As measles cases rise across the U.S., children’s routine vaccination rates continue to decline while exemptions from school vaccination requirements, particularly non-medical exemptions, have increased. These trends began during the COVID-19 pandemic and have continued (Figure 1), signaling a shift in attitudes toward childhood vaccinations. This period has seen widespread vaccine misinformation and more skepticism among the public about the safety and effectiveness of measles vaccines as well as a decline in trust of health authorities in general and increasingly partisan views on vaccine requirements. Department of Health and Human Services (HHS) Secretary Kennedy and the Trump administration have also made significant changes to federal vaccine policy, including several attempts to change childhood vaccine recommendations and dropping Medicaid vaccine reporting requirements. Due to recent federal actions, most states have announced that they are no longer following federal recommendations as their benchmark for some or all childhood vaccines. As the school year begins, these changes along with changes to school vaccine exemption requirements in some states may increase confusion for families and could further drive down vaccination rates among children. This issue brief provides an update on the latest trends in kindergarten children’s routine vaccination and exemption rates as state and federal vaccination policy continues to evolve.

What are recent trends in kindergarten children’s routine vaccination rates?

The share of kindergarten children up to date on their vaccinations continues to decline. Data collected and aggregated annually by the CDC from state and local immunization programs found that 92.4% of kindergarteners had been vaccinated against measles, mumps, rubella (MMR) and polio and 92.0% against DTaP (diphtheria, tetanus, and acellular pertussis) for the 2025-2026 school year. This is down from 95% across all three vaccines for the 2019-2020 (pre-pandemic) school year and below coverage levels of the past decade. MMR vaccination rates also fall below the Healthy People 2030 “target” rate of 95%, the level needed to prevent community transmission of measles, leaving approximately 280,000 kindergarteners  unvaccinated and unprotected against a highly contagious and life-threatening virus. While measles has been officially “eliminated” from the U.S. since 2000, measles cases have surged over the past two years. In 2026, the U.S. has reported more cases of measles than in any year since 1991, putting the U.S.’s elimination status at risk. Measles cases have been reported in most states, with South Carolina, Utah, Pennsylvania, Texas, and Virginia seeing the largest outbreaks so far in 2026.

Over three-quarters (39) of states had MMR vaccination rates below the “target” rate of 95% for the 2025-2026 school year (Figure 2). Further, 18 states reported rates below 90% for the 2025-2026 school year. This is compared to only 28 states below 95% and three states below 90% before the pandemic began. In the last year alone, over half of states experienced declines in vaccination rates for MMR, DTaP, polio, and varicella. There is also substantial variation in vaccination rates across states, with MMR coverage rates among kindergarteners for the latest school year ranging from a low of 75.2% in Idaho to a high of 98.9% in West Virginia. There can also be variation in vaccination coverage within states, and, when there are clusters of unvaccinated people within a specific community, the risk of an outbreak is higher.

What are recent trends in kindergarten children’s vaccine exemption rates?

At the same time, the share of kindergarten children with an exemption from one or more required vaccinations increased. The share of children claiming an exemption from one or more vaccinations rose from 2.5% in the 2019-2020 school year to 4.2% in the 2025-2026 school year, the highest national exemption rate to date. Increases in non-medical exemptions accounted for the recent increases; non-medical exemptions increased from 2.2% to 4.0% while medical exemptions declined slightly from 0.3% to 0.2% from 2019-2020 to 2025-2026. While a seemingly small increase in non-medical exemptions, any increases limit the overall share of children able to be vaccinated and make it more difficult to reach vaccination rate goals. Studies have shown that higher exemption rates are associated with lower vaccination coverage rates and increased risk for disease outbreaks.

Almost half (24) of states in the 2025-2026 school year had vaccine exemption rates over 5% (Figure 3). This is up from eight states during the pre-pandemic school year. Exemption rates over 5% make it impossible to reach vaccination coverage rates at or above 95% even if all non-exempt children were vaccinated (rates shown here are for exemptions to one or more vaccines, so potentially achievable coverage rates could vary by vaccine type). In the last year alone, most states experienced an increase in the share of kindergarteners claiming an exemption for one or more vaccines. States and local jurisdictions, not the federal government, set vaccine requirements and exemption criteria for daycare and school entry. As of 2026, all states and DC required children to be vaccinated against certain diseases, including MMR, to attend public schools, though exemptions are allowed in certain circumstances. All states allow a medical exemption, and almost all (46 states including DC) allow for a religious or personal belief exemption (or both). In recent years, some states have pursued changes to reduce or eliminate requirements or expand non-medical exemptions, which could further impact children’s vaccination trends.

Key Points

• The Constitution gives authority to state and local governments, not the federal government, to set school vaccine requirements and currently all 50 states and DC currently require certain vaccines for school attendance. All jurisdictions require MMR, DTaP, polio, and varicella vaccination for school-age children, while requirements for several other vaccines vary by state. All states allow for exemptions to these requirements.
• Jurisdictions differ substantially in how they allow parents to claim exemptions from school vaccine requirements. All states permit medical exemptions, while 45 states and DC permit religious and/or personal belief exemptions. States also vary widely in the documentation, review, and other requirements for obtaining an exemption.
• Due to actions by the Trump administration, which has questioned the safety and effectiveness of vaccines and sought to reduce the number of recommended childhood vaccines, a growing number of states has begun to delink their recommendations from those of the federal government, which may have implications for school vaccine requirements. As of August 2026, 30 states and DC had announced that they would no longer follow Centers for Disease Control and Prevention’s (CDC) Advisory Committee for Immunization Practices (ACIP) recommendations for one or more childhood vaccines, with 27 states delinking from CDC/ACIP recommendations for all childhood vaccines. Because state and local school vaccination policies may be linked to states’ broader childhood vaccine recommendation policies, these moves could have implications for school entry requirements.
• Recent state policy changes have generally made non-medical exemptions easier to obtain. Since 2025, at least nine states have enacted changes that make non-medical exemptions more permissive, including by reducing documentation or procedural requirements. Research indicates that easier-to-obtain non-medical exemptions are associated with higher exemption rates and, in turn, declining childhood vaccination coverage.

These trends are taking place in the context of falling national childhood vaccination rates since 2019, declines that are entirely attributable to the growth in non-medical exemptions. Higher exemption rates have been associated with increased incidence of diseases such as measles and pertussis, indicating continued outbreaks that place more children at risk for vaccine-preventable diseases in the U.S. are likely. 

Evolution of School Vaccine Requirements

Under the U.S. Constitution, states (and local governments) have the authority to impose immunization requirements, not the federal government (see Box 1). The earliest known school vaccine requirements in the U.S. were put in place by a local government in the 19^th century, when Boston enacted a city-wide requirement for smallpox immunization for school entry in 1827. In 1855, Massachusetts enacted the first state-level school vaccine mandate, also for smallpox. As more childhood vaccines were developed and recommended for routine use over time, states began adding additional requirements for diphtheria, tetanus, pertussis, and polio. By 1963, 20 states required at least one vaccine for children to attend school.

In the 1960s, the federal government also increased its support to states for vaccinations and broadened its immunization-related policy-making efforts. In 1962, Congress created the Public Health Service Section 317 Immunization Grants Program, which allowed federal funds to be directed to state and local jurisdictions for purchasing vaccines. In 1964, a new specialized expert committee called the Advisory Committee on Immunization Practices (ACIP) was established at the federal level to provide guidance regarding vaccines. ACIP was designated an official federal advisory committee and placed organizationally under the Centers for Disease Control and Prevention (CDC) Director in 1972. The 1960s and 1970s also saw the licensure of new combination measles, mumps and rubella (MMR) vaccines, coinciding with a number of measles outbreaks among children that drew national attention, and  spurred expanded federal and state efforts to strengthen and update vaccination laws (the measles vaccine was added to the federal 317 program in 1965). In the 1970s, large measles outbreaks in Alaska (1976) and Los Angeles, California (1977) led policymakers in those states to enact stricter measles vaccination requirements for school children that resulted in lower measles incidence, demonstrating to policymakers nationwide that enforcement of immunization requirements was possible, acceptable, and effective for most communities. Subsequently, CDC encouraged all states to implement school immunization requirements. 

By 1981, all 50 states and DC had some form of school immunization requirements, and in the 1981-82 school year, vaccination levels in school entrants nationwide had reached 96% or higher for diphtheria-tetanus-pertussis (DTP), polio, and measles vaccines. In 1983, CDC/ACIP published the first general federal recommendations for childhood vaccinations, which were updated in 1989 and eventually merged with the recommended schedule issued by the American Academy of Pediatrics (AAP) in 1995. Throughout the 1990s and 2000s more vaccines were added to the CDC/ACIP recommendations for children and adolescents, including Hepatitis A, Hepatitis B, Haemophilus influenzae type b (Hib), pneumococcal, rotavirus, varicella, human papillomavirus (HPV), and meningococcal vaccines. Over time, states have integrated many of these vaccines into their school immunization policies as well, though the specific set of required vaccines varies across states, as described below.

Current state policies on school vaccination requirements

As shown in Figure 1, all 50 states and DC require MMR, DTaP, polio, and varicella vaccines for school-age children. Forty-nine states and DC also require Hepatitis B (Alabama is the exception), with three of those states requiring Hepatitis B for childcare settings only (Maine, Montana, South Dakota). Thirty-five states require meningococcal vaccines for school-age children, while 27 states require Hepatitis A. Just four jurisdictions require HPV vaccines for school-age children (DC, Hawaii, Rhode Island, and Virginia).

State Exemption Policies for School Vaccine Requirements

While all states allow for individual exemptions to state school vaccination requirements, the extent of these exemptions vary. They fall into two general categories: “medical” (exemptions based on medical contraindications) and “nonmedical” (exemptions based on religious beliefs or other personal/philosophical beliefs). Currently, all states allow for medical exemptions, while 45 states and DC allow for religious and/or personal belief exemptions (the exceptions are California, Connecticut, Maine, New York, and West Virginia). Of the jurisdictions allowing non-medical exemptions (see Figure 2):

• 30 states allow religious exemptions only
• 15 states allow religious and personal belief exemptions
• 1 state (Minnesota) allows personal belief exemptions only

States also vary in how difficult it is to obtain an exemption and in their oversight of exemptions. All states require some form of documentation from a health care professional to grant a medical exemption, though how rigorous the process is differs across states. Likewise, in states that allow for nonmedical exemptions, documentation and approval processes can vary in their rigor and requirements. For example:

• In California, physicians issuing medical exemptions must use a centralized system, all exemption requests are reviewed by the state’s health department that has the authority to invalidate inappropriate requests, and justifications must adhere to standards for medical contraindications (previously, the state linked its standards for medical exemptions to CDC/ACIP recommendations, but as of 2025 uses AAP criteria instead). In New York, review and enforcement for exemption requests is the responsibility of school officials (the state has also delinked its standards for medical contraindications from CDC/ACIP, linking to AAP instead). In Mississippi, the state health department reviews all medical and non-medical (religious) exemption requests.
• In West Virginia, medical exemptions are reviewed by the state health department and must adhere to guidance from ACIP, AAP, and AAFP. In January 2025, the governor issued an executive order newly allowing religious and personal belief exemptions in the state, setting off a legal battle with the Department of Education. Currently, religious and personal belief exemptions in West Virginia are on hold while the state Supreme Court considers the case. 
• In Oregon, nonmedical exemptions are allowed but parents must receive counseling about disease risks and vaccine benefits before their child can be granted the exemption. In Washington, religious exemptions simply require parents to complete a form, while personal belief exemptions require parents to receive counseling prior to granting the exemption.
• In states such as Arizona, Idaho, Oklahoma, and Texas, nonmedical exemptions are granted after parents submit a form requesting them, with no counseling or health professional certification required.

Since 2025, at least 9 states have enacted policy changes that are more permissive for non-medical exemptions. For example, in Texas a new law allows parents to download the state’s non-medical exemption form directly rather than first having to submit a written request to the state’s health department for the form, and Utah has made a student’s vaccine exemption form a part of their permanent school record, allowing the form to remain valid even if a student transfers schools. In New Hampshire, advanced practice registered nurses and physician associates have recently been added as health care providers with the authority to sign school vaccination exemption forms and a new law requires that materials about school vaccine requirements include the statement “Medical and religious exemptions are available under New Hampshire law.”

State Procedures for Setting School Vaccination Requirements

Each state has its own legal and organizational process for setting school entry immunization requirements, which can range from a more statutory process where state legislatures determine most key school vaccination policies, to a more administrative, one where state health departments or other agencies have the responsibility and authority to determine these requirements. Many states have a mix of these elements, such as using a statutory process for some vaccines and an administrative process for others, or where state law determines which vaccines are required while administrative processes determine the specifics such as dosages and schedules. For example:

• Pennsylvania, Mississippi, South Carolina, and Virginia are states with a more administrative approach, where state health (or other) agencies have significant responsibilities in determining school vaccination requirements. In these cases, the state legislature has established the general requirement that children attending school must be immunized but has delegated authority to state agencies to determine the specific vaccines, dosages, and other technical requirements.
• In Arkansas and Florida, state legislation sets school vaccination requirements for specific vaccines, while giving the health department responsibility for other vaccines. In Florida, for example, state laws set the requirement that Diphtheria-Pertussis-Tetanus (DPT), MMR, and polio vaccines are required for school entry, but allow the health department to set requirements for other vaccines such as hepatitis A, pneumococcal, and varicella.
• In Kentucky, Maine, and West Virginia, state laws identify the full set of diseases students must be immunized against, but health departments and/or education departments are empowered with the responsibility to establish dosages, schedules, exemption policies, and other technical requirements.

In many states, childhood vaccination recommendations in the past have been linked to guidance from the CDC/ACIP and in some cases this has included school vaccination policies, such as when states link their allowed medical contraindications for exemptions to CDC/ACIP guidance, as mentioned above. However, since 2025 the Trump administration has sought to make changes to federal vaccine recommendations for children, including by issuing a new federal childhood vaccine schedule in January 2026 (which has been temporarily blocked by a federal judge) and issuing an Executive Order (EO) in August 2026 calling for changes to the federal childhood vaccine schedule and specifically asking States and territories to “consider updating relevant laws and regulations that define the scope of immunization requirements for contexts such as school enrollment and attendance.” In anticipation of and in reaction to the Trump Administration’s policy changes, starting in 2025 a number of states began announcing they will no longer link their own recommendations to those of CDC/ACIP. As of July 30, 2026, most states (30 states, including DC), announced they would no longer follow the CDC/ACIP general childhood vaccine recommendations for one or more childhood vaccines, with 27 doing so for all childhood vaccines, and instead rely on prior recommendations, state recommendations, and/or those of external entities such as AAP. No states have made policy changes in line with the August 2026 EO.  At least 10 state and local jurisdictions have announced specifically that their school vaccine requirements have not changed as a result of the EO.

The 2025 reconciliation law reduced federal Medicaid spending by an estimated $911 billion from 2025 through 2034, some of which stems from new restrictions on Medicaid state directed payments (SDPs) for hospital and other health care services. While states are generally prohibited from directing how managed care organizations (MCOs) pay for care, states can implement SDPs that require MCOs to increase rates or set minimum rates for specified Medicaid services. In authorizing SDPs and allowing states to require payments up to the rates paid by private insurers, the Centers for Medicare and Medicaid Services (CMS) aimed to help states improve access to care and provider participation. A 2024 rule on Medicaid managed care that codified rules for SDPs increased states’ use of SPDs and associated federal spending, spurring opponents to argue that private insurance rates were too high a threshold. Many states that contract with MCOs use SDPs to make uniform rate increases that function like supplemental payments in fee-for-service (FFS) Medicaid. This issue brief explores the state-level implications of forthcoming restrictions for SDPs, focusing on SDPs that pay for hospital services because KFF estimates that 84% of SDP spending is directed toward hospital services. Two companion issue briefs provide a summary of forthcoming changes and estimate current SDP spending before forthcoming restrictions take effect.

The analysis estimates the amount of current federal spending on SDPs for hospital services that exceeds the new limits established by the 2025 reconciliation law. In practice, the new limits will be gradually phased in over time for existing SDPs. In some cases, spending on SDPs could also be affected by new limits on provider taxes prior to the SDP limits taking effect, or the two changes will affect SDPs concurrently. The findings of this analysis demonstrate the potential amount of federal funding for hospital services that would be above the new limits (when fully implemented), providing a sense of the eventual magnitude of the changes and how they vary by state. The focus is federal funding because many states finance SDPs through either provider taxes or intergovernmental transfers (IGTs), making it difficult to determine the amount of net revenues health care providers receive. This analysis finds that:

• At least 37 states have Medicaid state directed payments for hospital services that could be reduced by the 2025 reconciliation law limits based on their current payment policies (Figure 1).
• An estimated $60 billion in current federal spending for hospital services through SDPs is above new limits and could be reduced when the new limits on SDPs are fully implemented.
• More than half of the estimated potential reductions in federal SDP spending on hospital services above new limits comes from eight states (CA, IL, KY, TX, NC, LA, AZ and MI).

Among SDPs which started on January 1, 2024 or later and were approved through May 12, 2026, KFF estimates that SDPs with payments for hospital services in 37 states are likely affected by the limits. Of those SDPs, KFF was able to estimate the amount of spending directed to hospitals that exceeded the new payment limits in 131 “preprints” filed by 35 states (see Methods for a description of KFF’s criteria for including preprints in the analysis). Preprints are application forms that document how states direct Medicaid managed care plans to pay providers using SDPs. Preprints are the only national source of data on SDPs but are limited because there are gaps in data provided by the preprints. For example, the preprints include states’ projected spending on SDPs but not actual spending, do not document how total spending is allocated across different services when a single SDP governs payments for multiple services, and omit details about the required payment rates for about half ($39.6 billion) of all hospital spending in this analysis. Such data gaps required KFF to impute missing data in several cases and rely on the best available sources of data in others, contributing to uncertainty in the estimates (see Methods). Although the estimated amounts of spending above new limits are uncertain, there are 37 states with SDPs that pay for hospital services using a rate that is based on average commercial rates. Those SDPs will likely no longer be permissible at current rates under the new law.

The 2025 reconciliation law established new payment limits for SDPs, capping them at or near Medicare rates instead of average commercial rates (ACR). The new limits are set in relation to a “benchmark,” which is a standardized rate that measures MCO rates relative to other payment rates such as Medicaid FFS, Medicare FFS, and average commercial (private) rates. Before the reconciliation law passed, CMS capped SDP payment limits at average commercial rates, which average about double what Medicare pays. (Prior federal rules specified average commercial rates were the limit for hospital services, nursing facility services and professional services at academic medical centers. CMS informally applied the same limit to other services.) Under the reconciliation law limits, SDP payment rates may not exceed 100% of the Medicare payment rate in states that have adopted the Affordable Care Act (ACA) Medicaid expansion (“expansion states”) and 110% of the Medicare payment rate for non-expansion states. In June 2025, CMS released a proposed rule that would implement the new changes.

To estimate the share of hospital spending above new limits, KFF started with estimated SDP spending for hospital services from its prior analysis, which also captured states’ estimated base payment rates for hospital services (e.g., without the SDP) and the final payment rates after accounting for SDPs. As noted in the prior brief, many SDPs indicate the type of benchmark used (e.g., average commercial rates or Medicare rates) but do not provide the payment level (e.g., 100% or 80% of average commercial rates). For hospital services with SDPs benchmarked to commercial rates, KFF estimated the Medicare-equivalent rates using RAND’s state-level inpatient and outpatient ratios of commercial to Medicare rates. KFF compared the base and final payment rates to the Medicare-based limits to estimate the amount of SDP spending that would fall above the new Medicare-related limits when the law is fully implemented (see Methods). Making assumptions about missing payment rate information and about conversions to Medicare rates contributes to the uncertainty of KFF estimates.

New limits on SDPs are likely to decrease Medicaid payments for hospital services in at least 37 states (Figure 1). There are 37 states with SDPs that direct payments for hospital services, all of which have at least one SDP with established payment rates for hospital services estimated to exceed the new limits established by the 2025 reconciliation law. Additional states could be affected by the new limits if there are SDP preprints that CMS has not yet approved or published, and all states are limited in their ability to create new SDPs. Some states may not know whether they will be able to implement planned SDPs. For instance, Colorado submitted an SDP proposal to CMS on June 27, 2025 that would pay hospitals using average commercial rates. The proposal notes that the program could represent an additional $378 million in reimbursements to Colorado hospitals. However, as of July 20, 2026, CMS had not published the preprint on its approved list (although it was posted as of August 11, 2026).

An estimated $60 billion in current federal spending for hospitals through SDPs could be reduced once the new limits take full effect (Figure 2). This represents 64% of federal spending on SDPs and 77% of federal spending on SDPs for hospital services. The $60 billion is an estimate of the amount by which federal payments would currently be above the new limits if those limits were in effect today. It does not represent the amount by which federal payments would be reduced in any given year, since these limits will be phased in over time starting in January 2028 and will fully take effect at different times in different states.

The $60 billion in federal SDP spending above new limits does not represent annual estimates of hospitals’ Medicaid revenue losses. Although the new limits on SDPs have major implications for hospital finances, spending above the new limits is not equivalent to the yearly change in revenues hospitals might expect. Actual revenue losses for hospitals could be higher or lower because of interaction with other policy changes and state and hospital behavioral responses:

• Additional Medicaid policy changes. The 2025 reconciliation law is estimated to reduce federal Medicaid spending by $911 billion, with several policies expected to reduce hospital revenues. For example, changes to provider taxes could affect how states finance the state share of Medicaid. In a proposed rule on the provider tax changes, CMS reports that the changes to SDPs in total (which include providers other than hospitals) are estimated to reduce federal Medicaid spending by $510 billion from 2026-2034, but that $155 billion of those reductions are also part of the reduced spending stemming from changes to provider tax rules. Beyond provider tax changes, hospital revenues will be affected by new work requirements and other provisions that could result in fewer patients being covered by Medicaid, and more people being uninsured.
• State Medicaid dollars above new limits. New SDP spending limits may also reduce state spending, but this analysis only includes the federal share. The state share is excluded because states fund some or all the state share for SDPs with provider taxes or intergovernmental transfers from entities such as public hospitals. In such cases, it is unclear how much the state share represents new revenues to hospitals in aggregate.
• Possible offsets from states. States might offset some of the reductions in SDP revenues by increasing base payment rates for hospital services, although their ability to do so may be limited given new restrictions on financing mechanisms like provider taxes.

More than half of the estimated potential reductions in federal SDP spending on hospital services comes from eight states (Figure 3). California ($7.4 billion), Illinois ($4.0 billion), Kentucky ($3.9 billion), Texas ($3.5 billion), North Carolina ($3.4 billion), Louisiana ($3.3 billion), Arizona ($3.0 billion), and Michigan ($2.6 billion) have the largest estimated amounts of federal SDP spending for hospital services above new limits. Although the analysis focused on federal spending, if total spending were instead used, the same eight states would still account for more than half of spending above the new limits. Rhode Island, Delaware, and New Hampshire have the smallest estimated amounts of federal SDP spending for hospital services above new limits (accounting for a combined total of $0.4 billion in federal spending).

The dollar amount of SDP spending above new limits may not indicate which states could have the biggest proportional effects when the law is fully implemented. For instance, although California has the largest estimated amount of hospital SDP spending above new limits, it also had the highest Medicaid spending in 2024. It is possible that other states’ spending over the new limits may account for a larger share of those states’ Medicaid spending. Data for Medicaid hospital spending by state in 2025 and 2026 are not yet available, making it difficult to look at SDP spending as a share of total Medicaid spending across states.

Across states, there is variation in the share of SDP spending that is estimated to be above new limits (Figure 4). Estimated spending above new limits as a share of all hospital SDP spending range from 9% in New Hampshire to 100% in two states (Louisiana and DC). In KFF’s analysis of SDP spending for hospital services above new limits, in 27 states at least 70% of SDP spending for hospital services is above the new limits.

KFF includes Minnesota and Missouri in the 37 states that are likely affected because they both have SDPs that pay for hospital services using a benchmark linked to average commercial rates. However, the preprints for those SDPs did not meet KFF’s inclusion criteria for this analysis because data were insufficient to estimate the amount of spending at risk under the new limits. As a result, Minnesota and Missouri are excluded from the analyses of the amount of SDP spending at risk under the new limits (see Methods).

A key factor in determining how much of the SDP spending exceeds the new payment limits is the level of base payment rates. States with lower base rates may be spending more through SDPs to bring total payment rates up to 100% or 110% of Medicare rates, and therefore, more of the SDP will fall below the new limits established by the 2025 reconciliation law. Conversely, in states where the vast majority of estimated SDP spending exceeds the new limits, base payments are estimated to be at or near the reconciliation law limits.

Hospitals will likely vary in how they are impacted by lower SDP spending, and it is unknown how the new limits will affect access to care among Medicaid enrollees. The effects for specific hospitals will depend on how much they are currently receiving in SDPs, how much their revenues decline as the new limits take effect, the interaction with changes to provider taxes, and how dependent they are on SDP revenues. Effects will vary across states but also within states because states may direct SDPs to a subset of hospitals, or sometimes a single hospital, and among eligible hospitals, SDPs vary with Medicaid patient volume. Hospitals’ ability to absorb reduced payment rates also varies. For hospitals with relatively high operating margins (such as for-profit hospitals and those serving relatively large shares of commercial patients), changes to SDP revenues might be more easily absorbed. On the other hand, hospitals with relatively low operating margins (like rural hospitals and those serving relatively large shares of Medicaid patients) may adapt in ways that affect Medicaid enrollees’ access to care, such as by cutting service lines or closing.

Methods

Data source: This analysis uses data available from the list of approved state directed payment preprints published by the Centers for Medicare and Medicaid Services (CMS) as of May 12, 2026. The approved state directed payment (SDP) preprints are PDF versions of forms that are completed by states and approved by CMS. States are required to seek approval using such a preprint for any SDP that requires managed care organizations (MCOs) to pay for services at any rate other than fee-for-service (FFS) Medicare or Medicaid rates. The approved preprints are often posted online 6–12 months after their start date, although some approved preprints are posted online much later.

KFF developed a Python script to download the available PDFs, extract relevant data from them, and standardize certain fields. Each preprint was turned into one row in a spreadsheet. Data from tables within the preprint were extracted and converted into separate tables in KFF’s data file with each row in the preprint table converted into a row in the spreadsheet table.

SDP preprint inclusion criteria: KFF included all SDPs in the analysis with a rating period start date of January 1, 2024, onward for the 50 states and Washington DC (hereafter referred to as a state). Puerto Rico was the only territory that had published SDPs, which were excluded. In each case, KFF only kept the most recent preprint for any given SDP. For example, if an SDP had an initial approval in 2024 and then renewals in 2025 and 2026, KFF would only include the 2026 renewal in the final dataset. Out of the 304 preprints included in this analysis, 23 (totaling $8.6 billion in federal spending) ended in calendar year 2024.

A small number of SDP preprints were excluded due to file formatting or data validity issues. Specifically:

• Data from five preprints were encoded differently, so the data could not be programmatically extracted into the dataset and were therefore excluded from the analysis (two from New Hampshire, one from Ohio, and two from Florida, totaling $89 million in federal spending for one year).
• Data from preprints that had obvious data quality issues were excluded from this sample. For instance, two were from Illinois (which projected total annual spending of more than $100 billion) while one from Minnesota did not report spending data in the preprint.

KFF also reviewed all preprints with end dates prior to July 1, 2025, and excluded preprints for the following reasons.

• The preprint was likely funded from COVID-19 relief dollars (including the increased federal funding for home care from the American Rescue Plan Act) and so unlikely to still be in place.
• The preprint was likely combined into a different preprint when renewed or was otherwise renamed when renewed.
• The preprint ended in 2024, and online research suggests that the payment was discontinued.

For purposes of identifying which states are likely affected by new limits, KFF manually reviewed SDPs in Minnesota and Missouri, which were the only two states with at least one preprint directed to hospital services but which did not meet the inclusion criteria. Upon review, KFF determined that preprints for hospital services in these states would also likely be affected.

See Methods Table 1 for a list of the inclusion criteria, the counts of preprints after each criterion was applied, and the federal spending for preprints that were retained at each stage.

Calculating total spending on SDPs: This analysis used the states’ projected total, federal, and state spending from the preprint. Most preprints are for a one-year period, but some are for longer or shorter periods. In such cases, KFF adjusted the data to be a one-year equivalent. When preprints were for periods shorter than 12 months, dollars were scaled up (e.g., if the preprint was for 6 months, the spending was multiplied by two) and for preprints that were for periods longer than 12 months, spending was scaled down (e.g., retaining two-thirds of spending if the preprint extended for 18 months).

KFF also manually reviewed the federal spending numbers because some states reported them as percentages of total spending and others reported them as dollar amounts. Manual review ensured the Python script had adequately handled the different reporting structures.

Calculating SDP spending by service type: For preprints that made payments for multiple service types (which accounted for $32.4 billion in federal spending), spending was apportioned across service types.

• For SDPs directed to hospital and non-hospital services, 90% of spending was allocated to hospital services.
• For SDPs directed to both inpatient and outpatient hospital services, 68% of hospital spending was allocated to inpatient services and 32% was allocated to outpatient services. Distinguishing between the two is important because states sometimes use different benchmark rates for each.

Apportioning spending across service types is difficult, and KFF used a variety of sources to develop the most realistic assumptions feasible. KFF analyzed data on Medicaid spending, including CMS-64 spending by service type, data on Medicaid spending by service type from the National Health Expenditures, the Congressional Budget Office Medicaid baseline, and existing studies on hospital payment policies such as those from the Medicaid and CHIP Payment and Access Commission (MACPAC). All of those data points suggest that the vast majority of SDP spending pays for hospital services, and $53.1 billion out of the $60.5 billion in federal spending from preprints directed to a single provider type went to hospital services. KFF also strove to use an assumption that resulted in estimates of hospital SDP spending that are similar to what could be expected on the basis of other data and research as described above.

When identifying the service types in the preprints, the Python script attempted to align service types between preprint Table 2 (which specifies payment rates for sets of providers) and preprint Question 20 (a checklist of services included in the SDP). In many cases, this alignment involved some uncertainty, requiring manual review and classification of service types.

Identifying benchmarks for MCO payments: The most common type of SDPs requires MCOs to make payments that are on top of the regular base payment rate (as opposed to limiting or replacing the negotiated rate). In such cases, payments are measured using a “benchmark” or standardized rate to compare the MCO rates to other payment rates, such as those of Medicaid FFS, Medicare FFS, or the average among commercial payers (“average commercial rates”). KFF used the Python script to identify the applicable benchmark type from the preprint but also manually reviewed the data since states sometimes used inconsistent terminology to report the same benchmarks.

Identifying payment levels: To identify how current payment rates align with the new limits on SDPs in the reconciliation law, KFF first needed to identify payment levels in the preprints. The level is specified as a percentage of the benchmark (e.g., 90% of average commercial rates or 140% of Medicare rates). Both types of payments were pulled from Table 2 when available. Payment rates for inpatient and outpatient hospital services were tracked separately with each row in Table 2 when applicable.

Hospital analysis: The methods above were used in a previous KFF analysis to estimate current SDP spending before new limits take effect. Additional methods below were incorporated into this analysis.

Hospital analysis inclusion criteria: For the analysis of how SDP spending levels align with new limits on SDPs in the 2025 reconciliation law, KFF further limited the analysis to:

• SDPs with inpatient or outpatient hospital services as a service type in Question 20,
• Those required to report a benchmark, and
• Those benchmarked to Medicare or average commercial rates.

Of the 131 preprints included in the hospital spending analysis (accounting for $78.0 billion in federal spending on hospital services), 35 did not include payment levels in Table 2 (accounting for $39.6 billion in federal spending on hospital services). Payment rates were missing for the relevant preprints because states left Table 2 incomplete and instead noted that rates were reported in attached addendums, which CMS generally does not make publicly available (some rate description addendums were at the end of the preprint, but they were not included in this analysis because they were not in a machine-readable format). KFF submitted a Freedom of Information Act request to access the addendum data on August 25, 2025, but, as of July 21, 2026, had not received the addendums or any information about whether the addendums would be available or the timing of their availability.

Comparing payment levels to new limits in the 2025 reconciliation law. In cases where rates were benchmarked to commercial rates, KFF first converted the rates to a Medicare-equivalent rate using state inpatient and outpatient commercial-to-Medicare price ratios from the 2024 RAND Price Transparency Study. The RAND price ratios are approximations, and actual commercial-to-Medicare price ratios may be higher or lower than what was used in the KFF analysis. For instance, RAND price ratios were derived from claims data from 2020–2022, and so may have changed between then and the sample period. RAND price ratios were also based on a sample of claims and are higher than some from other estimates at a national level, but have been used by other researchers to analyze state directed payments.

For SDP preprints that were missing the payment level, KFF estimated the payment rates for hospital services using the payment levels in other preprints. KFF first created national and state-specific (when possible) median payment rates for the following measures:

• Inpatient rates among SDP preprints that are benchmarked to average commercial rates and Medicare rates, and
• Outpatient rates among SDP preprints that are benchmarked to average commercial rates and Medicare rates

Where feasible, the analysis used the applicable state-specific rate (eight states—Georgia, Kentucky, Louisiana, New Mexico, Nevada, New York, Pennsylvania, and Washington). In other cases, the analysis used the applicable national rate (six states—Arizona, California, Hawaii, Illinois, Texas, and Wisconsin). Additionally, for North Carolina, KFF used the state-specific rate for outpatient services and the national rate for inpatient services. KFF’s imputed benchmark rates were more conservative than a RAND analysis of SDPs, in which all missing rates benchmarked to commercial rates are assumed to be 100% of average commercial rates.  For the remaining states, KFF had complete payment rate information from the preprints.

Estimating spending on hospital services above new limits: When the total payment rate (accounting for base payments and the SDP) was below the new limit (100% in expansion states or 110% in non-expansion states; expansion status was pulled from KFF’s Status of State Medicaid Expansion Decision tracker), the SDP was assumed to already be under the new limit and so would not need to be reduced. This was the case for 27 preprints, representing $2.2 billion in federal hospital spending. All other SDPs were assumed to be affected. When the base rate was above the new limit, 100% of the SDP was estimated to be above the new limit (this was the case in 50 SDPs, accounting for $15.0 billion in federal hospital spending).

For SDPs where the base rate was below the new limit, but the total rate of the SDP was above the new limit (a little less than half of preprints in the sample), KFF estimated the amount of federal spending above new limits as detailed below and in Formula 1.

1. The calculation was done separately for each provider row in Table 2, using the federal spending apportioned to each service line (as described above in “Calculating SDP spending by service type”) to calculate the estimated spending above new limits.
2. KFF estimated the difference between the total rate and the maximum rate allowed under the 2025 reconciliation law (both measured relative to Medicare payment rates, as described above), which represents the “portion of increase from the SDP above limit.”
3. KFF also estimated the difference between the total rate and the base rate, which represents the “increase from SDP.”
4. Those two rates were used to estimate the percentage of the SDP spending that would be above new limits.
5. That share was multiplied by the “apportioned federal spending” for the specific service line (i.e., the amount of SDP spending calculated by service type) to estimate the amount of SDP spending above new limits.
6.  The total rate comes from the “Total Payment Level” column of Table 2 (converted into a Medicare-equivalent rate when benchmarked to ACR) and the base rate comes from the “Average Base Payment Level from Plans to Providers” column (converted into a Medicare-equivalent rate when benchmarked to ACR).

Formula 1:

Appendix Table 1

Summary

Actions taken by the Trump administration and Congress will likely have major impacts on health and health care for immigrant families, including reducing the number of lawfully present immigrants eligible for federally funded health coverage under the 2025 reconciliation law. While undocumented immigrants have already been ineligible for federally funded health coverage, the law newly limits Medicaid and Children’s Health Insurance Program (CHIP), subsidized Affordable Care Act (ACA) Marketplace, and Medicare coverage to lawfully present immigrants who are lawful permanent residents (LPRs) or green card holders, certain Cuban or Haitian immigrants, and people residing in the U.S. under Compacts of Free Association (COFA). As such, many lawfully present immigrants, including humanitarian immigrants, such as refugees and asylees, will become ineligible for coverage. However, the law does not eliminate optional Medicaid and CHIP coverage under the Immigrant Children’s Health Improvement Act (ICHIA) for lawfully residing children and pregnant people. This option allows a state to cover a broader group of lawfully present immigrants who meet income and other eligibility requirements. As such, ICHIA coverage could help mitigate potential coverage losses for lawfully present immigrant children and pregnant people.

This brief provides an overview of health coverage of noncitizen children based on KFF analysis of 2024 American Community Survey (ACS) data to provide greater insight into the potential role of ICHIA coverage in limiting the law’s impact on coverage for lawfully present immigrant children. While there are few noncitizen children in the U.S. overall, their access to health coverage has important implications for their health and well-being, including their long-term health and economic stability as adults. Although states can also use ICHIA to expand coverage for lawfully present immigrant pregnant people, this analysis does not include this group since they cannot be separately identified in ACS data. Similarly, the analysis includes all noncitizen children rather than just lawfully present immigrant children, because the data do not provide information on immigration status. However, separate research suggests there are very few undocumented children in the U.S. overall. Key takeaways include the following:

• As of April 2026, 38 states have implemented ICHIA coverage for lawfully residing immigrant children, and over nine in ten (92%) of the approximately 2.6 million noncitizen children in the U.S. live in a state with ICHIA coverage for children.
• Noncitizen children are more likely to be uninsured than citizen children. Recent noncitizen children in the U.S. for less than five years are at the highest risk of being uninsured, with 28% lacking coverage compared to 22% of their longer-term noncitizen counterparts and 5% of citizens.
• The uninsured rate for noncitizen children living in states that have adopted ICHIA coverage for children is lower compared to the rate for noncitizen children living in states that have not (25% vs 37%), likely reflecting a combination of ICHIA coverage and other more expansive coverage policies in these states.

Together, the data show that Medicaid, CHIP, and other public coverage help reduce uninsured rates for noncitizen children, particularly recent noncitizen children living in ICHIA states. Maintaining ICHIA coverage could help mitigate coverage losses for lawfully present immigrant children as the 2025 reconciliation law eligibility restrictions go into effect. Additionally, implementation of ICHIA coverage in the states that have not yet adopted it or that have room to expand it for either children or pregnant people could further limit coverage losses. Even with ICHIA coverage in place, outreach and communication to families and effective processes to screen individuals for eligibility under the option will be important for preventing administrative coverage losses among those eligible as new restrictions are implemented.

Medicaid and CHIP Coverage Under the ICHIA Option

Prior to the 2025 reconciliation law, undocumented immigrants were already ineligible for Medicaid, CHIP, and other federally funded coverage, and lawfully present immigrants faced eligibility restrictions for Medicaid and CHIP. In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act limited Medicaid and CHIP eligibility to certain groups of lawfully present immigrants deemed to have a “qualified status” and required many of these groups to wait at least five years before they could enroll even if they met other eligibility criteria (Table 1). As such, many lawfully present immigrants faced a five-year waiting period for coverage and others remained ineligible regardless of their length of time in the country, although some groups were exempt from the five-year waiting period. Lawfully present immigrants were eligible for ACA Marketplace coverage with subsidies to offset the cost of this coverage during their five-year waiting period for Medicaid or CHIP.

Since 2009, states have had the option to expand Medicaid and CHIP coverage for lawfully residing children and pregnant people under ICHIA. This option extends eligibility to lawfully residing children and/or pregnant people beyond those with “qualified status” and eliminates the five-year waiting period for coverage. As of April 2026, 38 states including DC have taken up this option for children and pregnant people or for children only and 2 states have taken it up for pregnant people only (Figure 1).Most states that have taken up ICHIA for children have taken up other coverage expansion options. These include options such as the ACA Medicaid expansion to low-income adults and fully state-funded coverage for certain groups of immigrants, such as children, regardless of immigration status (Appendix Table 1.)

Health Coverage Among Noncitizen Children

As of 2024, there were approximately 2.6 million noncitizen children ages 0 to 18 residing in the U.S. This includes 61% or 1.6 million who are recent noncitizen children in the U.S. for less than five years and 39% or 1 million who have been in the U.S for five or more years. This group includes both lawfully present and undocumented immigrants, although other research suggests there are very few undocumented children in the U.S. overall.

Noncitizen children are significantly more likely to be uninsured than their citizen counterparts (Figure 2). Recent noncitizen children are at the highest risk of being uninsured, with 28% lacking coverage compared to 22% of their longer-term noncitizen counterparts and 5% of citizens. The higher uninsured rate among noncitizen children reflects a lower rate of private coverage. Rates of public coverage for children are similar across citizenship status and length of time in the country. However, noncitizen children are more likely than their citizen counterparts to live in a low-income family and, therefore, are more likely to be eligible for public coverage yet enrolled at lower rates.

The uninsured rate for noncitizen children is significantly lower in states that have adopted the ICHIA option for children compared to the rate for noncitizen children in states that have not adopted this option (25% vs. 37%). This pattern holds true across both recent noncitizen children (27% vs. 35%) as well as longer-term noncitizen children (21% vs. 40%). The lower uninsured rate in these states is largely driven by higher rates of public coverage, particularly among recent noncitizen children. This likely reflects the expanded coverage to recent lawfully residing immigrant children who would otherwise be in the five-year waiting period as well as broader groups of lawfully residing immigrant children who do not have “qualified status.” Additionally, as noted, some of these states have implemented other coverage expansions for immigrant children, such as fully state-funded programs, as well as broader expansions for the low-income population, including the ACA Medicaid expansion to low-income adults, which may have spillover effects on children’s coverage. States with ICHIA coverage for children also cover a much larger number of noncitizen children than states without ICHIA, as over nine in ten (92%) of noncitizen children live in these 38 states.

ICHIA Coverage Under the 2025 Reconciliation Law

The 2025 reconciliation law limits eligibility for federally funded coverage, including Medicaid, CHIP, subsidized ACA Marketplace, and Medicare coverage, to LPRs (green card holders), certain Cuban and Haitian entrants, and people residing in the U.S. under COFA. This change eliminates eligibility for many groups of lawfully present immigrants such as refugees, U visa holders and applicants, and people with Temporary Protected Status, and is expected to lead to 1.4 million lawfully present immigrants becoming uninsured by 2034. The Medicaid and CHIP eligibility restrictions will take effect as of October 1, 2026, and are expected to lead to 100,000 individuals becoming uninsured by 2034.

The 2025 reconciliation law did not eliminate optional Medicaid and CHIP coverage for lawfully residing children and/or pregnant people under ICHIA. ICHIA coverage provides eligibility for a broader group of lawfully present immigrants in these groups who would otherwise no longer be eligible under the reconciliation law and also extends eligibility to recent immigrants who would otherwise be subject to the five-year waiting period for Medicaid and CHIP.

States could mitigate coverage losses for lawfully present immigrant children and pregnant people by maintaining or expanding ICHIA coverage. Overall, 11 states have not taken up ICHIA coverage for either children or pregnant people, 8 states have taken up the option for children but could expand it to pregnant people, and 2 states have taken up the option for pregnant people only but could expand it to children. Conversely, elimination of ICHIA coverage could exacerbate coverage losses for these groups. Some states facing budget pressures have recently cut back on state-funded coverage for immigrants. While no state has eliminated ICHIA coverage to date, states continue to face increasing budget pressures. ICHIA cannot mitigate coverage losses among non-pregnant adults who will no longer be eligible for Medicaid based on their immigration status.

Even with ICHIA coverage in place, outreach and education to families and effective eligibility screening processes will be important to prevent administrative losses among those still eligible as the reconciliation law changes are implemented. For example, as states implement new eligibility restrictions, it will be important to effectively screen people for eligibility under the ICHIA option to make sure they do not lose coverage if they are still eligible. Families may also be confused about shifting eligibility rules, which may be compounded by confusion and fears stemming from recent changes to public charge policies. Additionally, a couple of states almost inadvertently eliminated this coverage through state legislation to implement the 2025 reconciliation law, although these changes were eventually avoided. 

Methods

Data sources: This brief is based on KFF analysis of federal survey data, namely the American Community Survey 1-year Public Use Microdata Sample. The ACS is a nationally representative household survey conducted by the U.S. Census Bureau. ACS PUMS data are available on a yearly basis. State-level data on immigrant subpopulations were excluded due to sample size.

Identifying citizenship status: U.S. citizens were defined as naturalized citizens or U.S.-born citizens. Naturalized citizens are individuals who indicate becoming a U.S. citizen by naturalization. Noncitizen immigrants are individuals who say that they are not a U.S. citizen, including both lawfully present and undocumented immigrants.

Defining insurance coverage categories: Private insurance coverage included employer-sponsored and direct purchase insurance plans. Public insurance coverage included Medicare, Medicaid, and military-sponsored insurance plans.

Defining state take-up of ICHIA: Information on state take-up of ICHIA is based on KFF and Georgetown University’s 2026 Medicaid Eligibility and Enrollment Survey. For the purposes of this analysis, the 38 states that have taken up ICHIA for lawfully residing children were grouped into “States with ICHIA Coverage” for children.

The Medicare Advantage quality bonus program, established by the Affordable Care Act, increases Medicare payments to Medicare Advantage plans that qualify by having a star rating of 4 or above (on a five-star rating system). (See the KFF brief on Medicare Advantage payments for more detail.) Plans may, but are not required to, use the increase in payments to cover the cost of supplemental benefits, including reduced cost sharing, extra benefits not covered by traditional Medicare (e.g., vision, hearing and dental), lowering Part B premiums, and/or subsidizing Part D prescription drug coverage. The star ratings are intended to help consumers make informed decisions when choosing among Medicare Advantage plans and the potential for additional funding is intended to encourage plans to improve quality. However, the Medicare Payment Advisory Commission (MedPAC) and others have suggested that the star ratings incorporate too many measures, do not adequately account for social risk factors, and may not be a useful indicator of quality because star ratings are reported at the contract rather than the plan level. Medicare Advantage contracts typically include multiple plans, which may have different benefits, costs, networks, service areas, and enroll different populations (i.e., plans that are open for general enrollment and special needs plans that limit enrollment to dual-eligible individuals).

Critiques of the quality bonus program have led to calls to replace, reform or end the program. In 2018, the Congressional Budget Office estimated that eliminating the quality bonus program would lower federal spending by almost $100 billion over ten years. Given the sharp increase in both actual and projected Medicare Advantage enrollment since CBO’s analysis, the savings from eliminating the quality bonus program could be substantially higher. For example, 35 million people are enrolled in Medicare Advantage in 2026, which is 5 million more than CBO projected at the time of the analysis. The degree to which changes to the quality bonus program would impact plan quality or the availability of supplemental benefits would depend on the specifics of any proposal and how insurers modified plan offerings in response.

Recently, the Centers for Medicare & Medicaid Services (CMS) finalized changes to the star ratings system (effective for 2029 star ratings, based on the 2027 plan year performance) that include removing several administrative measures and others that CMS stated no longer meaningfully differentiate plan quality. Though this change is a step toward simplifying the quality measurement system, because it is not combined with other changes to the Medicare Advantage payment system, the change is projected to increase Medicare Advantage spending by $18.6 billion over the next 10 years. That increase in spending is in part because more Medicare Advantage plans are expected to qualify for a payment increase under the quality bonus program as a result of the changes.

This analysis examines trends in Medicare spending resulting from the quality bonus program, enrollment in plans in bonus status (plans that qualify for a benchmark increase based on their quality star rating), and how these measures vary across plan types and insurers using publicly available information on Medicare Advantage enrollment, payment rates, and quality ratings (see methods).

Key Takeaways:

• Federal spending related to the Medicare Advantage quality bonus program will reach at least $13.4 billion in 2026, somewhat more than in 2025 ($12.7 billion), and more than four times higher than in 2015.
• More than two-thirds of Medicare Advantage enrollees (68%) are in plans that qualify for the quality bonus program in 2026, a decline from 75% in 2025, and the lowest share since 2018.
• The average increase in payment per enrollee because of the quality bonus program is highest for employer- and union-sponsored Medicare Advantage plans ($466) and lowest for special needs plans ($318).  
• Medicare spending under the quality bonus program varies across firms with UnitedHealth Group receiving the largest increase in payments ($3.9 billion) because of the quality bonus program (relative to what payments would have been otherwise) and Kaiser Foundation Health Plans receiving the largest increase in payments per person ($577). The variation is largely due to the share of enrollees in plans that qualify for increases under the quality bonus program but also relates to the average star ratings of plans that qualify.

Medicare will spend more than $13 billion on the Medicare Advantage quality bonus program in 2026.

Estimated federal spending on the Medicare Advantage quality bonus program will total at least $13.4 billion in 2026, somewhat more than 2025 ($12.7 billion). Spending on the quality bonus program has increased sharply since the program started, more than quadrupling from $3.0 billion in 2015 to $13.4 billion in 2026 (Figure 1). Total spending on the quality bonus program is 2.3% of the projected payments to Medicare Advantage plans in 2026 ($574 billion).

These estimates are a lower bound because they assume that, on average, Medicare beneficiaries enrolled in each plan that qualifies for additional payments under the quality bonus program are of average health status as measured by their risk score (that is, having a risk score equal to 1). However, increased coding intensity in Medicare Advantage suggests the risk scores are likely higher, which would increase the additional payments. For example, MedPAC estimates the increase to risk-adjusted benchmarks under the quality bonus program will add about $16 billion in Medicare spending in 2026. The estimates also do not include additional Medicare spending that results if plans increase their bids when their benchmark is higher because of being in bonus status (See Box 1 for more detail on star ratings and Medicare Advantage payments). For example, a plan might increase its bid to increase payments to providers, add more expensive providers to its network, or retain a larger amount as profit, provided they meet medical loss ratio requirements. (The medical loss ratio is the share of premium revenues going to pay for claims versus administrative overhead and profit.)   

Medicare spending under the quality bonus program has grown faster than enrollment in Medicare Advantage, which has doubled since 2015. This spending comes at a time when the Medicare program is facing growing fiscal pressures. Medicare Advantage benchmarks (and corresponding spending) grew faster than traditional Medicare spending between 2017 and 2024 in part because of the increase in spending under the quality bonus program. The quality bonus program also exacerbates the impact of higher coding intensity and favorable selection in Medicare Advantage, which together add $76 billion to Medicare spending in 2026. (Note, the higher spending under the quality bonus program is not additive to the $76 billion.)

More than two-thirds of Medicare Advantage enrollees (68%) are in plans that qualify for the quality bonus program.

In 2026, nearly 24 million people, or 68% of Medicare Advantage enrollees, are in plans that qualify for higher payments under the quality bonus program. That compares to just under 9 million people (55%) in 2015 (Figure 2). Both the number and share of enrollees in plans that receive bonuses in 2026 declined from the previous year (26 million or 75% of Medicare Advantage enrollees) and is the lowest share since 2018. That is a result of changes to the cut points, or scores plans are required to achieve to get higher quality ratings, values that CMS recalculates every year. In particular, substantially fewer Medicare Advantage contracts achieved at least a 4-star rating in 2026 compared to the previous year (209 vs 261). Star ratings are based on a Medicare Advantage contract’s performance on about 40 different measures, such as the share of enrollees that receive certain cancer screenings and annual flu vaccinations, whether people with chronic conditions are getting recommended services, enrollees’ ratings of their health plan, and customer service. For each measure, CMS establishes “cut points”, which are used to assign a rating between one and five stars for that measure. These are then combined into an overall rating for the Medicare Advantage contract. 

The average annual increase in payments per person under the quality bonus program are highest for employer- and union-sponsored plans.

Employer- and union- sponsored Medicare Advantage plans account for a larger share of spending under the quality bonus program (20%, or $2.6 billion) than enrollment in Medicare Advantage (16%) (Appendix Table 1). Consistent with this, and similar to previous years, the average increase in payments per person as a result of the quality bonus program to group employer- and union-sponsored plans ($466) are higher than for individual ($381) or special needs plans ($318) (Figure 3).     

The increase in payments per enrollee stemming from the quality bonus program are higher for employer- and union-sponsored plans because these plans have higher average star ratings, resulting in a larger share of enrollees receiving coverage from plans that qualify for bonuses. Across the entire period of 2015 to 2026, the share of all enrollees in employer- or union-sponsored plans that qualified for the quality bonus program never dropped below 80%. In contrast, the share of enrollees in individual and special needs plans that qualified for the quality bonus program exceeded 80% in only one year – 2023 (Figure 4).

Special needs plans serve higher need beneficiaries, including people who are dually eligible for Medicare and Medicaid and people who require an institutional level of care. Despite critiques of the quality star rating system, lower star ratings for special needs plans, on average, raise questions about how well these plans are serving the needs of their enrollees. The higher share of employer- and union-sponsored plans that qualify for the quality bonus program also raises questions about whether these plans, which are restricted to retirees of specific employers or unions, include more generous coverage or extra benefits. However, gaps in Medicare Advantage data, including the lack of information about the costs and benefits of employer- and union-sponsored plans, mean it is difficult to examine these questions.

Total Medicare spending under the quality bonus program varies across Medicare Advantage parent organizations.

UnitedHealth Group enrolls just over one-quarter (26%) of Medicare Advantage enrollees and is expected to receive 29% of total Medicare spending under the quality bonus program, or $3.9 billion dollars in 2026 (Figure 5). Humana Inc., which has the second largest share of Medicare Advantage enrollment (20%), will receive a disproportionately smaller share of bonus spending (11%), or $1.5 billion in 2026. Humana’s average star rating dropped considerably for the 2025 plan year (which is the year used for 2026 bonus eligibility), after the star rating for one of its largest contracts dropped from 4.5 to 3.5. Humana sued CMS over the change, but to date, the courts have sided with the Administration.

The average increase in payments per enrollee under the quality bonus program ranges from $23 for people in Centene Corporation plans to $577 for those in plans sponsored by Kaiser Foundation Health Plans. The variation in total bonus spending across firms corresponds to differences in the share of enrollees in plans that are eligible for the quality bonus program, which is based on the ratings of those plans. Virtually all of the more than 2 million enrollees in a plans sponsored by Kaiser Foundation Health Plans (100%) are in a plan that receives increased payments under the quality bonus program because it has a quality rating of at least four stars, while just 6% of Centene’s 938,000 Medicare Advantage enrollees are in a plan that receives bonus payments in 2026. The only Centene sponsored Medicare Advantage contracts that qualify for the quality bonus program payments in 2026 are those that are too new or have too low enrollment to receive star ratings. Differences also reflect variation in the star ratings of plans that qualify for the quality bonus program, because plans with at least 4.5 stars get a larger increase.

The recent recalculation of star ratings by CMS will increase spending under the quality bonus program in 2027.

In recent years, Medicare Advantage insurers have increasingly challenged the star ratings calculations, and have prevailed in a handful of cases, prompting CMS to recalculate the ratings on occasion. Most recently, in response to a decision following a legal challenge from Clover Health, CMS recalculated the 2026 star ratings for all plans (which will affect the 2027 payment year). CMS has only revised the star ratings for plans that saw an increase as a result of the recalculation.

Higher star ratings have three potential effects: 1) New eligibility for benchmark increases under the quality bonus program when the recalculated rating is at least 4 stars and the previous rating was less than 4 stars; 2) increased rebate percentage if recalculated star rating is associated with a higher rebate category (the rebate percentage is 70% of the difference between the benchmark and bid when the rating is at least 4.5 stars, 65% when the rating is 3.5 to 4.5 stars, and 50% when the rating is less than 3.5 stars); and 3) new 5-star special enrollment period (SEP) when the recalculated star rating is 5 stars and previous star rating was less than 5 stars.

KFF estimates that federal Medicare Advantage payments to insurers under the quality bonus program will be about $600 million higher in 2027 than they would have been if CMS had not recalculated the star ratings, with additional impacts for plans that receive higher rebate percentages but do not qualify for the quality bonus program. UnitedHealth Group will see the largest increase, followed by Clover Health, Blue Cross Blue Shield of Alabama, Humana, and CVS Health Corporation. Higher payments to Medicare Advantage insurers as a result of benchmark and rebate increases could translate into more generous benefits, lower cost sharing, or higher plan margins, while the additional SEP gives impacted plans an opportunity to attract new enrollees mid-year. CMS has appealed the decision, however, so there is uncertainty as to whether changes in methodology and their impact on payments will continue beyond the 2027 plan year.

Appendix

Methods

This analysis uses data from the Centers for Medicare & Medicaid Services (CMS) Medicare Advantage Enrollment, Crosswalk and Landscape files for the respective year.This analysis includes HMO, POS, local PPO, regional PPO, and PFFS plans. Enrollment counts in publications by firms operating in the Medicare Advantage market, such as company financial statements, might differ from KFF estimates due to inclusion or exclusion of certain plan types, such as SNPs or employer plans.To calculate federal spending on the quality bonus program, we first obtained information on star ratings from the Part C and Part D Performance Data, Star Ratings Data Table for the previous plan year. These are the ratings on which a plan’s benchmark is based. We then determined each plan’s benchmark using these data and information from the Medicare Advantage Rate Book, Rate Calculation Data, which provides the benchmark by county for plans with a 5%, 3.5% and 0% bonus. A plan’s increase in payment per enrollee under the quality bonus program is equal to the difference between its quality adjusted benchmark (either the 5% or 3.5% bonus rate) and the benchmark if the plan was not in bonus (0% bonus rate), multiplied by the relevant percentage based on its star rating and year (for example, 65% for plans with 4 stars and 70% for plans with at least 4.5 stars in 2026). The increase per enrollee is multiplied by enrollees in March of each year to get total spending. Actual bonus spending will depend on the risk scores of Medicare Advantage enrollees. According to the plan payment data release by CMS, the average risk score of MA enrollees was above 1 for every year from 2015 through 2024 (the most recent year for which data are available), meaning our estimates likely understate actual spending.

A new Executive Order (EO) released by the White House on Monday is the latest in a series of administration actions seeking to change U.S. childhood vaccine recommendations. It follows:

• a presidential memo from last December calling for the U.S. to align its vaccine recommendations with “best practices from peer, developed countries.”
• a January 5 memo from the Department of Health and Human Services (HHS) adopting a revised federal childhood vaccine schedule that categorized vaccines into three groups – “population-based,” or recommended for all children recommended for certain high-risk groups; and recommended through “shared-clinical decision-making” – and reduced the number of vaccines routinely recommended for all children, and
• an EO from May calling on federal agencies to align their actions, regulations, and funding with the revised vaccine schedule. However, a federal judge has temporarily blocked the revised HHS recommendations.

The new EO reiterates several previously issued recommendations, including that U.S. childhood vaccines should be “aligned with scientific evidence and best practices from peer, developed countries” and that childhood immunizations should fall into the three categories outlined above. As with the January 5 memo, the EO reduces the number of diseases targeted by routine childhood vaccination from 17 to 11 and the number of routine vaccines from 13 to 7. But it also contains new directives, including calling on the HHS Secretary to offer some childhood vaccines such as measles, mumps, and rubella (MMR) as “single vaccines rather than combination products”; aligning vaccine recommendations with findings to be released by a federal panel known as the “HHS Task Force on Safer Childhood Vaccines”; and directing the Attorney General to advance legal actions challenging state laws that conflict with “parental authority, religious freedom, disability accommodations, and equal protection under the law.” 

The administration has indicated these actions are intended to align the U.S. with peer countries, particularly Denmark. Prior KFF analysis has found, however, that Denmark itself is an outlier among “peer” nations, recommending vaccines against 10 diseases while most European countries recommend vaccines for 15 or more. Moreover, the EO’s directive to split the MMR vaccine into separate shots (a policy that could not be put into practice yet as no single component vaccine is currently licensed in the U.S.) would actually cause the U.S. to diverge from the policies of peer, developed nations, including Denmark. No European country, Canada, or Australia recommend separate vaccines over combination MMR vaccines (Japan currently recommends a combination measles rubella vaccine and this year began producing MMR for domestic use for the first time in 30 years).

President Trump said in a Monday press conference that the MMR shot can be “quite lethal” and that splitting up and giving the shots over multiple appointments is safer, although there is no evidence to support this claim. When countries have moved away from combination MMR vaccinations in the past, such as Japan beginning in the 1990s, measles, mumps, rubella outbreaks increased – a sobering prospect given the U.S. is already facing a historically high and growing number of measles cases this year.

The EO empowers a HHS Task Force – comprised of federal officials rather than external experts – to assess “timing and sequencing of all core childhood vaccines” and adjust the federal vaccine schedule. This could, in effect, bypass the CDC and its external Advisory Committee on Immunization Practices (ACIP), the traditional vehicles for federal vaccine recommendations, perhaps an attempt to implement administration vaccine priorities that have so far stymied by federal courts. Even so, it is not clear how many U.S. states, which have primary responsibilities in determining which childhood vaccines are required for school entry and other key vaccine policies, would adopt recommendations from this relatively unknown Task Force. In fact, most states – 30 including DC – have already made moves to decouple their vaccine policies from federal government recommendations for one or more childhood vaccines, instead relying on prior recommendations, state recommendations, and/or those of external entities such as American Academy of Pediatrics (AAP). Any recommendations from the Task Force are also unlikely to change how insurance covers childhood vaccinations given that private insurers have pledged to maintain existing childhood vaccine coverage through the end of 2027, and coverage through federal programs such as Vaccines for Children are not expected to change even with the recategorization of childhood vaccines contained in the order, a point confirmed by the White House itself on Monday.

Given ongoing legal challenges to the administration’s vaccine actions and declining influence of federal recommendations on states vaccine policy decisions, it is not clear how much the new EO can shift U.S. vaccine policy. Still, it could sow further confusion among parents already distrustful of federal guidance, and serve to exacerbate the existing partisan divide in the country on vaccine policy, and prove to be unpopular. A KFF poll from January this year, after HHS announced its earlier changes to the federal childhood vaccine schedule, found that adults who had heard about those changes were twice as likely to say it would have a negative impact on children’s health than a positive one. Ultimately, the effect of implementing these changes could be to raise the risk for further outbreaks of childhood diseases such as measles.