Summary

The Department of Homeland Security (DHS) released a proposed rule that would rescind 2022 Biden-era public charge determination regulations. In their place, DHS plans to provide interpretive and policy tools to guide public charge determinations and suggests it will “move away from a bright line primary dependence standard” and remove limitations on the types of public resources that are relevant for considering. As such, immigration officers would be given broad discretion to make determinations and could consider programs previously excluded from determinations, including Medicaid and the Children’s Health Insurance Program (CHIP), as well as potentially a much broader array of health and other support programs, other types of assistance, and family members’ use of programs. Under longstanding immigration policy, federal officials can deny entry to the U.S. or adjustment to lawful permanent resident (LPR) status (i.e., a “green card”) to someone they determine is likely at any time to become a public charge.

The proposed public charge changes along with other Trump administration policy changes will likely lead to decreased participation in public programs, including Medicaid and CHIP, among a broad group of immigrant families, including citizen children in those families. DHS indicates that the rule will deter immigration to the U.S. and reduce the number of immigrants relying on public programs. DHS further notes that the “elimination of certain definitions may lead to public confusion or misunderstanding of the proposed rule, which could result in decreased participation in public benefit programs by individuals who are not subject to the public charge ground of inadmissibility.” Research suggests that such “chilling effects” will likely lead to disenrollment and forgone enrollment among a broader group of individuals living in immigrant families than those subject to public charge determinations, including citizen children in these families. These fears may be further amplified by a recent notice from the Centers for Medicare and Medicaid Services (CMS) that it will begin sharing data it receives from states with Immigration and Customs Enforcement (ICE). Moreover, these changes come as immigrant families are already experiencing starkly increased fears due to President Trump’s immigration policies, leading them to limit their activities and participation in assistance programs and as recently passed legislation will make fewer lawfully present immigrants eligible for federally-funded health coverage programs.

If the proposed rule leads to disenrollment rates ranging from 10% to 30%, between 1.3 million to 4.0 million people could disenroll from Medicaid or CHIP, including nearly 600,000 to about 1.8 million citizen children. Additionally, assuming the same forgone enrollment rates, between about 200,000 to 500,000 uninsured people could forgo enrolling in Medicaid or CHIP despite being eligible, including over 50,000 to more than 150,000 citizen children. According to KFF analysis of American Community Survey (ACS) data, there are about 13.4 million Medicaid or CHIP enrollees living in a household with at least one noncitizen, including 5.9 million citizen children, who may be at risk for decreased enrollment. Additionally, nearly 1.8 million uninsured individuals are eligible for Medicaid and CHIP but are not enrolled and are living in a household with a noncitizen, including over 500,000 citizen children. These estimates differ from DHS estimates in the proposed rule (see Methods for more). Beyond Medicaid and CHIP, fear and confusion would likely have similar effects on participation in other programs, especially since DHS suggest it will give officers broad discretion to consider use of all sources of public resources in public charge determinations.

The proposed rule will likely lead to coverage losses and contribute to negative health outcomes, increases in uncompensated care, and broader negative spillover effects on communities and the workforce. Overall, the proposed rule would likely lead to reductions in health coverage, nutrition assistance, and other sources of support among immigrant families, including citizen children in those families. Nationally, one in four children live in a family with at least one immigrant parent. Reduced participation in health coverage and other assistance programs would negatively affect the health and financial stability of immigrant families and the growth and healthy development of their children. In addition, coverage losses would lead to lost revenues and increased uncompensated care for providers and have broader spillover effects within communities and on the workforce. DHS notes that the proposed rule may lead to worse health outcomes; increased use of emergency rooms; higher prevalence of communicable diseases; increases in uncompensated care; and increased poverty, housing instability, reduced productivity, and lower educational attainment. It also recognizes that it may result in reduced revenues for certain health, food, and housing providers. 

Background

Under longstanding immigration policy, federal officials can deny entry to the U.S. or adjustment to lawful permanent resident (LPR) status (i.e., a “green card”) to someone they determine is likely at any time to become a public charge. DHS regulations apply to public charge determinations for individuals seeking adjustment to LPR status within the U.S. Separately, media reports indicate new Department of State guidance directs visa officers to consider a wide range of health conditions when reviewing applications to enter the U.S. Under statute, officers must, at a minimum, consider age; health; family status; assets, resources, and financial status; and education and skills in making public charge determinations. Some groups, such as humanitarian immigrants, are exempt from public charge determinations under statute.

In 2022, the Biden administration published public charge regulations largely to address chilling effects of a 2019 Trump administration rule that led many immigrant families to avoid seeking health coverage and other services and assistance for which they were eligible. During his first term, President Trump implemented public charge rules that had newly considered the use of noncash assistance programs, including Medicaid, in public charge determinations. These changes led many immigrant families, including citizen children in these families, to forgo assistance and services for which they were eligible, including health coverage and care. In 2021, the Biden administration stopped applying the rule and reverted to prior 1999 field guidance. It subsequently published regulations in 2022 that largely codified the 1999 field guidance. The 2022 regulations defined a public charge as someone who is likely to become primarily dependent on the federal government as demonstrated by the use of cash assistance programs for income maintenance or government-funded institutionalized long-term care. The rule specifically excluded the consideration of noncash programs, including Medicaid (except for long-term institutionalization) and CHIP, from public charge determinations. It also prohibited the consideration of other family members’ use of programs. The 2022 regulations remain in effect until a new rule is finalized.

The proposed rule would rescind the 2022 public charge regulations (other than a provision related to bonds) and provide broad discretion to immigration officers in making public charge decisions, including considering factors and use of programs that had been excluded. DHS plans to provide interpretive and policy tools to guide public charge determinations if the proposed rule is finalized. In the preamble to the proposed rule, DHS notes that both the 2019 and 2022 rules were overly restrictive in providing narrow and finite lists of public benefits that could be considered as part of the public charge determinations and in not expressly providing officers with the authority to consider other factors beyond those specified in the rules. DHS suggests that eliminating the 2022 rule will allow for consideration of “receipt of any type of public benefits.” DHS proposes it will “move away from a bright line primary dependence standard” and remove limitations on the types of public resources that are relevant for consideration. As such, immigration officers would be given broad discretion to make determinations and could consider programs previously excluded from determinations, including Medicaid and CHIP, as well as potentially a much broader array of health and other support programs, other types of assistance, and family members’ use of programs.

Beyond the proposed changes to public charge, the Trump administration has implemented an array of immigration policy changes that have significantly increased fear among immigrant families, making them more reluctant to participate in activities or use services. The KFF/New York Times 2025 Survey of Immigrants shows that immigrant adults report rising fear and negative economic and health impacts amid this environment. More than one in five (22%) immigrant adults say they personally know someone arrested, detained, or deported for immigration-related reasons since January 2025, and 41% worry they or a family member could be detained or deported. Three in ten (30%) say they or a family member have limited their participation in activities outside the home since January due to concerns about drawing attention to someone’s immigration status, and 29% report skipping or postponing health care in the past 12 months, with 19% of this group (5% of all immigrant adults) citing immigration-related worries.

Past Evidence of “Chilling Effects”

Research indicates that the 2019 Trump administration public charge policy changes contributed to disenrollment from Medicaid and CHIP and other programs among immigrant families, including citizen children in these families. Analysis finds that between 2016 and 2019, the share of children receiving Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families fell about twice as fast among U.S.-citizen children with noncitizen household members as it did among children with only citizens in their households. Specifically, the analysis found that participation in Medicaid and CHIP fell by 18% among low-income U.S. citizen children with a noncitizen in the household compared to 8% among their counterparts in citizen-only households. Other studies found larger drops in Medicaid coverage among children in mixed status or noncitizen families compared to those in citizen families between 2017 and 2019 as well as larger declines in SNAP enrollment among noncitizen children and citizen children living in mixed-status families compared to citizen children with U.S.-born parents. Survey data from 2019 found that more than one in seven adults (16%) in immigrant families reported avoiding a noncash government benefit program such as Medicaid or CHIP, SNAP, or housing subsidies for fear of risking future green card status, with the share rising to 26% among adults in low-income immigrant families.

Research also suggests that these fears persisted even after the Biden administration reversed the 2019 public charge policy changes in 2021. The KFF/LA Times Survey of Immigrants showed that, as of 2023, 8% of immigrant adults, rising to over a quarter (27%) of those who are likely undocumented, said they avoided applying for food, housing, or health care assistance in the past year because they didn’t want to draw attention to their or a family member’s immigration status. Other survey data found nearly one in four adults in mixed immigration status families and over one in seven adults in immigrant families with children avoided safety net programs because of concerns related to immigration status in 2023.

As of 2025, there was already an increase in the share of immigrants reporting disenrolling from or avoiding enrolling in assistance programs due to immigration-related fears under the Trump administration prior to the release of the proposed public charge rule. In the KFF/New York Times 2025 Survey of Immigrants, 11% of immigrant adults say they stopped participating in a government program that helps pay for food, housing, or health care since January 2025 because of immigration-related worries, ranging from 4% among those living in a citizen-only household to 18% of those living in a household with a noncitizen. Among those in a household with a noncitizen, the shares reporting stopping participation were 11% for those that do not have a likely undocumented immigrant in the household and 36% for those that include a likely undocumented immigrant (Figure 1). Further, about one in ten (12%) immigrant adults say they avoided applying for such a program in the past 12 months because they did not want to draw attention to their or a family member’s immigration status, ranging from 5% among those living in a citizen-only household to 19% among those living in a household with a noncitizen, including 11% for those that did not report having a likely undocumented immigrant in the household and 42% for those that include a likely undocumented immigrant.

Potential “Chilling Effects” on Medicaid and CHIP Enrollment

It is difficult to predict what actual disenrollment or forgone enrollment rates may be in response to the rule. Few lawfully present immigrants who are subject to public charge determinations are eligible for federally-funded programs, including Medicaid and CHIP. However, fear and confusion about the rule would likely lead to disenrollment and forgone enrollment among a much broader group of individuals living in immigrant families, including citizen children.

To estimate potential effects of the proposed changes to public charge determinations amid the current immigration policy environment on Medicaid and CHIP enrollment, this analysis applied disenrollment rates of 10%, 20%, and 30% to the total number of Medicaid and CHIP enrollees living in a household with at least one noncitizen. To estimate potential forgone enrollment, this analysis applies these same rates to the total number of uninsured individuals who are eligible for Medicaid and CHIP but not enrolled who are living in a household with a noncitizen. Given the uncertainty of disenrollment and forgone enrollment, the rates illustrate a range of potential impacts to account for potential underestimates and overestimates.

The midpoint disenrollment and foregone enrollment rate of 20% is based on experiences reported in the KFF/New York Times 2025 Survey of Immigrants. It reflects the share of immigrant adults living in a household with a noncitizen who say they stopped participating in a program that helps pay for food, health care, or housing in the past year due to fears of drawing attention to their or a family member’s immigration status. The share reporting avoiding applying for programs (i.e., forgone enrollment) was similar. The lower bound of 10% reflects the disenrollment and forgone enrollment rate DHS uses to estimate transfer payments in the proposed rule. The upper bound accounts for potential increased effects relative to the experiences reported in the survey due to subsequent policy changes, including the public charge proposal and CMS notice of plans to share Medicaid data with ICE, that were released after the survey was fielded, as well as continued public enforcement activity, which may deter participation.

According to KFF analysis of ACS data, there are about 13.4 million Medicaid or CHIP enrollees living in a household with at least one noncitizen, including 5.9 million citizen children, who may be at risk for decreased enrollment. If the proposed rule leads to disenrollment rates ranging from 10% to 30%, between 1.3 million to 4.0 million Medicaid and CHIP enrollees who are living in a household with at least one noncitizen would disenroll (Figure 2). This includes nearly 600,000 to about 1.8 million citizen children. Beyond potential disenrollment, the proposed rule may also deter new enrollment among the nearly 1.8 million uninsured individuals who are eligible for Medicaid and CHIP but not enrolled and are living in a household with a noncitizen, including over 500,000 citizen children. Assuming a forgone rate between 10% and 30%, between about 200,000 to over 500,000 uninsured individuals who are living in a household with at least one noncitizen could forgo enrollment in Medicaid despite being eligible. This includes over 50,000 to more than 150,000 citizen children.

These estimates differ from DHS estimates in the proposed rule. DHS estimated that 3.5 million Medicaid enrollees and approximately 600,000 CHIP enrollees lived in a household with at least one person who is not a citizen, for a combined total of 4.1 million Medicaid and CHIP enrollees. DHS expects about 400,000 Medicaid and about 60,000 CHIP enrollees to disenroll or forgo enrollment (see Methods for more information).

Methods

The findings presented in this brief are based on KFF’s analysis of the 2023 American Community Survey 1-year Public Use Microdata Sample. KFF classified individuals as not having citizenship, or noncitizens, by their self-reported status at the time of the survey interview. This excludes foreign-born individuals who obtained U.S. citizenship through naturalization.

The 2023 data show that approximately 13.4 million Medicaid/CHIP enrollees were noncitizens or living in a household with at least one noncitizen. Households were classified as having at least one noncitizen if any household member reported not having citizenship. In addition, KFF identified 1.8 million uninsured individuals who are eligible for Medicaid or CHIP but not enrolled and live in a household with a noncitizen. KFF applied its health care coverage eligibility model to identify individuals who are eligible for Medicaid/CHIP but are not enrolled. For more details on the model, see the following explanation. These numbers do not reflect anticipated reductions to Medicaid enrollment due to Medicaid spending reductions and eligibility changes, including increased restrictions for lawfully present immigrants, in the 2025 reconciliation law.

To estimate potential changes in coverage due to public charge policies, KFF considered disenrollment and forgone enrollment rates of 10%, 20%, and 30%. Results were disaggregated by age and citizenship, with children defined as individuals under age 18. The midpoint disenrollment and foregone enrollment rate of 20% is based on experiences reported in the KFF/New York Times 2025 Survey of Immigrants. It reflects the share of immigrant adults living in a household with a noncitizen who say they stopped participating in a program that helps pay for food, health care, or housing in the past year due to fears of drawing attention to their or a family member’s immigration status. The share reporting avoiding applying for programs (i.e., forgone enrollment) was similar. The lower bound of 10% reflects the primary disenrollment and forgone enrollment rate DHS uses to estimate transfer payments in the proposed rule. The upper bound accounts for potential increased effects relative to the experiences reported in the survey due to subsequent policy changes, including the public charge proposal and CMS notice of plans to share Medicaid data with ICE, that were released after the survey was fielded as well as ongoing public enforcement activity, which may further deter participation.

This method differs from the method applied by DHS in the proposed rule to estimate potential federal and state transfer costs due to disenrollment from Medicaid and CHIP and other programs. In the 2025 proposed public charge rule, DHS estimated that 3.5 million Medicaid enrollees and approximately 600,000 CHIP enrollees lived in a household with at least one person who is not a citizen, for a combined total of 4.1 million Medicaid and CHIP enrollees. DHS expects about 400,000 Medicaid and about 60,000 CHIP enrollees to disenroll or forgo enrollment. To reach this estimate:

• DHS used a six-year average from FY 2019 to FY 2024 to find the average annual number of Medicaid and CHIP enrollees, limiting Medicaid enrollment to adults. Each annual total was calculated by averaging monthly Medicaid or CHIP enrollment over the year.
• DHS then estimated the number of households with Medicaid or CHIP enrollees by dividing the average annual adult Medicaid (44 million) or CHIP (7 million) enrollment by the average U.S. household size (2.54) in 2023.
• DHS multiplied the share of the total U.S. population that is foreign born (6.61%) times the number of households with Medicaid or CHIP enrollees to calculate their estimate of enrollee households with at least one noncitizen.
• Lastly, DHS then multiplied these households by the average size of foreign-born households (3.12) to finally estimate the number of Medicaid or CHIP enrollees living in a household with at least one noncitizen. DHS applied a 10.3% disenrollment and forgone rate to the approximately 3.5 million Medicaid and 600,000 CHIP enrollees.

Note: Originally published on October 2, 2024, this resource is updated as needed, most recently on December 1, 2025, to reflect additional developments.

There have or will be several resource mobilization efforts for multilateral health organizations in 2024 and 2025. These include: the Pandemic Fund’s first pledging event; the World Health Organization’s (WHO) first investment round; Gavi, the Vaccine Alliance’s (Gavi) fourth replenishment; and the Global Fund to Fight AIDS, Tuberculosis and Malaria’s (Global Fund) eighth replenishment. The U.S. is the largest contributor to global health and has played an integral role in each of these four organizations, and while pledging events represent commitments rather than immediate transactions, as U.S. funding must be approved by Congress, these events will nevertheless signal future U.S. support to these entities and to global health more broadly. This KFF tracker provides up to date information on U.S. pledges thus far to these four multilateral health replenishments and U.S. government support to date for these entities.

The 2025 reconciliation law imposes significant new restrictions on states’ ability to generate Medicaid provider tax revenue, including prohibiting all states from establishing new provider taxes or from increasing existing taxes as well as reducing existing provider taxes for states that have adopted the Affordable Care Act (ACA) Medicaid expansion. Medicaid is jointly financed by the federal government and the states, with the federal government guaranteeing states federal matching payments with no pre-set limit. In federal fiscal year (FFY) 2024, the federal government paid 65% and states paid 35% of total Medicaid costs. States are permitted to finance the non-federal share of Medicaid spending through multiple sources, including state general funds, health-care related taxes (referred to as “provider taxes” throughout this brief), and local government funds.

States are now facing a more tenuous fiscal climate due to slowing revenue growth, increasing spending demands, and growing fiscal uncertainty, due in part to the 2025 reconciliation law. The Medicaid provisions in the new law, including new provider taxes restrictions, are estimated to reduce federal Medicaid spending by $911 billion (or by 14%) over a decade, with wide variation in how the effects will be felt across the states. The cuts to Medicaid coupled with other changes in the 2025 reconciliation law and changes to the ACA marketplace coverage could increase the number of people by 14.2 million when everything is fully implemented. Those that support the new limits on provider taxes say that providers and states receive federal matching funds without expending their own money, which can “inflate a state’s Medicaid match.” However, provider taxes are a key source of Medicaid funding and limiting them could exacerbate existing state budget challenges and result in lower provider payment rates or reductions in Medicaid coverage, potentially compounding the effects associated with increases in the number of people without health insurance.

This issue brief uses data from KFF’s 2025-2026 survey of Medicaid directors to describe states’ current provider taxes, explore how the 2025 reconciliation law changed the federal rules governing provider taxes, and summarize potential impacts of the changes across states.

1. All states but Alaska use provider taxes to help finance the state share of Medicaid spending. 

States have considerable flexibility in determining how to finance the state (or non-federal) share of Medicaid payments, within certain limits. While most of the state share of Medicaid spending comes from state general funds, there is considerable variation in how much states rely on other non-federal share funding sources. KFF’s 2025 Medicaid budget survey found that general funds accounted for a median of 70% of the non-federal share in state fiscal year (FY) 2026 enacted budgets, while provider taxes accounted for 18% and funds from local governments or other sources accounted for 6% (this is relatively similar to 2018 data on non-federal share funding sources reported by the Government Accountability Office (GAO) and 2024 data on general fund spending from the National Association of State Budget Officers (NASBO)). 

All states but Alaska finance part of the state share of Medicaid funding through at least one provider tax and 41 states have three or more provider taxes in place (Figure 1). Medicaid provider taxes are defined as those for which at least 85% of the tax burden falls on health care items or services or entities that provide or pay for health care items or services (see Social Security Act, Section 1903(w)(3)(A)). Provider taxes may be imposed as a percentage of provider revenues or using an alternative formula such as a flat tax on the number of facility beds or inpatient days. States use provider tax revenues to fund Medicaid “base” rates and supplemental payments; to finance eligibility expansions, including the ACA Medicaid expansion; or to more generally support the Medicaid program. Over time, states have increased their reliance on provider taxes, with expansions often driven by economic downturns or a desire to fund eligibility expansions or provider reimbursement increases. Beyond helping finance the state share of Medicaid, permissible tax arrangements may have potential financial benefits for providers who are subject to the tax and serve a high volume of Medicaid patients.

2. Provider taxes are most common for institutional providers.

Provider taxes fall on a wide range of provider types but are most common for institutional providers including hospitals (47 states), nursing facilities (45 states), and intermediate care facilities for people with intellectual or developmental disabilities (33 states, Figure 2). Provider tax revenues often finance supplemental payments to institutional providers, which may be a major source of revenues for those providers. Payment policies vary considerably by state, and research has shown that Medicaid base payment rates are below those of Medicare and often below hospitals or nursing facilities’ costs of providing services to Medicaid enrollees, causing some states to rely more heavily on supplemental payments than others to help cover costs. Beyond institutional providers, states have taxes on managed care organizations (MCOs) (22 states), ambulance providers (21 states), and “other” provider types (9 states) such as ambulatory care facilities and home care providers.

Since the 1990s, federal rules have governed states’ use of provider taxes to fund Medicaid. Provider taxes were established in the 1980s, but particularly aggressive use of provider taxes following their establishment in the 1980s led to statutory and regulatory limitations beginning in the 1990s. Federal rules prior to passage of the 2025 reconciliation law specified that provider taxes must be:

• Broad-based, which means the tax is imposed on all providers within a specified class of providers (e.g., the tax cannot be imposed only on providers that see primarily Medicaid patients);
• Uniform, which means the tax must apply equally to all providers within the specified class (e.g., the tax rate cannot be higher on Medicaid revenue than non-Medicaid revenue); and
• Not hold taxpayers (providers) “harmless,” which means states are prohibited from directly or indirectly guaranteeing that providers will receive their tax revenues back (i.e., be “held harmless”).

There are 19 classes of providers that the Centers for Medicare and Medicaid Services (CMS) uses to ensure that the tax programs are broad-based and uniform (see 42 CFR Section 433.56). In assessing whether provider taxes comply with federal laws, regulations prior to the 2025 reconciliation law’s passage specify that the hold harmless requirement does not apply when the tax revenues comprise 6% or less of net patient revenues from treating patients (see 42 CFR Section 433.68), a level sometimes referred to as a “safe harbor” or “hold harmless” limit. Provider tax revenues are most likely to be near the 6% safe harbor limit for nursing facilities followed by hospitals and intermediate care facilities for people with intellectual or developmental disabilities (Figure 2). States were also able to obtain “uniformity waivers” of the requirements that taxes be broad-based and uniform if the state could prove the net effect of the tax is “generally redistributive,” and the amount of tax was not directly related to Medicaid payments.

3. Changes to federal rules for provider taxes are estimated to cut federal Medicaid spending by $226 billion over 10 years.

In addition to a number of other substantial Medicaid policy changes and federal funding cuts, the 2025 reconciliation law, signed by President Trump on July 4, 2025, imposes significant new restrictions on states’ ability to generate Medicaid provider tax revenue. The Congressional Budget Office (CBO) estimates these provider tax policy changes will reduce federal Medicaid spending by $226 billion over 10 years (Figure 3). Those savings stem from three new restrictions on states’ ability to raise revenues through Medicaid provider taxes including:

• An effective prohibition on new provider taxes or increases to existing ones (accounting for $89 billion in federal savings over 10 years),
• Reduced limits on provider taxes in states that adopted the ACA Medicaid expansion ($102 billion in federal savings), and
• Revisions to the conditions under which states may receive uniformity waivers ($35 billion over 10 years).

The effective prohibition on new provider taxes or increases to existing ones and the reduced provider tax limits in ACA Medicaid expansion states collectively account for $191 billion of the federal savings and will have the most widespread effects. Both changes stem from restrictions on the hold harmless limit. The new law effectively prevents the enactment of any new provider taxes by establishing a hold harmless limit of 0% for any taxes that were not in effect as of July 4, 2025. It also prevents any increases to existing provider taxes, which are capped at their rates as of July 4, 2025. Beginning in FFY 2028, the 2025 reconciliation law also gradually reduces the hold harmless limit for states that have adopted the ACA expansion by 0.5% annually until the safe harbor limit reaches 3.5% in FFY 2032.

CMS recently published a letter clarifying that to be “in effect” as of July 4, 2025, state or local governments must have been “actively collecting revenues” at that time. In KFF’s budget survey, four states reported plans to add new taxes in FY 2026: MCO taxes in Indiana and Nebraska and ambulance taxes in Montana and Nevada. An additional 18 states reported plans to increase existing taxes in that year, most commonly for hospital taxes. The new guidance suggests that if states had started collecting revenues for the new or increased taxes before July 4, 2025, they would be able to implement the new taxes or planned increases. This would include states that collect taxes on a delayed schedule if the collection is applicable as of July 4. If states’ taxes required waivers of the uniformity or broad-based requirements, those also had to be approved by CMS before July 4 for the tax to be “in effect.” In cases where states had enacted new taxes but scheduled implementation to start after July 4 or if the tax required an additional waiver and CMS approval for that waiver was still pending as of July 4, the states would not be able to implement the new taxes or higher rates.

CBO estimates provider tax changes in the 2025 reconciliation law will increase the number of uninsured people by 1.2 million by 2034. CBO estimates that restrictions on provider taxes would reduce the number of people with Medicaid coverage because there would be reduced resources available for states to fund Medicaid. With fewer resources available, states would need to either raise general taxes or reduce spending on other programs to maintain existing Medicaid eligibility levels, benefits, and provider payments. Although states responses will vary, CBO estimates that on average, states would replace half of the lost revenues with other state resources (either tax increases or cuts to other programs). States would make up the other half of revenue losses by reducing Medicaid spending through lower payment rates to providers, fewer covered services, or more restrictive eligibility.

4. The effective prohibition on new or increased provider taxes could impact all states, with expected cuts to existing taxes in 31 states.

All states could potentially be affected by the prohibition on new provider taxes or increases to existing ones, which will limit states’ ability to respond to the health care cuts in the 2025 reconciliation law. In KFF’s 2025 Medicaid budget survey, states noted the potential for significant state budget impacts as a result of the new provider tax changes as well as reductions in provider payment rates and state directed payments. Historically, states have used provider tax revenues as a mechanism to sustain Medicaid spending during budget shortfalls or to bolster Medicaid provider rates. The new law makes the largest reductions in federal support for health care in U.S. history and, combined with the expiration of enhanced subsidies for coverage in the ACA marketplaces, could increase the number of people without health insurance by 14.2 million people in 2034. The Medicaid cuts have particularly large effects in ACA expansion states, but the non-expansion states are expected to incur larger increases in the uninsured resulting from the loss of coverage through the ACA marketplaces. Increases in the uninsured could result in higher uncompensated care costs for providers (and have implications for the health of individuals who lose coverage or have access to fewer benefits). The effects of increased uncompensated care on hospitals and other safety net providers could be more profound because of states’ inability to bolster provider rates through new or increased provider taxes.  More broadly, the inability to add or increase provider taxes could exacerbate states’ budget challenges, especially during economic downturns.

While the prohibition on new provider taxes or increases to existing taxes cut a key source of future state Medicaid funding for all states, the revenue impacts will be even larger in the ACA expansion states that are also forced to reduce existing provider taxes. KFF data show that an estimated 31 states will have to reduce one or more provider taxes because of the lower hold harmless limits in ACA expansion states (Figure 4). As of July 1, 2025, 31 Medicaid expansion states reported having a non-exempt provider tax exceeding 3.5% (Figure 4), meaning at least 31 states will be required to reduce affected provider taxes on hospitals, MCOs, ambulances, or other affected providers (nursing facilities and intermediate care facilities are exempt). Hospital taxes are the most affected, with 28 of the 31 affected states having a hospital tax over 3.5% of net patient revenues as of July 1, 2025. Over half of the Medicaid provisions in the 2025 reconciliation law apply only to ACA expansion states, including the lower hold harmless limits. Those changes—coupled with lower provider tax revenues—may make it particularly difficult for ACA expansion states to navigate a challenging fiscal climate and increasing numbers of uninsured residents.

5. New requirements for “uniformity waivers” will force changes to provider taxes in at least seven states.

Uniformity waivers have allowed states to waive the requirement that provider taxes be broad-based and uniform if CMS determines that the tax is “generally redistributive.”  Provider taxes established through such waivers have generally taxed some types of providers within a class more heavily than others. States may use uniformity waivers to achieve policy goals such as limiting tax burdens for sole community hospitals, rural hospitals, or other vulnerable providers; but states have also used the waivers to impose taxes primarily on Medicaid providers. The disproportionate taxation of Medicaid providers has raised CMS concerns, including during the Biden Administration, and in May 2025, the current Administration released a proposed rule that aimed to address those concerns (Box 1).

The 2025 reconciliation law prohibits states from using uniformity waivers if the tax charges higher or lower rates based on the volume of Medicaid revenues or patients. The law specifies that taxes may not be considered generally redistributive if the state effectively varies tax rates based on the providers’ Medicaid revenues or patients, even if the tax does not explicitly name “Medicaid” when establishing the tax rates. The requirement is largely targeted at MCO taxes but may also apply to other provider tax types. It is effective as of July 5, 2025, but the Secretary may give states up to three fiscal years to come into compliance.

The new limits on uniformity waivers will affect MCO taxes in at least seven states, with effects starting as early as April 1, 2026 (Figure 5). CMS recently published a letter noting that the  minimum transition period for MCO taxes will be through the end of states’ current fiscal year, but the final policy will depend on guidance provided in the final rule. Although the affected states have not been definitively identified (by HHS / CMS), in the proposed rule (Box 1), CMS indicated seven states with MCO taxes that would be affected. CMS specifically named California, Massachusetts, Michigan, and New York. KFF and other researchers expect that the other three states are Illinois, Ohio, and West Virginia. Assuming CMS does not change the transition period with the final rule, New York’s transition period will be the shortest, ending on March 31, 2026 (the 2027 fiscal year starts on April 1).  The remaining six states would have until July 1, 2026, when their 2027 fiscal years start, to transition their MCO taxes to new permissible arrangements.

CMS’ recent letter specified that states have until 2028 to transition other taxes affected by the new limits on uniformity waivers, but it is unknown how many states or which taxes might be affected. The proposed rule indicated that one of the seven states with an affected MCO tax also had an affected hospital tax, but changes from the 2025 reconciliation law are could affect a wider ranges of taxes than the changes specified in the proposed rule. Depending on how CMS finalizes the rule—after accounting for the broader changes in the reconciliation law—additional state hospital taxes may be affected, as well as other provider tax types.

Other outstanding questions about the new limits on uniformity waivers include the following.

• Will states be permitted to use differential tax rates for policy purposes such as protecting sole community hospitals, rural hospitals, or other vulnerable providers? If not, how many taxes will be deemed impermissible as a result?
• How will states adjust impermissible taxes to eliminate differential rates and how much will those adjustments affect states’ revenue collections?
• Will the final rule include any additional restrictions on states’ use of uniformity waivers, and if so, how many states and taxes might be affected?

Appendix

For more than 50 years, a network of public programs and providers have assisted millions of reproductive age (18 to 49) women with low incomes in the U.S. to obtain sexual and reproductive health services. Over the past decade, the landscape of reproductive health care has changed dramatically as a result of shifts in federal and state policy as well as legal challenges and court rulings that have reshaped the state and federal laws that govern these programs. Recently, the 2025 Budget Reconciliation Law prohibits federal Medicaid payments for one year to some family planning providers that also offer abortion services, and the President’s most recent budget request proposes to eliminate funding for the federal Title X family planning program. This brief explains the major sources of public financing for family planning care, related policies, and their role financing services for low-income women.

Family Planning Services

Family planning encompasses a wide range of counseling, prevention, and treatment services that nearly all women use during their lifetimes. Contraceptives are the primary service, which most women use over the course of their lifetimes. Many options are available from clinicians including permanent methods, long-acting methods such as IUDs and Implants, as well as pills, injectables, patches, and rings. Over–the-counter methods include condoms and emergency contraception pills and more recently, Opill, a daily oral contraceptive pill. In addition to contraceptives, family planning includes sexual health services such as STI testing and treatment, gynecologic exams, and pregnancy testing (Figure 1).

Financing Family Planning Services for Low-Income People in the U.S.

Financing reproductive health care for people with low incomes comes primarily from a variety of public programs, including Medicaid, the federal Title X Family Planning Program, Section 330 of the Public Health Service Act (PHSA), and the Indian Health Service. Clinics and other providers may receive funds from a combination of these programs, which are described below.

Medicaid

Medicaid is a health coverage program for individuals with low incomes that covers more than 15 million reproductive age women nationally. Like private insurance, Medicaid pays clinicians and clinics for health services they provide to their patients. Jointly operated and funded by the federal and state governments, Medicaid provides health coverage to one in five women of reproductive age and more than four in ten (44%) who have low-incomes (Figure 2). The share of low-income reproductive-age women enrolled in Medicaid varies considerably by state, ranging from a high of 34% in Louisiana to a low of 10% in Utah. These differences are the result of a variety of factors, including demographic differences between states such as the share of women with low incomes, availability of employer-sponsored insurance, state choices about Medicaid eligibility, particularly whether the state has expanded Medicaid to all adults up to 138% FPL as permitted by the Affordable Care Act (ACA) and state-established income eligibility thresholds for parents in the non-expansion states. For these women, Medicaid provides comprehensive affordable coverage to help meet the full range of their health care needs, including family planning services.

Because it covers so many people, Medicaid is the largest source of public funds for family planning services. Federal law stipulates that family planning is a “mandatory” benefit that states must cover under Medicaid, but states have considerable discretion in specifying the services and supplies that are included in the program. Additionally, the ACA requires most private insurance plans and Medicaid expansion programs to cover the full cost of prescribed contraceptive methods for women. Most state Medicaid programs cover the full range of FDA approved contraceptives available to women, counseling and treatment for STIs and HIV, and screening for cervical cancer. Medicaid reimburses clinicians for delivering family planning care, just as it pays for other medical services. 

Abortion services are not considered to be family planning, and the Hyde Amendment prohibits any federal dollars, including Medicaid reimbursements, from being used to pay for abortion care except in cases of rape, incest or life endangerment of the woman. Other federal requirements that shape family planning policy under Medicaid include:

•  Federal Matching rate – The federal government pays 90% of all family planning services and supplies, which isconsiderably higher than the federal match that states receive for most other services for the traditional Medicaid population, which ranges from 50% to 78%, depending on the state. The federal government also picks up 90% of the costs for all services among the expansion population. 
• Ban on cost sharing – Federal law prohibits cost sharing for any family planning (and pregnancy-related) services.
• Freedom of choice – The federal Medicaid Act states that beneficiaries have “freedom of choice” to obtain family planning services from any qualified provider participating in the program, but recent policy decisions (discussed below) are changing this.
• Managed care –Nationally, nearly three in four (74%) reproductive age women with Medicaid are enrolled in managed care plans. While access to most services may be limited by managed care networks, federal law states that for family planning services, enrollees may seek care from any Medicaid provider even if the provider is outside of the plan’s network.
• Family planning specific programs – States may establish limited scope programs through Medicaid Section 1115 Research and Demonstration Waivers or through State Plan Amendments (SPAs) to provide coverage for family planning services only to individuals who do not qualify for full-scope Medicaid. Today, more than half of states have established such programs (Figure 3). 

Title X Program

The Title X National Family Planning Program, a federal block grant administered by the HHS Office of Population Affairs (OPA), is the only federal program specifically dedicated to supporting the delivery of family planning care. The program funds organizations in each state to distribute federal dollars to safety-net clinics to provide family planning services to low-income, uninsured, and underserved people. In 2023, approximately 4,000 clinics nationwide received Title X funding, including specialized family planning clinics such as Planned Parenthood centers, primary care providers such as federally qualified health centers (FQHCs), and health departments, school-based, faith-based, and other private nonprofits. In 2023, 60% of clients seen at Title X clinics had family incomes at or below the poverty level, almost half (46%) were covered by Medicaid or another public program, and more than a quarter (27%) were uninsured (Figure 4).

Signed into law by President Nixon in 1970, the Title X program’s funding has remained flat at $286.5 million for the past ten years. In addition to providing clinics with funds to cover the direct costs of family planning services and supplies such as contraceptives, Title X funds enable clinics to pay for patient and community education services about family planning and sexual health issues, as well as infrastructure expenses such as rent, utilities, information technology, and staff salaries. Clinics that receive Title X funds are also eligible to obtain discounted prescription contraceptives and devices through the federal 340B program. No other federal program makes funds available to support clinic infrastructure needs specifically for family planning. Clinics that receive Title X funds also receive Medicaid and private insurance reimbursements for specific clinical services they provide to enrollees with coverage. Title X grantees cannot charge patients with low incomes out of pocket for services they receive, and for people with annual family income above 250% FPL, charges should be on a sliding fee schedule based on ability to pay.

Title X regulations have historically stipulated that participating clinics must provide clients with a broad range of contraceptive methods as recommended by the national Quality Family Planning Guidelines (QFP), and ensure that the services are voluntary and confidential. This has been interpreted to mean that minors do not require parental involvement to obtain family planning services as a Title X funded site. The current QFP guidelines serve as standards for delivery of clinical sexual and reproductive health services and address a range of issues, including STIs, fertility, and gender-affirming care. Federal rules also require that participating clinics offer their patients non-directive pregnancy options counseling that includes abortion, adoption, and prenatal referral for those who seek those services. These requirements, however have changed with different presidential administrations shaping who can participate and what services can be offered.

Site of Care for Sexual and Reproductive Health for People with Lower Incomes

Most reproductive age women obtain reproductive care from a private doctors’ office; however many women with lower incomes get family planning services through the publicly funded health care safety-net, which is comprised of a variety of providers such as federally qualified health centers (FQHCs) and look-alike clinics, state and local health departments, the Indian Health Service, and specialized family planning clinics. Nationally, more than four in ten (43%) reproductive age women with Medicaid coverage had their last contraceptive visit at a safety-net clinic. This varies widely though, and in some states safety-net clinics play a larger role (Figure 5).

Federally Qualified Health Centers

Under Section 330 of the PHSA, the Health Resources and Services Administration (HRSA) administers federal grants to Federally Qualified Health Centers (FQHCs) whose main focus is providing primary and preventive care to populations that are underserved and predominantly low-income. FQHCs are required to provide “voluntary family planning” services along with a wide range of health care services, but they do not necessarily specialize in providing sexual and reproductive health care. Although it is not specifically defined in FQHC guidelines, voluntary family planning services can include contraceptives, screening and treatment of STIs, pre-pregnancy care and fertility counseling but the range of services that health centers offer can vary. FQHCs must have a sliding fee scale for patients with incomes below 200% FPL and offer services to all patients regardless of their ability to pay.

Specialized Family Planning Clinics

Specialized clinics such as Planned Parenthood centers focus on family planning and reproductive health care, typically offering the full range of contraceptives and other sexual and reproductive health services such as STI testing and treatment, cervical cancer screenings, and pregnancy testing. These clinics also employ clinicians and staff with expertise in family planning care. Planned Parenthood clinics comprise a relatively small portion of clinics that receive public financing for family planning services but have historically served a disproportionate share of safety-net patients (Figure 6).

Health Departments

State and local health departments offer public health services such as vaccines and chronic disease screenings to people who are low-income or uninsured. In many communities, they also offer family planning services, such as HPV vaccines and a limited range of contraceptive services. State and local health agencies may incorporate family planning counseling and services as part of other core public health functions, particularly maternal and child health programs.

Indian Health Services (IHS) Clinics

The Indian Health Service (IHS), an agency under the Department of Health and Human Services, provides a wide range of health services to approximately 2.8 million American Indian and Alaska Native (AIAN) individuals via a network of hospitals, clinics and health stations. Federal regulations require IHS to cover health promotion and disease prevention services, which include family planning services and STI services. However, the availability of contraceptive methods varies by clinic. Services at IHS and tribal clinics are provided with no cost-sharing and are generally only available to members or descendants of federally recognized Tribes who live on or near federal reservations.

Future of Public Financing for Sexual and Reproductive Health

Over the next few years, a confluence of policy changes at the federal level will challenge the network of publicly supported programs and clinics that provide access to free and low cost family planning services. The 2025 Budget Reconciliation law blocks Planned Parenthood clinics from receiving federal Medicaid payments for one year, cutting off a primary source of revenue from a major provider of sexual and reproductive health care for people with low incomes. Additionally, the President and other Republican leaders have proposed eliminating funding for the Title X program. Yet, the Congressional Budget Office estimates an increase of 10 million uninsured individuals over the next decade from the Budget Reconciliation law and the sunsetting of supplemental ACA premium tax credits at the end of 2025 could raise this number even further. With a steep rise in the number of uninsured people, clinics will likely face higher demand in the aftermath of sharp decreases in financing, greatly challenging an already fragile reproductive health safety net.