By Jennifer Calfas and Alyssa Lukpat

The Health and Human Services Department has reversed around $2 billion in grant cuts to substance-abuse and mental-health programs, rescinding termination notices that sent shock waves through organizations that receive funding to help people in recovery and those experiencing mental illness.

Letters sent to funding recipients said the grants were terminated as of Tuesday, Jan. 13, according to copies obtained by The Wall Street Journal. Some grantees said they got the letter late Tuesday.

On Wednesday, the terminations through Substance Abuse and Mental Health Services Administration, an agency within HHS, were rescinded, according to an administration official.

It wasn't immediately clear why the grant terminations were reversed. The rescinded cuts had affected about 2,000 grants totaling around $2 billion.

Leaders of several organizations that received Samhsa grant termination notices said Thursday morning they hadn't received official notice from HHS that those cuts had been reversed. Some groups receiving the grant money had said they would have to lay off workers and cut services to people in need.

The termination letter sent to grantees said the agency was ending some of its grants and adjusting its discretionary awards to better align with administration priorities. Those priorities included programs focused on addressing substance-abuse conditions, overdose, suicide, mental illness and other issues, the letter from Samhsa's principal deputy assistant secretary said.

Some professional medical societies and lawmakers criticized the terminations and how they were handled.

"This episode has only created uncertainty and confusion for families and healthcare providers," Rep. Rosa DeLauro (D., Conn.) said Wednesday night. "I hope this reversal serves as a lesson learned."

Yngvild Olsen, a former director of the center for substance-abuse treatment at Samhsa, said many of the grants that were cut ranged from $300,000 to $750,000. "That's a really big hole to have to fill for nonprofit organizations," she said Wednesday, before news that cuts were rescinded.

Ryan Hampton, the co-founder of the nonprofit Mobilize Recovery, said Wednesday his organization was facing cuts amounting to nearly $500,000 from a multiyear grant.

The cuts in grant funding would have affected the nonprofit's training, education and technical support for people in recovery, Hampton said. It may also have affected the group's distribution of free naloxone, a medication used to reverse opioid overdose, he said.

"My hope is that we do not have to lay people off," Hampton said Wednesday. "But certainly we will need to scale back services."

Michelle Lennon, the president and chief executive of New Hampshire-based organization Archways, on Wednesday said the group may have to end a program helping children affected by substance use and terminate an initiative pairing recovery coaches with people released from prison due to the grant cuts. She said her organization was losing $300,000 from the grant cuts, out of an annual budget of under $3,000,000.

"It's like they're ripping down our whole mental-health system," she said, before HHS reversed its decision.

Write to Jennifer Calfas at jennifer.calfas@wsj.com and Alyssa Lukpat at alyssa.lukpat@wsj.com

(END) Dow Jones Newswires

January 15, 2026 12:35 ET (17:35 GMT)

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