its budget was approved by the D.C. Council and that the money supports programs intended to address opioid addiction.
Reed also pointed to the council'oximately 3,500 people receiving medication-assisted treatment for opioid addiction.
Budget Still Under Review
Washington, D.C.'s budget has not yet completed the entire approval process. It remains subject to a 30-day congressional review, which represents the final stage of the district's annual budget process.
That leaves open questions about how the opioid settlement money will ultimately be allocated and whether changes will be made before the fiscal year begins.
For advocates and residents who have pushed for greater investment in overdose prevention and addiction treatment, however, the debate goes beyond a single budget line.
They argue that the opioid crisis continues to evolve and that settlement funds provide an opportunity to expand services, respond to emerging threats, and reach people who remain underserved.
Adesuyi said the changing illicit drug supply makes flexibility and innovation increasingly important. As new and unpredictable substances continue to appear, she believes government agencies need to be able to respond quickly and invest in interventions that directly address emerging risks.
“The drug supply is getting a lot more unpredictable, which calls for some nimbleness, and it calls for interventions that are more courageous,” she said.
Adesuyi believes the district is falling short of that standard.
For advocates, the concern is that replacing existing government funding with settlement money could reduce the opportunity to make new investments in prevention, treatment, recovery, and harm-reduction services at a time when those resources remain urgently needed.
“It’s frustrating, it’s disappointing, and it’s enraging because people are dying unnecessarily in the district to overdose,” Adesuyi said.
Source: US News