UNFPA Funding and Kemp-Kasten: An Explainer

Published: Feb 21, 2025

Editorial Note: Originally published in April 2017, this resource is updated as needed, most recently on Feb. 21, 2025, to reflect the latest developments. 

Key Points

  • On January 24, 2025, President Trump directed the Secretary of State to “take all necessary actions to ensure U.S. taxpayer dollars do not fund organizations or programs that support or participate in the management of a program of coercive abortion or involuntary sterilization.” This provision of law, known as the Kemp-Kasten amendment, was first enacted by Congress in 1985 and has been included in appropriations language annually.
  • Kemp-Kasten has often been used, as determined by presidents along party lines, to withhold U.S. funding to the United Nations Population Fund (UNFPA, the lead U.N. agency focused on global population and reproductive health).
  • The U.S. government provided $194.4 million in FY 2023 for UNFPA – $30.6 million in core support and $163.8 million more for other project activities – making it the largest government contributor in that year.
  • While framed broadly, Kemp-Kasten was originally intended to restrict funding to UNFPA specifically, after concerns arose about China’s population control policies and UNFPA’s work in China; to date, it has only been applied to UNFPA. Evaluations by the U.S. government and others have found no evidence that UNFPA directly engages in coercive abortion or involuntary sterilization in China, and more generally, UNFPA does not promote abortion as a method of family planning or fund abortion services.
  • Kemp-Kasten has been used to withhold funding from UNFPA in 19 of the past 40 fiscal years. Under current law, any U.S. funding withheld from UNFPA is to be made available to other family planning, maternal health, and reproductive health activities.

What is the Kemp-Kasten Amendment?

The Kemp-Kasten amendment, first enacted in 1985, is a provision of U.S. law that states that no U.S. funds may be made available to “any organization or program which, as determined by the [p]resident of the United States, supports or participates in the management of a program of coercive abortion or involuntary sterilization.”1  It was the congressional response to a Reagan administration decision in 1984 to temporarily withhold some funding from UNFPA and to begin conditioning its funding on assurances that the agency did not engage in or provide funding for abortion or coercive family planning. This policy change was made after concerns arose about whether UNFPA supported China’s coercive population policies.2  It was announced by the Reagan administration at the 2nd International Conference on Population in 1984, in conjunction with the “Mexico City Policy.”3  The Mexico City Policy required foreign NGOs to certify that they would not “perform or actively promote abortion as a method of family planning” with non-U.S. funds as a condition of receiving U.S. family planning assistance; the Trump administration recently expanded this restriction to include all U.S. global health assistance (see the KFF explainer on the policy).

Box 1: The Original Language Regarding UNFPA in the U.S. Policy Statement at the 2nd International Conference on Population, 1984

“With regard to the United Nations Fund for Population Activities [UNFPA], the US will insist that no part of its contribution be used for abortion. The US will also call for concrete assurances that the UNFPA is not engaged in, or does not provide funding for, abortion or coercive family planning programs; if such assurances are not forthcoming, the US will redirect the amount of its contribution to other, non-UNFPA, family planning programs.”4 

What U.S. funding does Kemp-Kasten apply to?

Kemp-Kasten applies to all funds appropriated under the State and Foreign Operations appropriations act as well as any unobligated balances from prior appropriations. This includes all funding provided to the State Department and USAID, which, in turn, includes the vast majority of U.S. global health funding.5 

When has Kemp-Kasten been in effect?

The Kemp-Kasten amendment has been in effect for 40 years. First enacted in 1985,6  its language has been included in the State and Foreign Operations appropriations act every fiscal year since then. (Although the provision is present in current law, language similar to Kemp-Kasten was also included in President Trump’s presidential memorandum reinstating the Mexico City Policy on January 24, 2025.7 ) While Congress has kept the amendment in place annually, it remains up to the president to determine whether or not to invoke Kemp-Kasten as a reason to withhold funding from an organization (see below).8 

Though Kemp-Kasten technically could apply to funding provided to any organization or program (including U.S. NGOs, non-U.S. NGOs, multilateral organizations, and foreign governments), the U.S. government has issued determinations about only one organization, UNFPA, thus far. The U.S. played a key role in the launch of UNFPA in 1969 and was, until 1985, the largest government donor to the agency.9  However, the U.S. has withheld funding from UNFPA due to presidential determinations that it violated Kemp-Kasten as often as it has provided funding since 1985 (in 19 of the past 40 fiscal years, to date), and in some years, funding was also withheld from UNFPA based on other provisions of the law, such as the dollar-for-dollar withholding requirement10  (see below). These determinations have been made along party lines with only one exception – the first year of President George W. Bush’s administration (see Figure 1 and Table 1).

How much funding does the U.S. provide to UNFPA?

In 2023, the U.S. was the largest government donor to UNFPA, having contributed 11% of all contributions (funding amounts for 2024 are not yet available). Total funding from the U.S. in FY 2023 for UNFPA was $194.4 million – $30.6 million in core support as well as $163.8 million in non-core support (see Box 2).11  See Figure 1 and Table 1 for historical funding data.

Box 2: Core and Non-Core Support to UNFPA

According to UNFPA, contributions to core resources allow the agency to support any activity, while contributions to non-core resources – funds earmarked for a specific purpose – may only be used for the stated project or activity.12  Governments provide contributions toward UNFPA core and non-core resources on a voluntary basis, since UNFPA does not assess a required contribution from governments.

U.S. Funding for UNFPA, FY 1985 - FY 2024
Kemp-Kasten and U.S. Funding for UNFPA (Core Support Only), FY 1985–FY 2025

How is a determination about Kemp-Kasten made?

By law, it is up to the president to determine whether any organization or program should be ineligible for funding due to a violation of the Kemp-Kasten amendment (in practice, this authority has generally been delegated to the State Department). In most recent years, legislative language has also specified that this determination must be: 1) made no later than six months after the date of enactment of the law that includes the provision and 2) accompanied by the evidence and criteria used to make the determination.13 

Most recently, on January 24, 2025 at the beginning of his second term, President Trump directed the Secretary of State to begin the process of Kemp-Kasten determination by taking “all necessary steps.” These determinations are usually made after the annual appropriations process is completed. For example, in 2017, the Trump administration’s determination was made on March 30, 2017, at the six month mark after the passage of the FY 2017 continuing resolution appropriations bill and was accompanied by a two-page justification memorandum.14 

Has there ever been evidence that UNFPA supports coercive abortion or involuntary sterilizations?

To date, there has not been evidence that UNFPA supports coercive abortion or involuntary sterilizations. Several evaluations by the U.S. government (including one by an assessment team sent to China by the State Department in 2002) as well as other groups, such as the British All-Party Parliamentary Group on Population, Development, and Reproductive Health (in 2002) and the Interfaith Delegation (in 2003), have found no evidence of direct engagement by UNFPA in such activities in China or elsewhere.15  In addition, UNFPA does not promote abortion as a method of family planning or fund abortion services.16  In years when a determination has been made that UNFPA violated Kemp-Kasten, the U.S. government has stated that the determination was based on its conclusion that UNFPA support to or partnering with the Chinese government for other population and reproductive health activities was sufficient grounds for invoking the amendment to withhold funding. In the March 30, 2017, determination by the Trump administration, for example, the justification memorandum stated that: “While there is no evidence that UNFPA directly engages in coercive abortions or involuntary sterilizations in China, the agency continues to partner with the NHFPC [China’s National Health and Family Planning Commission] on family planning, and thus can be found to support, or participate in the management of China’s coercive policies for purposes of the Kemp-Kasten amendment.”

What other legislative requirements apply to U.S. funding for UNFPA?

In addition to Kemp-Kasten, there are several other provisions of law that Congress has enacted in recent years to set conditions on U.S. funding for the agency.17  These provisions:

  • require UNFPA to keep U.S. funding to the agency in a separate account, not to be commingled with other funds;
  • prohibit UNFPA from funding abortion;
  • prohibit UNFPA from using any U.S. funds for their programming in China;
  • reduce the U.S. contribution to UNFPA by one dollar for every dollar that UNFPA spends on its programming in China (“dollar-for-dollar withholding”); and
  • in some years, state that not more than half of funding designated for the U.S. contribution to UNFPA is to be released before a particular date, which varies by fiscal year (this provision is not currently in effect).

What happens to funding that is withheld from UNFPA?

For several years, including FY 2017, FY 2018, FY 2019, and FY 2020, Congress has required that funding withheld from UNFPA be reallocated to USAID’s family planning, maternal, and reproductive health activities.18  The enactment of this provision first affected reallocation of FY 2002 funds.19  It is now typically included in the State and Foreign Operations appropriations act each year.20 

  1. U.S. Congress, FY 2017 Consolidated Appropriations Act (P.L. 115-31), May 5, 2017; KFF, The U.S. Government and International Family Planning & Reproductive Health: Statutory Requirements and Policies, fact sheet. ↩︎
  2. Congressional Research Service (CRS), The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010; “Policy Statement of the United States of America at the United Nations International Conference on Population (Second Session), Mexico City, Mexico, August 6-14, 1984,” undated. ↩︎
  3. “Policy Statement of the United States of America at the United Nations International Conference on Population (Second Session), Mexico City, Mexico, August 6-14, 1984,” undated; United Nations Division of Economic and Social Affairs/Population Division, “United Nations Conferences on Population,” webpage, undated, http://www.un.org/en/development/desa/population/events/conference/index.shtml. ↩︎
  4. “Policy Statement of the United States of America at the United Nations International Conference on Population (Second Session), Mexico City, Mexico, August 6-14, 1984,” undated. ↩︎
  5. KFF, The U.S. Congress and Global Health: A Primer; and KFF U.S. Global Health Budget Tracker, available at: https://modern.kff.org/interactive/u-s-global-health-budget-tracker/. ↩︎
  6. Via FY 1985 supplemental appropriations, per CRS, The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010. ↩︎
  7. Specifically, in this memorandum, President Trump stated, “I further direct the Secretary of State to take all necessary actions, to the extent permitted by law, to ensure that U.S. taxpayer dollars do not fund organizations or programs that support or participate in the management of a program of coercive abortion or involuntary sterilization.” ↩︎
  8. However, after UNFPA ended its program in China in 1997 but then began a new program there in 1999, this resulted in Congress withholding funding from UNFPA that year. ↩︎
  9. CRS, The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010; PAI, Why the United States Should Maintain Funding for UNFPA, May 2015. ↩︎
  10. In FY 1999, Congress prohibited UNFPA funding in response to the initiation of a new UNFPA program in China (this was unrelated to Kemp-Kasten), and in some other years when the U.S. made a contribution to UNFPA, UNFPA’s China program meant some UNFPA funding was withheld under the “dollar-for-dollar withholding” provision. ↩︎
  11. KFF analysis of data from: Congressional Appropriations Bills, Press Releases, and Conference Reports; Federal Agency Budget and Congressional Justification documents and Operating Plans; ForeignAssistance.gov; Office of Management and Budget, personal communication; UNFPA, personal communication; Biden Administration, “Memorandum on Protecting Women’s Health at Home and Abroad,” presidential actions, Jan. 28, 2021, Biden White House Archives, https://bidenwhitehouse.archives.gov/briefing-room/presidential-actions/2021/01/28/memorandum-on-protecting-womens-health-at-home-and-abroad/. ↩︎
  12. UNFPA, Annual Report 2013, 2014. ↩︎
  13. Typically included in annual State and Foreign Operations appropriations since FY 2008, including in FY 2017 under the terms of the continuing resolution. CRS, The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010; KFF analysis of appropriations bills. ↩︎
  14. State Department: Letter to Bob Corker, Chairman, Committee on Foreign Relations, from Joseph E Macmanus, Bureau of Legislative Affairs, State Department, dated April 3, 2017, and accompanying “Determination Regarding the ‘Kemp-Kasten Amendment,’” dated March 30, 2017, and “Memorandum of Justification for the Determination Regarding the “Kemp-Kasten Amendment,” undated. Available online (follows the article) at: https://www.buzzfeednews.com/article/jinamoore/the-us-wont-give-any-more-money-to-the-un-population-fund. ↩︎
  15. CRS, The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010. ↩︎
  16. UNFPA, “Frequently Asked Questions,” webpage, updated January 2025, http://www.unfpa.org/frequently-asked-questions#abortion. ↩︎
  17. KFF, The U.S. Government and International Family Planning & Reproductive Health: Statutory Requirements and Policies, fact sheet. ↩︎
  18. KFF analysis of Congressional Appropriations Bills. ↩︎
  19. “Although such reallocation began in practice in FY 2002, it was first authorized by Congress in legislation beginning in FY 2004 with reference to FY 2002 and FY 2003 funds,” per KFF, The U.S. Government and International Family Planning & Reproductive Health: Statutory Requirements and Policies, fact sheet. ↩︎
  20. The activities to which Congress directs reallocated funds varies by fiscal year; in FY 2003, for example, reallocated funding supported assistance to vulnerable children and victims of trafficking in persons. CRS, The U.N. Population Fund: Background and the U.S. Funding Debate, RL32703, July 2010. ↩︎

5 Key Facts About Medicaid Coverage for Adults with Mental Illness

Published: Feb 21, 2025

Options under consideration in Congress to significantly reduce Medicaid spending could have major implications for adults who live with mental illness. Nationwide, an estimated 52 million nonelderly adults live with mental illness, and Medicaid covers nearly one in three (29%) of them, or about 15 million adults. Changes to Medicaid under consideration include imposing a per capita cap on federal spending, reducing the federal government’s share of costs for the ACA expansion group, and imposing work requirements. Such policy changes would fundamentally alter how Medicaid financing works and large federal spending reductions would force states to make tough choices on whether to raise new revenue, restrict the number of people covered, cover fewer benefits, or cut payment rates for physicians, hospitals, and other providers. For people with mental illness, losing Medicaid coverage would reduce access to mental health treatment and other health care, which could have negative implications for their mental and physical health.

1. More than one in three adult Medicaid enrollees have a mental illness.

More than one in three nonelderly adults enrolled in Medicaid have a mental illness (35%), including 10% with a serious mental illness. These rates are higher than the rates among adults with private insurance or no coverage (Figure 1). Serious mental illness generally involves more severe symptoms and may include other neurological factors, both of which can complicate treatment and impact daily functioning. Data in Figure 1 come from the National Survey on Drug Use and Health (NSDUH), which categorizes respondents as having a probable mild, moderate, or serious mental illness through a combination of mental health scales and indicators of functional impairment. Generally, adults with severe symptoms and with greater impairments in daily functioning would meet the threshold for serious mental illness, while “any mental illness” includes adults who meet criteria for mild, moderate or serious mental illness (see methods). Among Medicaid adults, any mental illness is most prevalent among White adults, rural or small metro residents, those aged 26-34, and females (Appendix Table 1). Rates of any mental illness among adult Medicaid enrollees vary widely by state, from 22% in New Jersey to 51% in Iowa. Similarly, the percentage of adult Medicaid enrollees with a serious mental illness ranges from 4% in Mississippi to 22% in Wyoming and Missouri (Appendix Table 2).

One in Three Nonelderly Adult Medicaid Enrollees have a Mental Illness, Higher than Other Coverage Groups

2. Mental health treatment rates for Medicaid-enrolled adults are higher or similar to those with private insurance.

Nonelderly adults in Medicaid receive mental health treatment at rates that are higher or similar to those with private insurance, and much more often than those who are uninsured. In 2023, 59% of adult Medicaid enrollees with any mental illness received treatment – somewhat above the rate for privately insured adults (55%) and far higher than for those who are uninsured (37%). Across all coverage types, treatment rates increased with the illness severity, with adults diagnosed with serious mental illness reporting the highest rates of treatment. Although adults with mild mental illness covered by Medicaid or private insurance report similar treatment rates, Medicaid-enrolled adults with moderate and serious mental illnesses report higher treatment rates than those with private coverage. In every category, adults with either Medicaid or private insurance receive treatment at much higher rates than those who lack health coverage. These data indicate only that care was accessed, not the adequacy or quality of that care. In an effort to increase access to care, many state Medicaid programs have expanded covered services and adopted policies to address workforce shortages.

Mental Health Treatment Rates for Medicaid-Enrolled Adults are Higher Than or Similar to Those with Private Insurance

3. Adults enrolled in Medicaid experience a range of mental health diagnoses.

Anxiety and depressive disorders are the most frequently diagnosed mental illnesses among nonelderly Medicaid-enrolled adults (over 5 million diagnoses for anxiety alone). Serious mental illnesses – such as bipolar disorder and schizophrenia or other psychotic disorders – were diagnosed in over 2.3 million adult Medicaid enrollees (Figure 3). Many people experience overlapping mental health conditions (e.g., a person with depression may also have anxiety). Estimates of the number of people with specific types of mental illnesses come from Medicaid administrative data (i.e. claims data) which only capture diagnoses for people with a mental illness diagnosis recorded in their medical claims. This is not a measure of overall prevalence of mental illness because not everyone is screened, and diagnoses are not always recorded. Prevalence rates estimated through surveys are generally higher than the prevalence rates observed in claims data.

Medicaid-Enrolled Adults Experience a Range of Mental Health Diagnoses

4. Medicaid enrollees with mental illness have higher rates of chronic conditions.

Medicaid enrollees diagnosed with mental illness have higher rates of chronic conditions and substance use disorder compared to those without a mental health diagnosis. Approximately two-thirds of adult enrollees with any mental illness have at least one other chronic condition – twice the rate of those without a diagnosed mental illness (Figure 4). Enrollees with serious mental illness have the highest rates of chronic conditions with 76% having at least one chronic condition. Chronic conditions are those that last at least a year and require ongoing medical care or limit daily activities, such as heart disease, diabetes, cancer, and mental illnesses. The most common chronic condition among Medicaid enrollees with mental illness is substance use disorder. These often overlap with mental illness, potentially due to shared risk factors. One in four enrollees diagnosed with any mental illness also have a diagnosed substance use disorder, and about 40% of those diagnosed with SMI do, compared to 5% of enrollees without a mental health diagnosis (Figure 4).

Medicaid Enrollees Diagnosed with Mental Illness Experience a Greater Chronic Disease Burden

5. Average annual spending for enrollees with a mental illness is twice that of those without.

Average annual Medicaid spending per nonelderly adult enrollee is twice as high for those with any mental health diagnosis—about $14,000 per year—compared to roughly $7,000 for those without a mental health diagnosis. Spending is highest among adults diagnosed with a serious mental illness, at approximately $21,000 per enrollee per year—three times higher than the annual spending for those without a mental illness (Figure 5). Medicaid spending for adults with any mental illness accounts for one-third of the total Medicaid spending for non-elderly adults enrolled only in Medicaid. Higher rates of other chronic diseases among adults with mental illness may contribute to higher spending (Figure 3).

Average Annual Spending for Medicaid Enrollees with Any Mental Illness is Twice That of Medicaid Enrollees Without a Mental Illness

Appendix Tables

Mental Illness Among Nonelderly Medicaid-Enrolled Adults

Methods

Medicaid Claims Data: This analysis used the 2021 T-MSIS Research Identifiable Files including the inpatient (IP), long-term care (LT), other services (OT), and pharmacy (RX) claims files merged with the demographic-eligibility (DE) files from the Chronic Condition Warehouse (CCW).

Identifying Mental Health, Serious Mental Health and Substance Use Disorder Diagnoses in Medicaid Claims Data:Mental illness, serious mental illness (SMI) and substance use disorder (SUD) diagnoses were identified using an algorithm adapted from the Behavioral Health Service Algorithm (BHSA) reference codes provided by The Urban Institute. The BHSA identifies these conditions with ICD-10 diagnosis codes, procedure codes, service codes, and National Drug Codes (NDCs). “Any mental illness” is a comprehensive category that includes the diagnosis of anxiety, depression, post-traumatic stress (PTSD) or other trauma disorders, personality disorders, bipolar disorders, schizophrenia/psychotic disorders, and/or other mental illnesses not fitting within these categories. “Any SMI” is a subcategory of any mental illness that specifies mental disorders that result in severe functional impairment. This analysis follows other literature and includes bipolar disorders and schizophrenia/psychotic disorders in the definition of SMI. “Any SUD” is a comprehensive category that includes alcohol, opioids, marijuana, inhalants, sedatives, hallucinogens, psychostimulants, and/or substances labeled as “other” or “unspecified” in claims data.

See: Victoria Lynch, Lisa Clemans-Cope, Doug Wissoker, and Paul Johnson. Behavioral Health Services Algorithm. Version 4. Washington, DC: Urban Institute, 2024.

Defining Chronic Conditions in Medicaid Claims Data: This analysis used the CCW algorithm for identifying chronic conditions (updated in 2020). This analysis also included in its definition of chronic conditions substance use disorder, obesity, HIV, hepatitis C, and intellectual and developmental disabilities (ASPE definition). Mental illness was not included the in the count of chronic conditions in Figure 4 since the analysis is stratified by mental illness.

Enrollee Inclusion Criteria in Medicaid Claims Data:Enrollees were included if they were ages 18-64, had full Medicaid or CHIP coverage for at least one month, and were not dually eligible for Medicare.

State Inclusion Criteria in Medicaid Claims Data: To assess the usability of states’ data, the analysis examined quality assessments from the DQ Atlas for OT claims volume and OT managed care encounters and compared the share of adults diagnosed with any mental illness (AMI) in each states’ Medicaid data to estimates for adult Medicaid enrollees from the 2021-2022 restricted National Survey on Drug Use and Health (NSDUH). States were excluded if: (1) they received a “High Concern/ Unusable” rating on the relevant DQ Atlas assessment measure, and (2) their Medicaid estimate of AMI differed from the NSDUH estimate by more than 15.1 percentage points (the 75th percentile of all differences).

If at least 70% of a state’s Medicaid enrollees were covered by either managed care or by fee for service, only the corresponding DQ Atlas indicator was considered (i.e. managed care encounters volume or claims volume (FFS)). For states with more mixed delivery systems, both sets of indicators were considered; in these cases; a “High Concern/Unusable” rating on either measure, combined with a difference above 15.1 percentage points, led to exclusion. Based on these criteria, Mississippi was excluded, leaving 49 states and D.C. in the analysis.

National Survey on Drug Use and Health. The National Survey on Drug Use and Health (NSDUH) is a nationally representative survey that, among other topics, collects information about symptoms of mental illness and related functional impairments from adult respondents. It uses a combination of mental health scales, suicidality symptoms, functional impairments and other indicators to classify respondents as having a probable mild, moderate, or serious mental illness. Thresholds for each category were developed by NSUDH through methodological work comparing survey responses with psychiatric clinical interviews using the DSM-IV diagnostic criteria. Adults whose responses meet or exceed the highest severity threshold are categorized as having a probable serious mental illness, which reflects greater functional impairment due to more severe mental illness symptoms.

National data reported in this analysis uses the most recent NSDUH data (2023) to identify Medicaid enrollees ages 18-64 who meet DSM-IV criteria for any or serious mental illness. State-level data reported in Appendix Table 2 is drawn from the most recent state-level data publicly available (2021-2022 restricted NSDUH files).

NSDUH generally reports higher rates of mental illness than claims-based data, as it includes people who have not received a formal diagnosis. Still, NSDUH may underestimate prevalence because it excludes people without an address (such as those who are unhoused, institutionalized, or incarcerated)–groups likely to have higher rates of mental illness.

The Outlook for PEPFAR in 2025 and Beyond

Published: Feb 20, 2025

PEPFAR, the U.S. global HIV/AIDS program, is – for the first time in its two-decade history – facing significant challenges that could impede its ability to fulfill its mission. One of President Trump’s first actions was to issue an executive order to re-evaluate and realign foreign aid, requiring a 90-day pause in foreign aid funding while a review was undertaken, as well as dismissal of thousands of USAID staff and contractors, and other changes, effectively halting most programs, including for PEPFAR, around the world. Despite PEPFAR receiving a limited waiver to continue some services and the courts stepping in to provide temporary relief, services are still disrupted. In addition, PEPFAR’s current short-term authorization expires on March 25, 2025, about a month before the 90-day aid review is scheduled to be completed, and Congress is increasingly looking for program reforms and ultimately scale down.

The current situation, coupled with uncertainty about future changes, poses potential risks to health outcomes for a program that has been shown to have saved millions of lives and helped to build health infrastructure in sub-Saharan Africa; already, analyses have estimated that the foreign aid freeze and ensuing service disruptions have led to increases in HIV-related deaths and new HIV infections. This policy brief provides an overview of these recent events and ongoing challenges facing the program.

Background

Despite almost two decades of strong, bipartisan support and demonstrated success and impact, PEPFAR began facing growing headwinds in recent years. This was due to several external shifts, including pressures on the global economy; an increasingly crowded global health and development space; and shrinking resources to address the global HIV epidemic, with a concomitant and growing reliance on the United States, the largest donor to HIV.

Within the U.S., members of Congress were increasingly asking questions about PEPFAR’s “end game,” pressing the program for its plans for the future to scale down and transition services, programming and, ultimately, financing to countries. In addition, some members began raising concerns that PEPFAR was supporting abortion activities, which is prohibited under federal law and policy. Together, these issues rendered PEPFAR unable to secure a five-year reauthorization for the first time in its history. Instead, Congress reauthorized the program for just one year (from March 23, 2024, to March 25, 2025), pushing further decision until after the 2024 election. In the meantime, ongoing concerns about abortion prompted Senator Risch to put a $1 billion hold on the program in September 2024.

What to Watch

Against this backdrop, several recent developments have made PEPFAR’s future particularly precarious; many of these intersect with one another, adding uncertainty and complexity to an already shifting landscape. These include:

  • Increasing Abortion Concerns. In January, just before President Trump assumed office, PEPFAR notified Congress that some funds had, in violation of the Helms amendment, mistakenly been used to support a limited number of abortions in Mozambique, where abortion is legal in certain circumstances. According to one report, this was discovered by U.S. officials in late October 2024 when routine compliance measures found that some PEPFAR-funded nurses had not received required training on the prohibition on paying for the performance of abortion in U.S.-funded services, with four found to have performed abortions. In a statement issued on January 17, PEPFAR enumerated the steps it took to halt and remediate the violation and to prevent future violations, including immediately suspending funding and obtaining reimbursement from the Government of Mozambique for the amount (reported to be $4,100 spent on the nurse’s salaries) and putting in place new, additional measures, such as “requiring an annual signed attestation by PEPFAR-funded clinical service providers to ensure compliance with U.S. funding restrictions.” While this was the first time there had been evidence of any PEPFAR violation of the prohibition on abortion, it raised significant additional concerns among members of Congress who called for further investigation. This has led to increased scrutiny of the program and is likely to figure significantly in any discussion of reauthorization and PEPFAR’s future more broadly.
  • President Trump’s Foreign Aid Funding Freeze and PEPFAR’s Limited Waiver. Beginning on the first day of his second term, President Trump issued several executive actions that affected and continue to affect PEPFAR’s operations, most notably a January 20 Executive Order reevaluating foreign aid. The order called for a 90-day freeze on U.S. foreign aid, including PEPFAR funding, to allow for a review of foreign assistance programs for alignment with Trump administration policy. While the order focused on pausing funding for new obligations and disbursements, on January 24, Secretary of State Rubio issued a stop-work order on all existing operations (those already underway), with limited exception. This, coupled with actions affecting USAID, PEPFAR’s main U.S. government implementing agency (see below), effectively halted service delivery.Although PEPFAR was able to secure a limited waiver on February 1 to allow some services to continue, communication about the waiver has been slow or unclear and the payment system remained unavailable. In addition, the waiver was limited to care and treatment only, as well as PMTCT and PrEP for pregnant and breastfeeding women; no other prevention services, including PrEP for those at risk of HIV infection or already on PrEP, were allowed. Even where the waiver might have been communicated to implementers, the capacity to deliver services has already been negatively affected with thousands of aid workers having already lost their jobs.In a set of lawsuits brought by organizational recipients of U.S. foreign aid, the court issued a temporary restraining order on February 13, requiring the administration to end the foreign aid freeze. Still, the case continues to move through the legal process and the government has since indicated that, despite the requirement to resume funding, it acted within its authority to cancel most grants and contracts. It is also unknown how much of the damage already done to service capacity can be repaired, should funding resume. Finally, the administration’s foreign aid review is ongoing, and expected to conclude by April 19 with recommendations for programmatic changes and potential cuts. How PEPFAR fares in this process is unclear but could have significant implications for its future. It is also unknown how any recommendations about changes to PEPFAR under the foreign aid review will be met by Congress and/or figure into Congress’ own deliberations about reauthorization.
  • The Potential Dismantling of USAID. PEPFAR is overseen by the State Department but implemented primarily by other U.S. government agencies – particularly USAID and CDC. In FY 2023, 60% of PEPFAR’s bilateral HIV assistance was obligated and implemented by USAID. Shortly after the foreign aid pause was announced, however, President Trump and others in the administration announced their intention to dissolve USAID and implemented a series of actions that affected its operations and capacity including: taking down its website and payment and data systems, letting go of hundreds of staff and plans to put thousands more on leave (although a federal judge has temporarily enjoined the administration from doing so), closing the USAID building, and appointing the Secretary of State as the Acting Administrator of USAID. As mentioned above, this has already significantly affected PEPFAR’s operations even with a limited waiver issued, including widespread reports that there are no USAID personnel to communicate about the waiver, answer questions about waiver implementation, or facilitate payment. More long-term, it remains unclear what will happen with the agency including the recommendations that will be made by the State Department and whether Congress will accept proposed changes. Given the current reliance of PEPFAR on USAID as one of its main implementing agencies, any change stands to impact programming.
  • The Reinstatement of the Expanded Mexico City Policy. As was expected, President Trump reinstated the Mexico City Policy, marking the resumption of the expansion of the policy from his first term that, for the first time, included PEPFAR. The Trump administration’s 2017 expanded policy required foreign non-governmental organizations (NGOs) to certify that they would not “perform or actively promote abortion as a method of family planning” using funds from any source (including non-U.S. funds) as a condition of receiving U.S. government global family planning funding and most other bilateral U.S. global health assistance (prior to this time, only family planning assistance had been subject to the policy). An analysis of the impact of Trump’s expanded policy found significant decreases in services offered by PEPFAR implementing organizations, including reductions in HIV testing and counseling among other services. The newly reinstated policy calls for the Secretary of State, in coordination with the Secretary of Health and Human Services, to develop a plan to implement the policy, and it is possible that the plan will reach even further than during Trump’s first presidency, as some have called for.
  • PEPFAR’s Reauthorization Uncertainty. As mentioned earlier, PEPFAR’s current authorization expires March 25, which means that eight time-bound provisions would lapse if Congress does not act to extend them. However, the PEPFAR program overall would continue, so long as funding is appropriated. Still, how concerns raised by some members of Congress about abortion and increasing pressure on PEPFAR to demonstrate more concrete plans about its future, will figure into reauthorization have yet to be seen. It is possible that the new measures announced by PEPFAR to assure compliance with U.S. law, the reinstatement of the Mexico City Policy, and, presumably, a new PEPFAR coordinator appointed by President Trump, will alleviate abortion concerns. At the same time, the current upheaval in PEPFAR services and disruptions around the world may accelerate Congress’ interest in playing a more active role in charting its future, as will its interest in seeing more active sustainability reforms – for example, Congress could assess whether to include new provisions in PEPFAR authorizing language, such as country co-financing or graduation requirements.
  • Future Funding. Finally, while PEPFAR’s funding has been relatively flat for several years, it now enters a much more uncertain funding environment. Last year, during budget negotiations, both the House and Senate’s final FY 2025 appropriation bills for State, Foreign Operations, and Related Programs (which funds most of PEPFAR) included level funding for program. Still, Congress could not agree on an overall budget for FY 2025 and the entire government is operating under a continuing resolution through March 28, 2025, requiring Congress to either agree on a FY 2025 budget or adopt another continuing resolution (or the government shuts down), and reports already indicate that Republicans will be looking for deep cuts in the budget. This changes the overall funding calculus for PEPFAR potentially for FY 2025 but also beyond. Contributing to this is the likelihood that President Trump’s first budget request for FY 2026, which will be released soon, will call for funding cuts to global health, including PEPFAR, as it did during his first term – at that time, Congress balked at those cuts but it is much less certain how they will respond now, given current fiscal and political pressures.

Key Facts About Hospitals

This analysis presents key facts to inform policy discussions about hospitals and hospital spending in the following categories: National Hospital Spending, The Hospital Industry, Rural Hospitals, Use of Hospital Care, Out-of-Pocket Spending and Medical Debt, Hospital Prices, Hospital Finances and Charity Care.

This analysis presents key facts to inform policy discussions about hospitals and hospital spending in the following categories:

Overview

Introduction

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Hospitals account for nearly one third (31%) of total health care spending—$1.5 trillion in 2023—with expenditures projected to rise rapidly through 2032, contributing to higher costs for families, employers, Medicare, Medicaid, and other public payers. In the past, policymakers have looked to reduce spending on hospital care as part of broader efforts to make health care more affordable and reduce the federal deficit and national debt. For example, Republican lawmakers recently floated a number of proposals that could directly or indirectly affect the more than 6,000 hospitals across the country, including major reductions in Medicaid spending, reductions in Medicare spending for uncompensated care and bad debt, establishing site-neutral payments that would achieve Medicare savings by aligning payment rates for a given service across different sites of care, and eliminating federal tax-exempt status for nonprofit hospitals.

Reducing federal spending on hospital care would inevitably involve tradeoffs. On the one hand, doing so could reduce the federal deficit, help offset the cost of a tax bill or other policy priorities, and promote efficiencies. Some options that reduce Medicare reimbursement may also lead to lower beneficiary cost-sharing requirements and premiums. On the other hand, reducing federal payments to hospitals could shift costs onto patients and lead hospitals to offer fewer services—which may result in patients not getting need care—or poorer quality of care. Absorbing reductions in federal spending could be especially challenging for hospitals that are financially vulnerable, such as rural and safety-net hospitals

This analysis presents key facts about hospitals to inform policy discussions about hospitals and hospital spending. Topics include national spending on hospital care, characteristics of the hospital industry, rural hospitals, use of hospital care, out-of-pocket spending and medical debt, hospital prices, hospital finances, and charity care. (For additional information about the data used, see Data Sources.)  

National Hospital Spending

National Spending on Hospital Care

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Spending on hospital care totaled $1.5 trillion in 2023, representing nearly one third (31%) of national health expenditures in that year. Spending on hospital care was the single largest source of national health expenditures in 2023. Hospital care includes both inpatient services and outpatient services (like imaging services or surgical procedures that do not require an overnight stay). Other categories that account for a large share of national health expenditures include spending on physician and clinical services (20%) and retail prescription drugs (9%). (See the Peterson-KFF Health System Tracker for more on national health expenditures.)

Spending on Hospital Care Totaled $1.4 trillion in 2023, Representing Nearly One Third (31%) of National Health Expenditures in That Year

Spending by Payer

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Private health insurance accounted for more than a third of spending on hospital care in 2023 (37%), followed by Medicare (25%) and Medicaid (19%). Private insurance includes coverage offered by employers and insurance purchased through the Affordable Care Act (ACA) health insurance Marketplaces and elsewhere. The federal government subsidizes private insurance through favorable tax treatment for employer-sponsored coverage and through subsidies for coverage purchased through the Marketplaces.

Medicare spending—which is financed by the federal government—includes hospital care provided by traditional Medicare and Medicare Advantage plans. Medicaid spending—which is jointly financed by states and the federal government—includes hospital care provided by fee-for-service Medicaid and Medicaid managed care plans. Federal, state, and local governments also cover hospital spending through other programs, such as the Veterans Health Administration, which is administered by the federal government.

Patient out-of-pocket spending accounted for a relatively small share of hospital spending (3%), though individuals also contribute to hospital spending through health insurance premiums, taxes, and lower wages. 

Private Health Insurance Accounted for More Than a Third of Spending on Hospital Care in 2023 (37%), Followed by Medicare (25%) and Medicaid (19%)

Spending as Percentage of GDP

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Spending on hospital care as a percent of gross domestic product (GDP) is projected to increase from 5.5% in 2023 to 6.0% in 2032. Hospital spending as a share of GDP more than tripled from 1.7% in 1960 to 5.4% in 2010. Between 2010 and 2019, hospital spending as a share of GDP was relatively flat, but spiked in 2020 (i.e., the first year of the COVID-10 pandemic). The share eventually fell below 2019 pre-pandemic levels in 2022 before increasing to 5.5% in 2023, a year that marked the fastest growth rate of hospital spending (10.4%) since 1990. Hospital spending is projected to increase from 5.5% of GDP in 2023 to 6.0% in 2032.

Spending on Hospital Care as a Percent of Gross Domestic Product (GDP) is Projected to Increase From 5.5% in 2023 to 6.0% in 2032

Medicare and Medicaid Spending

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Hospital care accounted for about one third of Medicare and Medicaid spending in 2023 (37% and 32%, respectively). For purposes of comparison, hospital care represented a larger share of Medicare and Medicaid spending (37% and 32%, respectively) than physician and clinical services (25% and 14%) or retail prescription drugs (14% and 6%). Medicare is financed by the federal government while Medicaid is jointly financed by states and the federal government (Medicaid data include expenditures from both). Because hospital care accounts for a large share of Medicaid and Medicare expenditures, it is likely that any large reductions in program spending would impact hospitals. Policies that reduce spending on hospital care could involve tradeoffs, for example, to the extent that they lead hospitals to offer fewer services, reduce staff, or make other cuts, which could result in patients not getting needed care or in poorer quality of care.

Hospital Care Accounted for About One Third of Medicare and Medicaid Spending in 2023 (37% and 32%, Respectively)

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The Hospital Industry

Number of Hospitals

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Most of the 6,093 hospitals in the United States (84%) are community hospitals. Community hospitals are short-term, non-federal, general and specialty hospitals that are open to the general public. While the majority of community hospitals are general medical and surgical hospitals (83%; not shown), the category also includes certain rehabilitation hospitals, acute long-term care hospitals, children’s hospitals, cancer hospitals, and other hospitals (such as rural emergency hospitals and surgical hospitals). Non-community hospitals include federal hospitals, like Veterans Affairs hospitals, and non-federal psychiatric hospitals, among other types (such as non-federal long-term care hospitals).

Most of the 6,093 Hospitals in the United States (84%) are Community Hospitals

Openings and Closings

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From 2010 through 2023, more hospitals closed than opened. Over this 14-year period, 300 hospitals closed and 192 hospitals opened, or 108 more hospital closings than openings. Hospital closures often raise concerns about access to care, and this may especially be the case when there are few or no other hospitals or providers in the area offering a given set of services or when a safety-net hospital closes that had served as an access point for vulnerable populations.

From 2010 Through 2023, More Hospitals Closed Than Opened

Hospital closures outpaced openings to a greater extent in rural versus urban areas. From 2017 to 2023, there were more closures than openings in both rural and urban areas, and especially so in rural areas. In rural areas, 61 hospitals closed compared to 11 that opened, a net reduction of 50 hospitals. In urban areas, there were 87 hospital closures compared to 74 openings, a net reduction of 13 hospitals. Over the twenty-year period from 2005 to 2024, 193 rural hospitals closed.

Hospital Closures Outpaced Openings to a Greater Extent in Rural Versus Urban Areas

Hospital Characteristics

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Most community hospitals (58%) are nonprofits. Nonprofit hospitals are often exempt from federal, state, and local taxes and, in return, are expected to provide benefits to the communities they serve. Nonprofit hospitals may in some circumstances be more attentive than their for-profit counterparts to the needs of their patients and communities, such as by maintaining needed but unprofitable service lines. Nonetheless, some policymakers and researchers have questioned the extent to which nonprofit hospitals behave differently than for-profit hospitals and whether these facilities provide enough community benefits to justify their tax exemption (see Figure 38 in the Hospital Finances section for an estimated value of tax exemption).

While most community hospitals are nonprofit entities, for-profit ownership is common among some types of community hospitals—including acute long-term care hospitals (82%) and rehabilitation hospitals (84%)—as well as non-federal psychiatric hospitals (50%).

Most Community Hospitals (58%) Are Nonprofits

Most community hospitals are nonprofit, and most are part of a larger health system. Most community hospitals (58%) are nonprofit, but a large minority are for-profit (24%) or government hospitals (18%). While about two thirds (69%) of community hospitals are part of a larger health system, the about one third remaining are independent. About one in ten (11% of) hospitals are operated by the Catholic Church. Catholic hospitals have received some media attention in recent years regarding restrictions on reproductive, gender-affirming, and end-of-life care.

About two in five (42% of) hospitals have at least 100 beds, though bed sizes vary; about a quarter (26%) have 25 or fewer beds while about one in seven (16%) have 300 beds or more. More than four in ten hospitals are teaching facilities (44%). About one in three (35%) are in rural (nonmetropolitan) areas.

Most Community Hospitals Are Nonprofit and Part of a Larger Health System, and About Two in Five (42%) Have at Least 100 Beds

Market Concentration and Consolidation

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One or two health systems controlled the entire market for inpatient hospital care in nearly half of metropolitan areas in 2023. Consolidation may allow providers to operate more efficiently and help struggling providers keep their doors open in underserved areas, but it often reduces competition. A substantial body of evidence has found that consolidation can contribute to higher prices, with unclear effects on quality. One or two health systems provided all of the inpatient care in nearly half (47%) of metropolitan areas and at least 75% of the inpatient care in most metropolitan areas (83%) in 2023. Both cases meet the definition of a highly concentrated market based on thresholds in current antitrust guidelines (see below).

The number of health systems in a given metropolitan area tends to increase with the population of the region. For example, regions with four or more health systems accounted for 33% of all metropolitan areas but 77% of the U.S. population living in metropolitan areas.

One or Two Health Systems Controlled the Entire Market for Inpatient Hospital Care in Nearly Half of Metropolitan Areas in 2023

Nearly all (97% of) metropolitan areas had highly concentrated markets for inpatient hospital care in 2023 based on thresholds used in current antitrust guidelines. One way to assess market competitiveness is to evaluate a measure of concentration known as the Herfindahl-Hirschman Index (HHI), which is based on the number of participants in a market and their respective shares. The measure runs from 0 (perfectly competitive) to 10,000 (monopoly market). Nearly all (97% of) metropolitan areas had highly concentrated markets for inpatient hospital care in 2023 when applying thresholds used in current merger guidelines from the Federal Trade Commission and Department of Justice to these regions. Based on the thresholds used in prior merger guidelines, a somewhat smaller share (92%) of metropolitan areas had highly concentrated markets for inpatient hospital care in 2023.

As was the case when looking at counts of health systems in MSAs, larger metropolitan areas tended to be more competitive than less populated metropolitan areas, though many were still highly concentrated. For example, 43 of the 54 metropolitan areas with more than one million residents—including those encompassing Houston, Denver, and Atlanta—had highly concentrated hospital markets.

Nearly All (97% of) Metropolitan Areas Had Highly Concentrated Markets for Inpatient Hospital Care in 2023 Based on Thresholds Used in Current Antitrust Guidelines

The share of hospitals affiliated with health systems increased from 58% in 2010 to 69% in 2023, while the share of hospitals that were independent declined. About two thirds of hospitals (69%) are now part of a larger system, an increase from 58% in 2010. A smaller share of rural than urban hospitals were part of a health system in 2023 (52% versus 78%), though a majority of hospitals were part of a system in both rural and urban areas. Shares have also increased over time for both rural and urban areas: from 43% in 2010 to 52% in 2023 among rural hospitals and from 66% in 2010 to 78% in 2023 among urban hospitals.

The Share of Hospitals Affiliated With Health Systems Increased From 58% in 2010 to 69% in 2023, While the Share of Hospitals That Were Independent Declined

The ten largest health systems in the country operated about one in five (22% of) non-federal general acute care hospital beds in 2023. Consolidation has also contributed to the emergence of large health systems. For example, the ten largest health systems accounted for about one in five (22% of) non-federal general acute care hospital beds in 2023. These systems are the size of large corporations. For instance, HCA Healthcare, the largest system in terms of beds, had greater operating revenues than each of Netflix, Uber, and Starbucks in 2023. Health systems can include many types of providers beyond hospitals (such as ambulatory surgical centers, physician practices, outpatient clinics, home health agencies, and hospices) and sometimes also offer health insurance plans. 

The Ten Largest Health Systems in the Country Operating About One in Five (22% of) Non-federal General Acute Care Hospital Beds in 2023

An increasing share of physicians are employed by a hospital or are part of a practice that is at least partially owned by a hospital or health system. Between 2012 and 2022, the share of physicians employed by a hospital or part of a practice that is at least partially owned by a hospital or health system increased from 29% to 41% based on AMA survey data. Another study found that more than half of physicians were employed directly or indirectly by hospitals or health systems as of January 2024.

Instances where hospitals or health systems employ physicians or buy up physician practices are known as “vertical consolidation.” Vertical consolidation between hospitals and physicians could benefit patients in some instances if, for example, it leads to more integrated and better coordinated care across providers. At the same time, with more and more physicians owned by hospitals and health systems, health systems gain market power, which may lead to higher prices and lower quality by dampening competitive pressure on providers. Prices may also increase following vertical consolidation given that Medicare and other payers often pay higher rates for a given outpatient service when provided by a hospital than in other settings, like freestanding physician offices.

An Increasing Share of Physicians Are Employed by a Hospital or Are Part of a Practice That Is at Least Partially Owned by a Hospital or Health System

Workforce

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Hospitals account for more than 4% of all U.S. workers. Hospitals employed 6.7 million individuals in 2023, making them the sixth largest employer in the country when comparing different industry subsectors. Hospitals followed educational services; food services and drinking places; professional, scientific, and technical services; administrative and support services; and ambulatory health care services in employment rankings. Physicians and other employees in the ambulatory health care services subsector may have close ties to hospitals in some instances (e.g., be owned by the same system as a hospital or see patients at a hospital).

Hospitals accounted for at least 5.0% of total employment in 17 states in 2023 and represented 7.8% of total employment in West Virginia, which was the highest percentage across states.

Hospitals Account for More Than 4% of All U.S. Workers

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Rural Hospitals

Prevalence of Rural Hospitals

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About one third (35%) of community hospitals are in rural areas. In 2023, 1,796 community hospitals operated in rural (nonmetropolitan) areas. Of these rural hospitals, 758 were in micropolitan areas while the remaining 1,038 were not. Regions that are neither metropolitan nor micropolitan areas do not include and are not closely connected to any substantial population center.

About One Third (35%) of Community Hospitals Are in Rural Areas

Rural Hospital Characteristics

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Most hospitals in rural areas were nonprofit (58%) and affiliated with a health system (52%) and half had 25 or fewer beds in 2023. Hospitals in rural areas had similar rates of nonprofit ownership as those in urban areas but were much more likely to be government-owned (33% versus 10%) and were much less likely to have for-profit ownership (9% versus 32%). Rural hospitals were also much less likely than urban hospitals to be affiliated with a broader health care system (52% versus 78%), though system affiliation has increased in both rural and urban areas over time (see Figure 12 in the Hospital Industry section). Finally, rural hospitals tend to be smaller than urban hospitals. For example, half of rural hospitals had 25 or fewer beds compared to 14% of urban hospitals. While nearly a quarter of hospitals in urban areas had at least 300 beds (23%), this was only the case for 1% of those in rural areas.

Most Hospitals in Rural Areas Were Nonprofit (58%) and Affiliated With a Health System (52%) and Half Had 25 or Fewer Beds in 2023

Rural Discharges by Payer

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Medicare covered a larger share of hospital discharges in rural than urban areas while private insurance covered a smaller share in rural than urban areas in 2023. Medicare shares were 53% in rural areas versus 45% in urban areas, while private insurance (not including Medicare and Medicaid plans) accounted for 19% of discharges in rural areas versus 24% in urban areas. Medicaid also covered a slightly smaller share of discharges in rural versus urban areas (19% versus 21%).

Private insurers generally reimburse at higher rates than Medicare and Medicaid (see Prices section for comparisons with Medicare), though the extent to which this is true in rural areas is unclear. Medicare provides more generous reimbursement for most rural hospitals through special rural payment designations, such as for critical access hospitals (rural hospitals with at most 25 beds that with some exceptions are a minimum distance from other facilities). Many state Medicaid programs also have special payment rules for hospitals in rural areas, such as by paying higher rates or based on costs or through supplemental payments. Commercial prices also likely differ in rural areas given the unique market structure of these regions, though it is unclear how rates compare.

Medicare Covered a Larger Share of Hospital Discharges in Rural Than Urban Areas While Private Insurance Covered a Smaller Share in Rural Than Urban Areas in 2023

Rural Profit Margins

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Operating margins were lower than average among rural hospitals in 2023. Operating margins were lower among hospitals in rural (nonmetropolitan) areas than hospitals in urban (metropolitan) areas (3.1% versus 5.4%, respectively). Operating margins were especially low among the nearly 1,000 hospitals in rural areas that were not micropolitan areas (1.7%) (i.e., that do not include and are not closely connected to any substantial population center).

Policymakers have had concerns about the financial health of rural hospitals and the implications for access to care and the local economy. Rural hospitals often face unique financial challenges. For example, they often have low patient volume, which may lead to higher costs, on average, and limit the ability of rural hospitals to offer specialized services. While, as noted above, the government provides additional funds for rural hospitals, including through Medicare rural payment designations (such as for critical access hospitals), rural hospitals continue to have lower operating margins than average.

Recent policy discussions have considered options for supporting rural hospitals, including in the context of discussions about reductions in Medicaid and Medicare spending. Even with an infusion of additional funds, it may be difficult to sustain some rural hospitals, such as those in areas with shrinking populations. In 2023, Medicare began to offer a new rural emergency hospital designation created by Congress, which provides support to hospitals that operate 24/7 emergency departments but do not provide inpatient care, recognizing that some regions cannot support a broader suite of services. In general, maintaining access to services at local rural hospitals involves tradeoffs in scenarios where other providers—such as outpatient clinics and large regional hospitals—are less expensive or offer higher quality of care.

Operating Margins Were Lower Than Average Among Rural Hospitals in 2023

Rural Openings and Closings

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Hospital closures outpaced openings in rural areas from 2017 to 2023. During that seven-year period, 61 hospitals closed compared to 11 that opened, a net reduction of 50 hospitals. Over the twenty-year longer period from 2005 to 2024, 193 rural hospitals closed. Rural hospital closures often raise concerns about access to care, and this may especially be the case when there are few or no other hospitals or providers in an area offering a given set of services and for conditions that require time-sensitive care, such as heart attacks and childbirth.

Hospital Closures Outpaced Openings in Rural Areas From 2017 to 2023

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Use of Hospital Care

Inpatient Utilization

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Hospital inpatient utilization has decreased over time. This is true for both hospital inpatient days and admissions per capita. From 2000 to 2023, the number of hospital inpatient days per 1,000 people fell from 684 to 561, an 18% decrease. Much of this decrease occurred from 2005 to 2014, when inpatient days per 1,000 decreased by 15%. Contributing to the decrease in inpatient days over time was a decrease in both inpatient admissions and average length of stay. Inpatient admissions per 1,000 people decreased by 19% from 2000 to 2023, with much of the change also occurring from 2005 to 2014. The average length of stay decreased from 5.8 in 2000 to 5.4 in 2019, with much of the change occurring from 2000 to 2009, before jumping up during the pandemic (see below). Decreases in inpatient use over time are partly due to increases in procedures performed in outpatient settings.

There were relatively large changes in hospital inpatient utilization during the pandemic. Inpatient days per 1,000 people decreased by 5% in 2020 before increasing towards 2019 pre-pandemic levels in 2021-2023. Inpatient admissions per 1,000 people decreased by 9% in 2020; levels wavered in 2021 and 2022 before increasing again by 2% in 2023, at which point they remained 8% below 2019 pre-pandemic levels. Average length of stay increased from 5.4 in 2019 to 6.0 in 2022 before falling to 5.8 in 2023. (See the Peterson-KFF Health System Tracker for more on trends in health care utilization.)

Hospital Inpatient Volume Has Decreased Over Time

Outpatient Utilization

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While hospital inpatient utilization has decreased over time, hospital outpatient utilization has increased. Hospitals provide a wide array of services on an outpatient basis, including clinic visits, imaging services, drug infusion services, and outpatient surgical procedures. The number of hospital outpatient visits per 1,000 people increased from 1,853 in 2000 to 2,426 in 2023, a 31% increase. One factor likely underlying this trend is the general movement of care from inpatient to outpatient settings. Another factor may be that reimbursement rates are often higher for a given outpatient service when provided in a hospital than in other care settings, which could create an incentive to move services from physician offices to hospital outpatient departments, including by hospitals buying up physician practices.

Outpatient visits per 1,000 people decreased in 2020, the first year of the pandemic, before increasing to around 2019 pre-pandemic levels in later years. In 2023, outpatient visits per 1,000 people exceeded pre-pandemic levels by 1%.

While Hospital Inpatient Utilization Has Decreased Over Time, Hospital Outpatient Utilization Has Increased

Discharges by Payer

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Medicare and Medicaid together accounted for about two thirds (67%) of all hospital discharges in 2023. Nearly half of hospital discharges were attributed to Medicare (46%) and more than one fifth were attributed to Medicaid (21%). Private insurance (not including Medicare or Medicaid plans) accounted for 24% of discharges. Four percent were self-pay discharges, which typically includes uninsured patients and insured patients who pay directly rather than use their coverage. It is also possible that uninsured patients could be included under “other” in some instances.

Payer mix varies across hospitals, which has implications for hospitals’ role in the safety net and their finances. For example, private insurance accounted for 24% of discharges overall but at least 33% of discharges among the top ten percent of hospitals based on private insurance shares and 9% or less among the bottom ten percent of hospitals. Private insurers generally reimburse at higher rates than Medicare and Medicaid (see Prices section for comparisons with Medicare). Medicaid accounted for 21% of hospital discharges overall but at least 27% of discharges among the top ten percent of hospitals based on Medicaid shares and 4% or less among the bottom ten percent.

Nearly Half of Hospital Discharges (46%) in 2023 Were Attributed to Medicare

Medicare Advantage Inpatient Days

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Medicare Advantage steadily increased as a share of inpatient days between 2015 and 2023, while the share attributable to traditional Medicare decreased. In particular, the share of total inpatient days attributed to Medicare Advantage enrollees grew from 13% in 2015 to 24% in 2023 among general short-term hospitals in the U.S. During this same period, the share of inpatient days attributed to traditional Medicare declined from 34% to 24%. As of 2023, half of all Medicare inpatient days were attributable to Medicare Advantage patients. The rise in Medicare Advantage enrollment has implications for beneficiaries and hospitals, as Medicare Advantage differs from traditional Medicare. For example, plans often require prior authorization before covering certain services and establish networks of providers, among other factors.

Medicare Advantage Steadily Increased As Share of Inpatient Days Between 2015 and 2023, While the Share Attributable to Traditional Medicare Decreased

Pregnancy & Hospitalizations

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Medicaid covers about four in ten (41% of) births nationally. Medicaid covered at least four in ten births in 25 states and DC in 2023 and covered more than half of births in four states: Louisiana, Mississippi, New Mexico, and Oklahoma. The share was the largest in Louisiana, where Medicaid covered nearly two in three (64% of) births. (See prior KFF work for more about women and Medicaid.)

Medicaid Covers About Four in Ten (41% of) Births Nationally

Maternal and neonatal stays accounted for more than one in five (22% of) hospitalizations in 2021. Maternal stays accounted for about one in ten (11% of) hospitalizations in 2021, and neonatal stays accounted for the same share (hospital stays for a mother and newborn are recorded separately). Other types of hospitalizations were medical (50%), surgical (18%), injury (5%), and mental health and substance abuse (5%) discharges.

Maternal and Neonatal Stays Account for More Than One in Five (22% of) Hospitalizations

Common Inpatient Diagnoses

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Excluding maternal and neonatal stays, sepsis was the most common reason for a hospitalization in 2021, followed by COVID-19, heart failure, and diabetes with complication. Excluding maternal and neonatal stays, the most common reasons for a hospital stay in 2021 were sepsis (739 stays per 100,000), COVID-19 (468 stays per 100,000), heart failure (328 stays per 100,000), and diabetes with complication (206 stays per 100,000). COVID-19 hospitalizations have decreased substantially since 2021. Hospital stays in general were much more common among people ages 75 and older: 30,084 stays per 100,000 compared to 6,665 stays per 100,000 people under 18 (most of which were stays for newborns).

The most common hospitalizations when excluding maternal and neonatal stays varied with age. For instance, people under 18 were most commonly hospitalized for depressive disorders; acute bronchitis; epilepsy, convulsions; and asthma. People ages 18 to 44 were most commonly hospitalized for sepsis, COVID-19, schizophrenia spectrum and other psychotic disorders, and depressive disorders. People ages 75 and older were most commonly hospitalized for sepsis, heart failure, COVID-19, and arrhythmia.

Excluding Maternal and Neonatal Stays, Sepsis Was the Most Common Reason for a Hospitalization in 2021, Followed by COVID-19, Heart Failure, and Diabetes With Complication

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Out-of-Pocket Spending and Medical Debt

Out-of-Pocket Spending

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More than two in five (23% of) patients with a hospital stay in 2022 spent more than $3,000 out of pocket on health care. The rate among individuals who were hospitalized was nearly four times the rate (6%) among people without a hospital stay. Half (50%) of all individuals with a hospital stay had at least $1,000 in out-of-pocket spending, compared to 19% of people without a hospital stay. (See the Peterson-KFF Health System Tracker for more on differences in health care expenditures across the population.)

Total out-of-pocket spending among individuals with a hospital stay includes inpatient hospital care, hospital outpatient department visits, office-based visits, and prescription drugs, among other things. Out-of-pocket costs associated with hospital care may be especially burdensome for uninsured patients, insured patients with high deductibles or relatively less generous coverage, and low-income patients who are not eligible for hospital financial assistance programs or do not know that they are eligible.

Hospital costs have direct implications for affordability among patients receiving treatment and also affect the broader population. Hospital costs impact health insurance premiums and also affect wages and taxes because employers and the government ultimately cover a portion of these costs. Patient out-of-pocket spending accounts for a relatively small share of spending on hospital care (3% in 2023 based on national health expenditure data; see Figure 2 in the Hospital Spending section), with government and private insurers covering the bulk of hospital expenses.

About Two in Five (21% of) Hospitalized Patients Spent More Than $3,000 Out-of-Pocket on Health Care in 2022

Medical Debt

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More than one in six hospitalized adults (18%) had over $250 in medical debt in 2022. The rate among adults who were hospitalized was more than two times the rate of those without a hospital stay (7%). (See the Peterson-KFF Health System Tracker and the KFF Health Care Debt Survey for more on medical debt.) Medical debt takes into account amounts owed to hospitals and other providers.  

Hospitals typically have financial assistance programs, which provide free or discounted services to eligible patients who are unable to afford their care. However, eligibility criteria vary across hospitals, financial assistance programs may not cover the full cost of care, and not all eligible patients receive assistance (e.g., because they do not know to apply).

More Than One in Six Hospitalized Adults (18%) Had at Least $250 in Medical Debt in 2022

Among hospitalized adults with over $250 in medical debt in 2022, the amount of debt exceeded $5,000 for about four in ten patients (39%). That again was greater than the corresponding rate (22%) among adults with over $250 in medical debt but without a hospital stay. 

Among Hospitalized Adults With at Least $250 in Medical Debt in 2022, the Amount of Debt Exceeded $5,000 for About Four in Ten Patients (39%)

More than two thirds (69%) of adults with at least $5,000 in medical debt say that a hospitalization caused at least some of their debt. Additionally, the majority of people with at least $5,000 in medical debt (77%) attributed at least part of their debt to emergency care, which is typically provided by hospitals. Many of those with at least $5,000 in medical debt cited other services that may be provided in hospitals, including lab fees or diagnostic tests (77%), doctor visits (69%), and outpatient surgery (38%). 

More Than Two-Thirds of Individuals With at Least $5,000 in Medical Debt Report That a Hospitalization Contributed to Their Debt.

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Hospital Prices

Price Growth by Payer

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Prices for hospital care paid by private insurance have grown faster than Medicare and Medicaid rates. Inpatient hospital prices paid by private health insurance plans (and other payers aside from Medicare or Medicaid) increased by 50% from June 2014 to December 2024 based on the Producer Price Index. This is twice the growth rate of inpatient hospital prices for Medicare (25%) and more than twice the growth rate for Medicaid (19%) over the same period. There were similar differences when looking at increases in prices for hospital outpatient care (42% versus 17% for Medicare and 6% for Medicaid). (See Peterson-KFF Health System Tracker for more on medical inflation).

Prices for Hospital Care Paid by Private Insurance Have Grown Faster Than Medicare and Medicaid Rates

Prices Paid by Private Insurance

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Prices paid by private insurance for hospital care were 267% of Medicare rates on average in 2022 and varied widely across the country. This is based on the RAND Price Transparency Study—which uses claims data from a large population of commercial patients—and reflects facility claims for both hospital inpatient and outpatient services (while excluding associated professional claims). A KFF review similarly found that commercial prices were nearly double Medicare rates for hospital services when averaging findings across studies. Commercial-to-Medicare price ratios based on the RAND data varied widely across the country, from 166% in Arkansas to 380% in Florida. (See Peterson-KFF Health System Tracker for more on commercial health care prices and variation across the country.) Private payers often benchmark their reimbursement to a percent of Medicare rates.

Policymakers have explored a number of options to rein in commercial prices in an effort to make care more affordable, including by increasing the competitiveness of health care markets and directly regulating prices and spending. 

Prices Paid by Private Insurance for Hospital Care Were 267% of Medicare Rates on Average in 2022 and Varied Widely Across the Country

Prices paid by private insurance as a percent of Medicare can vary widely across hospitals within metropolitan areas. For example, in the New York City-Newark-New Jersey City metropolitan area, the prices paid by private insurance for hospital care were less than 199% of Medicare rates for a quarter of hospitals but were more than 354% for another quarter. Differences in the prices paid as a percent of Medicare rates could reflect a variety of factors, including market power and negotiating leverage, quality, cost structure, and the types of services a given hospital provides. Insurers may try to steer patients away from hospitals with high prices or exclude those hospitals from their provider networks altogether, though doing so may be challenging, especially in the case of highly regarded, “must have” hospitals with local clout and name recognition.

Prices Paid by Private Insurance as a Percent of Medicare Can Vary Widely Across Hospitals Within Metropolitan Areas

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Hospital Finances

Profit Margins

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Hospital margins rebounded in 2023 following a large decrease in 2022. Total margins for hospitals decreased from 10.8% in 2021 to 2.3% in 2022 before increasing to 6.4% in 2023. Similarly, operating margins decreased from 8.9% in 2021 to 2.7% in 2022 before increasing to 5.2% in 2023. While both increased in 2023, they remained below 2019 pre-pandemic levels (6.5% for operating margins and 7.6% for total margins). Total margins reflect profit margins earned on all activities while operating margins reflect profit margins earned on patient care and other operating activities (rather than on other sources such as investments).

Decreases in operating margins in 2022 were likely due to the erosion of COVID funds, costs associated with labor shortages, and increased supply expenses due to high inflation rates, among other factors. Improvements in 2023 may have been due a number of factors, including stabilizing labor expenses, decreases in average length of stay, and increases in revenue. Industry reports indicate that hospital margins improved in 2024 relative to 2023.

Hospital Margins Rebounded in 2023 Following a Large Decrease in 2022

Operating margins were relatively high among for-profit and system-affiliated hospitals and relatively low among hospitals with low market shares and rural hospitals in 2023. For-profit hospitals had much higher operating margins than nonprofit and government hospitals (14.0% versus 4.4% and 3.4%, respectively) in 2023. Differences in operating margins across these and other groups of hospitals could reflect a variety of factors. For instance, for-profit hospitals may have a greater motivation than other hospitals to operate efficiently and engage in other strategic behaviors to increase their margins, such as focusing on relatively profitable services lines, dropping unprofitable service lines (like obstetrics), or locating in wealthier areas that have more residents with commercial insurance and fewer with public or no insurance.

Operating margins were lower among hospitals in rural (nonmetropolitan) areas than hospitals in urban (metropolitan) areas (3.1% versus 5.4%, respectively). Operating margins were especially low among the nearly 1,000 hospitals in rural areas that were not micropolitan areas (1.7%). Regions that are neither metropolitan nor micropolitan areas do not include and are not closely connected to any substantial population center.

Prior KFF analysis provides additional information about differences in margins across hospitals.

Operating Margins Were Relatively High Among For-Profit and System-Affiliated Hospitals and Relatively Low Among Hospitals With Low Market Shares and Rural Hospitals in 2023

Operating margins were lower than average among hospitals with high shares of Medicaid patients and higher than average among hospitals with high shares of commercial patients in 2023. More specifically, operating margins were relatively low (2.3%) among hospitals with high shares of Medicaid patients and were relatively high among hospitals with low shares of Medicaid patients (7.0%). (This compares operating margins among hospitals in the top versus bottom quartiles based on Medicaid as a share of total discharges, weighted by revenues). Notably, operating margins in 2023 were relatively low among hospitals with high Medicaid shares in both rural and urban areas (1.7% and 2.3%, respectively) (data not shown). Some policymakers have been attentive to the financial stability of safety-net hospitals, including those in both urban and rural areas, given their role in providing access to patients with limited resources and other sources of vulnerability. The share of patients covered by Medicaid may signal the extent to which a hospital serves as a safety net for low-income patients.

Operating margins were higher among hospitals with a relatively large share of commercial patients than hospitals with a relatively small share of commercial patients (7.5% versus 3.3%). One factor that likely plays a role in these results is that commercial payers generally reimburse hospital care at higher rates than Medicare and Medicaid (see Prices section for comparisons with Medicare).

Operating Margins Were Lower Than Average Among Hospitals With High Shares of Medicaid Patients and Higher Than Average Among Hospitals With High Shares of Commercial Patients in 2023

Tax Exemption

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The estimated value of tax exemption for nonprofit hospitals grew from about $19 billion in 2011 to about $28 billion in 2020. Over the years, some policymakers have questioned the extent to which nonprofit hospitals—which account for nearly three-fifths (58%) of community hospitals (see Figures 8 and 9 in the Hospital Industry section)–provide enough benefit to their communities to justify tax exemption.

The estimated value of tax exemption for nonprofit hospitals was about $28 billion in 2020 based on a prior KFF analysis. About half of this amount is related to federal tax-exempt status, including the estimated value of not having to pay federal corporate income taxes ($10.3 billion) and assumptions that individuals contribute more to tax-exempt hospitals because they can deduct their donations ($2.5 billion) and that hospitals can issue bonds at lower interest rates because the interest is not taxed ($1.6 billion). About half is related to state and local tax-exempt status, including the estimated value of not having to pay state or local sales taxes ($5.7 billion), local property taxes ($5.0 billion) or state corporate income taxes ($3.0 billion).

The value of tax exemption increased in most years (7 out of 9) from 2011 to 2020. The large decrease in the value of tax exemption in 2018 coincided with the implementation of the Tax Cuts and Jobs Act of 2017, which permanently reduced the federal corporate income tax rate from 35 to 21 percent and therefore decreased the value of being exempt from federal income taxes. The large increase in the value of tax exemption in 2020 may in part reflect unique circumstances related to the COVID-19 pandemic, including the large amounts of government relief provided to hospitals.

Estimating the value of tax exemption requires a number of assumptions. Another analysis using a different methodology estimated that the value of tax exemption was $37 billion in 2021, with the largest differences being much higher estimated value of sales and property tax exemptions.

The Estimated Value of Tax Exemption Grew From About $19 Billion in 2011 to $28 Billion in 2020

340B Drug Pricing Program

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Purchases through the 340B Drug Pricing Program, most of which are made by hospitals, have increased substantially over time. The 340B Drug Pricing Program requires manufacturers participating in Medicaid to sell outpatient drugs to eligible nonprofit and government providers at a substantial discount, with the intent of supporting entities caring for low-income and other underserved populations, such as certain disproportionate share hospitals. The 340B program has grown substantially over time, with total drug purchases growing from $2.4 billion in 2005 to $66.3 billion in 2023.

Hospitals account for the large majority of these drug purchases, and more than 2,600 hospitals participated in the program as of January 2023. The pharmaceutical industry has raised concerns that hospitals are not always using the 340B program to help patients afford health care, while hospitals say that the 340B program provides funds to help safety-net hospitals care for underserved populations and invest in operations. Policymakers have considered a variety of 340B reforms, including options that would preserve the ability of providers to dispense 340B drugs through contract pharmacies, increase transparency, tighten regulation of the program, or scale back its scope.

340B Drug Purchases Have Risen Rapidly in Recent Years, Most of Which Is Driven by Hospitals

Hospital Expenses

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Labor costs were the largest expense category for hospitals in 2023, followed by supply and pharmacy expenses. Labor costs made up almost half (46%) of all hospital expenses in 2023 based on a large sample of community hospitals. That includes the costs of hospital employees but not contract labor (e.g., nurses temporarily hired through staffing agencies), which are part of “other” expenses. Most labor costs were related to direct patient care in 2022 based on another data source. Supplies (12%) and pharmacy (9%) were the next largest expense categories.

Labor Costs Were the Largest Expense Category for Hospitals in 2023, Followed by Supplies and Pharmacy Expenses

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Charity Care

Distribution of Charity Care

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Half of all hospitals reported that charity care costs represented 1.2% or less of their operating expenses in 2023, though the level of charity care varied substantially across facilities. Hospital charity care programs, also known as “financial assistance programs,” provide free or discounted services to eligible patients who are unable to afford their care. While charity care costs represented 0.1% of operating expenses or less on the lower end of the spectrum (for 10% of hospitals), they represented 6% or more among a similar share of hospitals on the higher end. Differences in charity care likely reflect a variety of factors, such as the extent to which patients require financial assistance, hospitals’ eligibility criteria and application procedures, efforts to notify patients of their eligibility, and state requirements (e.g., that hospitals at a minimum extend eligibility to certain groups of patients).

Half of All Hospitals Reported That Charity Care Costs Represented 1.1% or Less of Their Operating Expenses in 2023, Though the Level of Charity Care Varied Substantially Across Facilities

Charity Care and Medicaid Expansion

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Charity care costs in 2023 were generally higher in states that had not expanded Medicaid. As a result of the Affordable Care Act, states have the option of expanding Medicaid to nearly all adults with incomes up to 138% of the federal poverty level. Eight of the ten states with the highest average charity care costs as a percent of operating expenses in 2023 had not expanded Medicaid as of January of that year (one did so in December 2023). For example, Texas had both the highest uninsured rate (16%) and the highest average charity care costs as a percent of operating expenses (6.6%) in the country. Conversely, all thirteen states where average charity care costs as a percent of operating expenses were less than 1.0% had expanded Medicaid. Medicaid expansion can improve hospital finances by extending coverage to uninsured patients who may otherwise qualify for hospital charity care or be unable to pay their bills.

Average charity care costs as a percent of operating expenses across the nation were 2.2% in 2023 (which is higher than the median reported in Figure 41 due to a relatively small share of hospitals with particularly high charity care costs).

Charity Care Costs Tended To Be Higher in States That Have Not Expanded Medicaid as of 2023

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Data Sources

About the Data

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Data sources used for Key Facts About Hospitals are listed below. Some figures pull from other sources, including prior KFF analyses and KFF State Health Facts, which include additional information about the data and methodology. Numbers have been rounded.

American Hospital Association (AHA) Annual Survey. Data from an annual survey of all hospitals in the United States and its associated areas. Non-federal psychiatric hospitals were defined to include psychiatric hospitals as well as hospitals that identified their hospital type as “substance use disorder” or “intellectual disabilities.”

American Medical Association (AMA) Physician Practice Benchmark Survey. As described by the AMA, the Physician Practice Benchmark Survey is a nationally representative survey of “post-residency physicians who provide at least 20 hours of patient care per week, are not employed by the federal government, and practice in one of the 50 states or [DC].”

Census Bureau delineation files. The Census Bureau delineation files map counties and county equivalents to metropolitan areas, micropolitan areas, and other regions. These files were used to group hospitals into metropolitan, micropolitan, and other areas. A metropolitan area is a county or group of counties that contains at least one urban area with a population of 50,000 or more people. A micropolitan area is a county or group of counties that contains at least one urban area with a population of at least 10,000 but less than 50,000. Urban and rural regions were defined as metropolitan and nonmetropolitan areas, respectively.

Census Bureau population estimates. We relied on annual population estimates for the 50 states and DC as of July 1 of a given year from the Census Bureau’s Population Estimates Program.

Healthcare Cost and Utilization Project (HCUP) National Inpatient Sample (NIS). The NIS is a sample that includes about 20% of all inpatient discharges from U.S. community hospitals (aside from rehabilitation and long-term care hospitals). It is nationally representative of non-federal short-term hospitals in the U.S. and is sponsored by the Agency for Healthcare Research and Quality. Primary diagnoses are grouped into clinical categories based on Clinical Classifications Software Refined (CCSR). The categories used for rankings are mutually exclusive; when a diagnosis falls under multiple clinical categories, the stay is assigned to a single category based on hierarchical guidelines.

KFF Health Care Debt Survey. The KFF Health Care Debt Survey is a nationally representative survey of U.S. adults that was conducted from February 25 through March 20, 2022.

Medical Expenditures Panel Survey (MEPS). MEPS is a nationally representative survey of the U.S. civilian non-institutionalized population that includes information about health care expenditures and sources of payment, among other things. The analysis of out-of-pocket spending relied on the MEPS Household Component (HC).

National Health Expenditures. These data are published annually by the Centers for Medicare & Medicaid Services and provide estimates of national spending on health care, by payer and by type of service.

Producer Price Index (PPI). These data come from the Bureau of Labor Statistics (BLS). As BLS notes, PPI indices measure “the average change over time in selling prices received by domestic producers of goods and services.” The health care PPIs reflect the reimbursement that providers receive for health care services. The Medicare, Medicaid, and private and other patient PPIs are mutually exclusive. The Medicare and Medicaid PPIs take account of private Medicare and Medicaid plans. The PPI may exclude supplemental payments that are paid to hospitals as a lump sum.

Quarterly Census of Wages and Employment (QCEW). These data also come from BLS. As BLS notes, the QCEW data provide a “quarterly count of employment and wages reported by employers covering more than 95 percent of U.S. jobs.” The QCEW includes workers covered by state unemployment insurance laws as well as federal workers covered by the Unemployment Compensation for Federal Employees (UCFE) program. Analyses of hospital and other employment relied on the average annual employment numbers reported by BLS. Industry subsector rankings were based on 3-digit NAICS codes. Employment for a given industry subsector and employer type were not included in totals when not disclosed by BLS.  

RAND Hospital Data. These data are a cleaned and processed version of annual cost reports that Medicare-certified hospitals are required to submit to the federal government. Cost reports include information about hospital characteristics, utilization, and finances. The RAND Hospital Data also crosswalk hospitals to health systems based on the Agency for Healthcare Research and Quality (AHRQ) Compendium of U.S. Health Systems.

For charity care analyses, missing charity care costs were recoded as $0 if the hospital reported total unreimbursed and uncompensated care costs. Hospitals were excluded if they had missing or negative operating expenses or charity care costs, outlier amounts of charity care as a percent of operating expenses (≥18.1%), or reporting periods less than or greater than one year. Cost report instructions indicate that hospitals should report amounts related to both charity care and uninsured discounts as part of their charity care costs. MedPAC has noted that current HCRIS calculations favor hospitals with higher markups, and it has recommended revisions that would put hospitals on more equal footing and reduce reported charity care costs on average.

RAND Price Transparency Study, Round 5.1. These data are based on commercial claims for employer-sponsored health insurance plan enrollees collected from participating self-insured employers and health plans as well as from all-payer claims databases (APCDs) from 12 states. Commercial-to-Medicare price ratios are based on the actual allowed amount from the claims and an estimate of the allowed amount had Medicare covered the same services. Ratios presented in key facts include facility claims for hospital inpatient and outpatient services but exclude associated professional claims (which are also available through the RAND study). Analyses of metropolitan areas exclude hospitals for which RAND did not disclose relevant data while state and national analyses include all hospitals in the RAND study.

Survey of Income and Program Participation (SIPP). SIPP is a nationally representative survey of the civilian noninstitutionalized population. Among other questions, SIPP asks individuals ages 15 and older about their medical debt. The analysis of medical debt further restricted the sample to adults ages 18 and older.

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This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

5 Key Facts About Immigrants and Medicaid

Published: Feb 19, 2025

Confusion persists about immigrants’ eligibility for federal programs, with about half or more of U.S. adults and immigrants adults saying they are unsure or incorrectly believe that most immigrants to the U.S. are eligible to enroll in federal health insurance programs, including Medicaid, as soon as they arrive to the U.S. Eligibility for Medicaid and the Children’s Health Insurance Program (CHIP) is limited to citizens and certain lawfully present immigrants. Many citizens and lawfully present immigrants live in families with mixed immigration status, which may include undocumented immigrants. For example, 19 million or one in four children in the U.S. has an immigrant parent, including one in ten (12%) or 9 million who are citizen children with a noncitizen parent. Although most immigrant families have a full-time worker in the household, they tend to have lower incomes. As such, Medicaid and CHIP help keep uninsured rates for children in these families low and provide an affordable coverage option to eligible lawfully present immigrants. Despite having lower incomes, among those under age 65,  immigrants are less likely than U.S.-born citizens to have Medicaid or CHIP coverage (19% vs. 23%) and eligible noncitizen immigrants account for just 6% of Medicaid and CHIP enrollees.

The Congress is considering options to reduce federal Medicaid spending in order to offset the cost of tax cuts, including reinstating changes made to public charge immigration rules that were made under the first Trump administration and reducing federal funding for states that use state-only funds to expand coverage for immigrants. Proposals also suggest restricting eligibility for federal health programs to lawfully present immigrants, although this restriction is already in place. At the same time, the Trump administration has implemented an array of restrictive immigration policies that will likely increase fears among immigrant families about lawfully present immigrants and citizens accessing health coverage for which they are eligible. These changes may lead to disenrollment and coverage losses among lawfully present immigrants and citizens in immigrant families, which could have negative short and long-term effects on their health and reduce their productivity. The savings achieved from such changes are likely to be modest given that noncitizens account for a small share of Medicaid and CHIP enrollees. This brief provides five key facts on Medicaid and immigrants as context for understanding the potential impacts of the changes under consideration.

1. Undocumented immigrants are not eligible for Medicaid or CHIP, and only some lawfully present immigrants qualify subject to eligibility restrictions.

Undocumented immigrants are not eligible to enroll in federally funded coverage including Medicaid, CHIP, or Medicare or to purchase coverage through the ACA Marketplaces. Emergency Medicaid spending reimburses hospitals for emergency care they are obligated to provide to individuals who meet other Medicaid eligibility requirements (such as income) but who do not have an eligible immigration status, including undocumented immigrants and lawfully present immigrants who remain ineligible for Medicaid or CHIP.

Lawfully present immigrants may qualify for Medicaid or CHIP but are subject to eligibility restrictions. In general, in addition to meeting other eligibility requirements, lawfully present immigrants must have a “qualified” immigration status to be eligible for Medicaid or CHIP (Table 1), and many, including most lawful permanent residents or “green card” holders, must wait five years after obtaining qualified status before they may enroll. They may enroll in Marketplace coverage and receive subsidies during this five-year waiting period. Some immigrants with qualified status, such as refugees and asylees, as well as citizens of Compact of Free Association (COFA) nations, do not have to wait five years before enrolling. Some immigrants, such as those with temporary protected status, are lawfully present but do not have a qualified status and are not eligible to enroll regardless of their length of time in the country. Individuals with Deferred Action for Childhood Arrivals (DACA) status are not eligible for Medicaid or CHIP, and implementation of a Marketplace coverage expansion for them remains subject to ongoing litigation. States must verify citizenship and immigration status with the Social Security Administration and Department of Homeland Security to determine eligibility for coverage.

"Qualified" Immigration Statuses that Are Eligible for Medicaid/CHIP

2. Despite having lower household incomes, immigrants under age 65 are less likely to be covered by Medicaid than their U.S.-born citizen counterparts.

In 2023, 19% of immigrants under age 65 were covered by Medicaid compared to 23% of U.S.-born citizens (Figure 1). Eligible noncitizen immigrants represent a small share of people covered by Medicaid, comprising just 6% of individuals under age 65 with Medicaid. Immigrants are also not more likely than U.S.-born citizens to receive assistance with food or housing. Data from the 2023 KFF/LA Times Survey of Immigrants show that, overall, about a quarter (28%) of both immigrant adults and U.S.-born citizen adults say they received assistance with food, housing, or health care in the past 12 months.

Immigrants Under Age 65 Are Less Likely to Be Covered by Medicaid Than U.S. Citizens

Many families face barriers to enrolling eligible lawfully present immigrants and citizen children in assistance programs due to fear, confusion about eligibility policies, difficulty navigating the enrollment process, and language access challenges. Restrictive immigration policies, including increases in enforcement actions, being implemented by the Trump administration will likely increase fears of enrolling in coverage and accessing health care. Even prior to the Trump administration, in 2023, nearly one in ten (8%) immigrants 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 immigration status or the status of someone in their family.

3. Emergency Medicaid spending makes up less than 1% of total Medicaid spending.

Emergency Medicaid spending represented less than 1% of overall Medicaid spending between fiscal years 2017 and 2023. Spending on Emergency Medicaid was $3.8 billion in FY 2023 and was 0.4% of total Medicaid spending that year (Figure 2). Emergency Medicaid spending reimburses hospitals for emergency care they are obligated to provide to individuals who meet other Medicaid eligibility requirements (such as income) but who do not have an eligible immigration status. These include lawfully present immigrants who are subject to a five-year waiting period for Medicaid or who remain ineligible for Medicaid and undocumented immigrants. Emergency services include those requiring immediate attention to prevent death, serious harm or disability, although states have some discretion to determine reimbursable services. Much of Emergency Medicaid spending goes toward labor and delivery costs. Without Emergency Medicaid, the costs of care would be shifted to hospitals that are required to treat individuals in emergency situations or fully to states.

Spending on Emergency Medicaid Accounted for 0.4% of Total Medicaid Spending in FY 2023

4. States have expanded Medicaid coverage for lawfully present immigrant children and pregnant people, and some have fully state-funded coverage for immigrants.

For children and pregnant people, states can eliminate the five-year waiting period for Medicaid and CHIP coverage. As of January 2025, 37 states plus D.C. have taken up this option for children, and 31 states plus D.C. have elected the option for pregnant individuals (Figure 3). Additionally, 23 states plus D.C. provide prenatal care and pregnancy-related benefits to low-income children beginning from conception to end-of-pregnancy regardless of their parent’s citizenship or immigration status under the CHIP From-Conception-to-End-of-Pregnancy option. Some states have fully state-funded health coverage programs for immigrants regardless of status, particularly children. Research suggests that state coverage expansions for immigrants lead to increases in coverage and improvements in health care access and use.

Most States Have Taken Up Options to Expand Coverage to Lawfully Residing Immigrant Children and/or Pregnant People

5. Immigrants use less health care and have lower health care costs than people born in the U.S.

Research shows that immigrants use less health care and have lower health care costs than U.S.-born citizens. Lower use of health care among immigrants likely reflects a combination of them being younger and healthier than their U.S.-born counterparts as well as them facing increased barriers to care, including language access challenges, confusion, and immigration-related fears. Prior KFF analysis found that Trump-era policies amplified these fears and contributed to greater reluctance to access care. Reflecting their lower use of health care, immigrants have lower health care expenditures than their U.S.-born counterparts. Consistent with other research, KFF analysis of 2021 medical expenditure data shows that, on average, annual per capita health care expenditures for immigrants are about two-thirds those of U.S.-born citizens ($4,875 vs. $7,277), with no significant difference in the average amount paid by Medicaid for immigrants ($854) and U.S.-born people ($830). Given the Medicaid eligibility restrictions for immigrants, it is likely that a greater share of Medicaid spending for immigrants goes toward pregnancy-related care and emergency care, which tend to be costly. In contrast, U.S.-born enrollees include a high share of children, who typically utilize lower cost care.

Immigrants contribute to the economy through their role in the workforce and tax payments, with research showing that they help subsidize health care for U.S.- born people and stabilize Medicare and Social Security. Immigrants support the nation’s workforce by filling unmet labor market needs, and research suggests that they do not take jobs away from U.S.-born people. They play a disproportionate role filling jobs in essential industries such as construction and agriculture. In addition, immigrants as well as the adult children of immigrants play outsized roles in the health care workforce as physicians, surgeons, nurses, and long-term care workers (Figure 4). They also play a particularly large role as direct care workers in home and community-based settings. As health care workforce shortages are projected to continue and the U.S. 65 and older population grows, immigrants could help mitigate these shortages. Analysis also shows that undocumented immigrants contribute billions in federal, state, and local taxes each year, and research shows that they pay more into the health care system through taxes and health insurance premiums than they utilize, helping to subsidize health care for U.S.-born citizens.

Immigrant Adults and Adult Children of Immigrants Play an Outsized Role in the Health Care Workforce

What is Medicaid Home Care (HCBS)?

Authors: Maiss Mohamed, Alice Burns, and Molly O’Malley Watts
Published: Feb 18, 2025

Issue Brief

Medicaid Watch

Many older adults and people with disabilities require assistance with self-care such as bathing, dressing, and eating. Help with such services is known as “long-term care” and may be provided in institutional settings such as nursing facilities or in people’s homes and the community, including assisted living facilities. Four in ten adults incorrectly believe that Medicare is the primary source of coverage for low-income people who need nursing or home care, but Medicaid is the primary payer—covering two-thirds of all home care spending in the United States in 2022. With House Republicans considering $2.3 trillion in Medicaid cuts over 10 years—a nearly one-third reduction in Medicaid spending—the availability of home care could be affected in future years. This issue brief provides an overview of what Medicaid home care (also known as “home- and community-based services” or HCBS) is, who is covered, and what services were available in 2024. About 4.5 million people receive Medicaid covered home care services annually.

This brief is one of several describing data from the 22nd KFF survey of officials administering Medicaid home care programs in all 50 states and the District of Columbia (hereafter referred to as a state), which states completed between April and October 2024. Other issue briefs from the survey describe the number of people on waiting lists for home care, how home care programs support family caregivers, payment rates for home care providers, and how Medicaid covers people in assisted living facilities. The survey was sent to each state official responsible for overseeing home care benefits (including home health, personal care, and waiver services for specific populations such as people with physical disabilities). All states except Florida, Indiana, and Utah responded to the 2024 survey, but response rates for certain questions were lower. Where possible, KFF supplemented survey data with previously reported or publicly available data to provide information for the states that did not respond. Key takeaways include:

  • Nursing facility care is a required Medicaid benefit, but states can choose whether or not to provide most home care services. A key component of home care is personal care, which helps people who need assistance with self-care (such as bathing and dressing) and household activities (such as taking medications and preparing meals).
  • Medicaid home care can be offered through either the Medicaid state plan or as part of a specialized waiver. All states offer Medicaid home care through either 1915(c) waivers (47 states), 1115 waivers (14 states), personal care offered as a state plan benefit (34 states), or the Community First Choice option (10 states) (Figure 1).
  • Most states provide Medicaid home care through waivers that offer benefits specifically targeted to people with intellectual or developmental disabilities (48) and people ages 65 and older or who have physical disabilities (46).
  • Waivers’ coverage of different home care services, such as day services, supported employment, and home-based services, vary by the target populations they serve.

All States Offer Medicaid Home Care Through 1915(c) Waivers, 1115 Waivers, or Both

Proposed cuts to Medicaid spending may have broad implications for home care, including for the workforce, support for family caregivers, and states’ ability to cover various services. House Republicans’ proposals to reduce federal Medicaid spending by $2.3 trillion over 10 years—roughly one-third of Medicaid spending—could fundamentally change how Medicaid financing works, consequently impacting enrollees’ access to care. Cuts of this magnitude would put states at financial risk, forcing them to raise new revenues or reduce Medicaid spending by eliminating coverage for some people, covering fewer services, and (or) cutting rates paid to home care workers and other providers. Such difficult choices would have implications for home care because over half of Medicaid spending finances care for people ages 65 and older and those with disabilities, the enrollees most likely to use home care and related services.

What programs do states use to provide Medicaid home care?

Unlike institutional long-term care, nearly all home care is optional for states to provide under Medicaid. States are required to cover home health—which consists of part-time nursing services; home health aide services; and medical supplies, equipment, and appliances—but all other home care services are provided at the discretion of the states. States use various federal legal “authorities,” also known as programs, to offer home care, which are generally categorized as being part of the Medicaid state plan or part of a waiver. If services are provided through a state plan, they must be offered to all eligible individuals. In contrast, services provided under waivers, such as 1115s or 1915(c)s, may be restricted to specific groups based on geographic region, income, or type of disability. Waivers may include a wider range of service types than can be provided under state plans, but states may limit the number of people receiving waiver services. When the number of people seeking services exceeds the number of waiver slots available, states may use waiting lists to manage participation in the waiver.

All states have at least one home care program and many states have multiple programs. Home care is most frequently offered through 1915(c) waivers (47 states) and the personal care state plan benefit (34 states), and less frequently offered through 1115 waivers (14 states) or the Community First Choice option (10 states) (Figure 1). KFF estimates that 4.5 million people used Medicaid home care in 2021 compared with only 1.4 million people who used institutional long-term care.

All states offer people assistance with self-care and household activities under the personal care benefit, but they use different programs to do so. The primary home care benefit is personal care, which provides people with assistance with the activities of daily living (such as eating and dressing) and the instrumental activities of daily living (such as preparing meals and managing medication). States most commonly cover personal care through waivers (45 states), followed by the state plan (34 states).

How are people eligible for Medicaid home care?

Most people who are eligible for Medicaid home care qualify on the basis of having a disability or being ages 65 and older. Medicaid eligibility pathways in which eligibility is based on old age or disability are known as “non-MAGI” pathways because they do not use the Modified Adjusted Gross Income (MAGI) financial methodology that applies to children, pregnant individuals, parents, and other non-elderly adults with low incomes. In addition to considering income and age or disability status, non-MAGI eligibility pathways usually require people to demonstrate that they have limited savings and other financial resources (e.g., assets). Because nearly all non-MAGI pathways are optional, eligibility levels vary substantially across states.

Most states allow people with somewhat higher incomes to qualify for Medicaid home care, but income is capped at 300% of the supplemental security income limit ($2,901 per month in 2025) and assets are usually limited to $2,000 per person. Medicaid enrollees who use long-term care must also meet requirements related to their functional needs which are generally measured in terms of the ability to perform activities of daily living such as eating and bathing. Over half of people who use Medicaid home care are enrolled in Medicare as well; such people are also known as dual-eligible individuals.

In 2024, states operated over 300 different programs for Medicaid home care, many of which targeted a specific population. Most programs (258) were operated through 1915(c) waivers with 14 operated through 1115 waivers. (Waivers include those from all 51 states, not only the 48 states that responded to KFF’s survey.) The most common waiver programs target people with intellectual or developmental disabilities (48 states) and people who are ages 65 and older or have physical disabilities (46 states). Each year, some states’ waiver programs change: In 2024, Indiana added a new waiver for people who are ages 65 and older or have physical disabilities and North Dakota closed one. Also in 2024, Minnesota established a new program that is funded with state-only dollars to provide home care for people ages 65 and older who live in the community but require a nursing facility level of care. Unlike most Medicaid programs, Minnesota’s state-funded program requires participants to pay for a share of the total costs.

States are Most Likely to Offer Home Care to Eligible People with Intellectual/Developmental Disabilities

What services does Medicaid home care cover?

Besides personal care, Medicaid home care covers an array of services to help people with the activities of daily living and the instrumental activities of daily living. KFF asked states about what services they provide through Medicaid home care programs using the Centers for Medicare and Medicaid Services’ list of services, which are categorized in a comprehensive taxonomy. The taxonomy was developed to provide common language for describing home- and community-based services across waivers and state plans. Those services vary widely, including adult day care, supported employment, round-the-clock care, services to support unpaid family or friends who are caregivers, home-delivered meals, and non-medical transportation (Table 1).

All responding states cover supported employment (48), while nearly all (47) cover equipment, technology, and modifications, nursing services, home-based services, and day services in any home care program (Appendix Table 3). States often also offer other additional services for specific populations. For example, California offers specialized childcare and nutritional counseling through its waiver serving people with HIV/AIDS, Colorado offers virtual attendant services through its waivers serving people who are ages 65 and older or have disabilities and people with mental health conditions, and Minnesota offers respite, day support, and homemaker services through its waiver for children who are medically fragile or technology dependent. Among the categories defined by the Centers for Medicare & Medicaid Services, the least-frequently covered service was rent and food expenses for a live-in caregiver.

CMS Definitions of Medicaid Home Care Services

States use waivers that target specific populations to offer tailored benefits, and covered services differ among different types of waivers (Figure 3, Appendix Table 4). Some services, such as equipment, technology and modifications, home-based services, and day services, are covered by most states and in most waiver programs. However, other services are much more targeted to specific populations. Comparing services among the most commonly-offered waivers (those serving people with intellectual and developmental disabilities and people who are ages 65 and older or have physical disabilities), shows some services are widely covered by one type of waiver but not the other. For example, 45 states cover supported employment for people with intellectual or developmental disabilities, but only 13 cover the service for people who are ages 65 and older or have physical disabilities, a population less likely to be working. Alternatively, home-delivered meals are covered by 36 states under waivers serving people who are ages 65 and older or have physical disabilities, but only under 14 states’ waivers serving people with intellectual and developmental disabilities. By enabling states to cover, at times, different services per target population, waivers allow states to customize services to the needs of the specific populations they serve.

States' Coverage of Medicaid Home Care Services Vary by Target Population

How do states use managed care to provide home care?

All but 11 states use managed care to provide at least some home care (Figure 4). In managed care, states pay managed care plans a set fee—often called a capitation payment—for each person enrolled and the managed care plans are responsible for providing all services to enrollees. Use of managed care to provide home care has been growing over time, with states using managed care to make their Medicaid spending more predictable and to help coordinate the services enrollees use.

All but 11 States Provide Some Medicaid Home Care Through Managed Care Plans

Managed care is more commonly used for benefits provided through the state plan or 1115 waivers than for 1915(c) waivers (Figure 5, Appendix Table 5). Among the 14 states with 1115 waivers, 10 use managed care plans to provide at least some home care, over half of states use managed care plans to provide at least some home health through the state plan, and nearly half use managed care plans to provide some personal care, also through the state plan. Managed care was much less common under the 1915(c) waivers, particularly for waivers serving people with intellectual or developmental disabilities—of the 47 states with such waivers, only 8 provided any of the benefits through managed care.

All States Provide Optional Medicaid Home Care, Many Using Managed Care

This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

Appendix Tables

States Offering Medicaid Home Care Through Various Federal Programs

States Offer Medicaid Home Care for Several Target Populations

States Reporting Coverage of Each Medicaid Home Care Service Under Any Program

States' Coverage of Medicaid Home Care Services Vary by Target Population

All States Provide Optional Medicaid Home Care, Many Using Managed Care

Payment Rates for Medicaid Home Care: States’ Responses to Workforce Challenges

Authors: Alice Burns, Maiss Mohamed, Priya Chidambaram, Abby Wolk, and Molly O'Malley Watts
Published: Feb 18, 2025

Issue Brief

Long-standing workforce challenges in Medicaid home care (also known as home- and community-based services or HCBS) impact care for the over 4.5 million people who use these services and addressing them is a top priority for most states. Shortages and high turnover rates among the direct care workforce reflect demanding work and low wages, particularly among home care workers (who are direct care workers that provide HCBS). This issue brief describes states’ ongoing efforts to respond to shortages of home care workers and how they pay these workers, finding that increased payment rates are a key component of states’ efforts to address workforce shortages. However, those higher payment rates may be curtailed under House Republicans’ proposals to cut federal Medicaid spending by $2.3 trillion over 10 years. Cuts of that magnitude—a nearly one-third reduction in Medicaid spending—would force states to raise new revenues or reduce Medicaid spending, which would place downward pressure on payment rates. Efforts to reduce funding for Medicaid could have significant impacts on the direct care workforce, in particular, as nearly 70% of home care is paid for by Medicaid.

This issue brief is one of several reporting the data from the 22nd KFF survey of officials administering Medicaid home care programs in all 50 states and the District of Columbia (hereafter referred to as a state), which states completed between April and October 2024. The survey was sent to each state official responsible for overseeing home care benefits (including home health, personal care, and waiver services for specific populations such as people with physical disabilities). All states except Florida, Indiana, and Utah responded to the 2024 survey, but response rates for certain questions were lower. Key takeaways include:

  • All responding states reported taking actions to address workforce shortages, with most states raising payment rates (Figure 1).
  • All states reported shortages of home care workers, most frequently among direct support professionals, personal care attendants, nursing staff, and case managers.
  • Most (41) states reported permanent closures of home care providers within the last year.
  • Among the 34 states that reported time-based payment rates for personal care providers, more than half pay less than $20 per hour.
  • As enhanced federal funding through the American Rescue Plan Act (ARPA) for home care comes to an end, most states (30) are hoping to keep their increased payment rates for home care providers.

Increasing Provider Payment Rates Was States' Most Common Strategy to Increase Workers Providing Medicaid Home Care in 2024

Despite states’ efforts to address workforce challenges, cuts to Medicaid and changes in immigration policy under the new Trump Administration may exacerbate provider shortages and reduce payment rates for home care workers. All responding states (48) reported increasing provider payment rates to address staffing shortages, but with House Republicans proposing $2.3 trillion in cuts to Medicaid spending over 10 years, states may need to reduce provider payment rates. Additionally, over half of Medicaid spending is for Medicaid enrollees most likely to use home care and related services, so cuts will have implications on enrollees’ care. Proposed legislation by House Republicans could also delay or overturn the Biden Administration’s final rule on ensuring access to Medicaid services (see Box 1). Beyond reducing Medicaid resources, President Trump’s immigration policy changes, such as restricting and eliminating legal immigration pathways and deporting millions of immigrants, may further strain the long-term care workforce, which relies heavily on foreign-born workers.

How are States Addressing the Workforce Challenges in Home Care?

All responding states reported workforce shortages in 2024, with the most common shortages being among direct support professionals and personal care attendants (48 states each), followed by nursing staff and home health aides (47 states each) (Figure 2, Appendix Table 2). States were asked if they had shortages of each type of provider but were not provided with a definition of “shortage.” Most states also reported shortages in case managers (42 states), certified nurse aides (41 states), community-based mental health providers (37 states), and occupational, physical, and speech therapy providers (32 states). In some cases, states may not have reported a shortage of a particular type of provider because that type of service is not offered through their home care program.

All Responding States Reported Shortages of Home Care Workers in 2024

All states reported shortages for more than one type of provider and 46 states reported shortages among five or more provider types. Such shortages may reflect low compensation coupled with demanding working conditions. In the spring of 2024, home care providers participating in KFF focus groups reported that their jobs had high physical and mental demands that were often “overwhelming.” The groups described their wages as low, particularly given the demands of their jobs; and how staffing shortages made their jobs harder because they may not know if they would be able to leave work at the end of their shift. In survey responses, states attributed shortages to low reimbursement rates, lack of qualified providers, and high turnover rates.

Within the last year, 41 states reported permanent closures of home care providers, which were most common among adult day health programs (31 states), followed by assisted living facilities and group homes (27 states each) (Figure 3, Appendix Table 3). States were asked if there were any permanent closures of providers that offer services for Medicaid enrollees based on the location in which the providers deliver care. For a setting such as an assisted living facility or group home, a closure could reflect either the closure of an assisted living facility or the closure of a home care agency that sent workers into facilities and group homes. States were not asked to provide a reason for the closures. Some states reported closures of providers who work in enrollees’ homes (21 states), supported employment providers (15 states), and community mental health providers (11 states).

41 States Reported Permanent Closures of Medicaid Home Care Providers in 2024

Most states reported closures among more than one type of provider: 37 states reported closures among two or more provider types, and 28 states reported closures among three or more provider types. Some closures reflect provider shortages, while others reflect the fact that many companies have not recovered from the effects of the COVID-19 pandemic or have closed as a result of the home care settings rule. The settings rule, finalized in 2014 but first taking effect in 2023, established new requirements for home care settings, including full integration of individuals into the community and rights to privacy, dignity, respect, and freedom from coercion or restraint.

All responding states reported taking actions to address provider shortages, with 48 states increasing payment rates, 41 states developing or expanding worker education and training programs, and 38 states offering incentive payments to recruit or retain workers (Figure 1, Appendix Table 1). Less common initiatives included establishing or raising the state minimum wage (19 states) and offering paid sick leave for workers (18 states). States also reported other types of initiatives to strengthen the workforce, including initiatives allowing people to receive paid care from family members. For example, Illinois newly sought approval to allow legally responsible individuals to provide paid care for seniors participating in the home care waiver program.

All but 11 states use managed care to provide at least some home care, and in over half of the states with managed care, fee-for-service payment rates impact the payment rates that managed care plans pay home care providers. Out of the 37 states that use managed care to provide at least some home care, 22 states reported that the fee-for-service payment rates represent the minimum amount that plans must pay providers, one state, New Mexico, reported that the rate represents the maximum payment rate for managed care plans, 12 states reported that the fee-for-service rates do not affect payments by private plans, and 2 states responded that the answer was unknown or did not respond to the question.

How Much do States Pay for Medicaid Home Care?

KFF asked states to report their average hourly rate paid to two types of home care provider agencies (personal care agencies and home health agencies) and three types of specific home care providers (personal care providers, home health aides, and registered nurses), but many states were unable to report all rates (Appendix Table 4). The number of states that responded to the survey but did not provide payment rates or reported that payment rates were unknown was 4 for personal care agencies and 23 for home health agencies. Even more states did not provide payment rates for specific provider types: For registered nurses and home health aides, nearly half of states did not provide payment rate information or reported that payment rates were unknown.

Starting July 2026, states are required to report detailed payment rates for personal care, home health, and other services, per the provisions of the Biden Administration final Access rule (see Box 1). In addition to reporting payment rates for certain home care services, starting in 2030, states must demonstrate that at least 80% of the payments went to compensation for providers, also described as “direct care workers.” Meeting that requirement will require states to know both agency and provider payment rates. Among the states that were able to report payment rates, 38 could report payment rates for personal care agencies, home health agencies, personal care providers, and home health aides, all of which would be required under the rule. Those 38 states include states that reported a mix of hourly and non-hourly rates, which makes comparisons between provider and agency rates more complicated. These challenges highlight the difficulties states face as they implement the requirements in the new rule.

Box 1: Final Access Rule’s Provisions on Home Care

On May 10, 2024, the Biden Administration released a final rule aimed at helping to ensure access to Medicaid services, which has several notable provisions aimed at increasing transparency and improving access to Medicaid home care, increasing home care payment rates, and addressing home care workforce challenges. The rule cites workforce shortages as a major contributor to home care access barriers among Medicaid enrollees. To address those access barriers, the rule requires states to do the following.

  • Starting July 2026, states must report state hourly payment rates for personal care, homemaker services, home health aide services, and habilitation and publish that information on the state website. If state rates vary across provider types, geographies, or other factors, the states must report each of those rates.
  • For each type of payment rate, the disclosures must also include the number of Medicaid paid claims and the number of Medicaid enrollees who received the service within the calendar year.
  • States must establish an interested parties advisory group (IPAG) comprised of direct care workers, Medicaid enrollees and their representatives, and other interested parties. The IPAG will meet at least every two years to advise and consult on the sufficiency of current and proposed payment rates for personal care, homemaker services, home health aide services, and habilitation.
  • Starting July 2030, states must ensure that at least 80% of payments to Medicaid providers for designated home care go directly to compensation for direct care workers. Designated home care include personal care, homemaker services, home health aide services, and habilitation. States may adopt separate standards for small providers or exempt small providers that meet reasonable criteria.

Beyond payment rates, the Access rule includes other requirements aimed at increasing access to home care. Starting July 2027, states will be required to report the number of people on waiting lists for services and the average amount of time from when homemaker services, home health aide services, or personal care services are initially approved to when services begin and the percentage of authorized hours that are provided. The proposed rule also includes provisions that would strengthen requirements around person-centered planning and needs assessment, create new requirements around incident management, establish requirements for people to file grievances if they are receiving home care from the state Medicaid program, and require states to report on nationally-standardized quality measures.

The home care payment-related requirements are one component of a broader emphasis on addressing Medicaid payment rates. The Access rule also requires states to report all fee-for-service Medicaid payment rates on state websites, and to compare various service-specific rates to those of Medicare. A companion rule on Medicaid managed care requires states to submit an annual payment analysis comparing managed care plans’ payment rates to Medicare payment rates for selected services.

States reported many reasons why it was difficult to report payment rates, including the following.

Some states reported that services were bundled together in various ways and therefore, the payment rates were not distinguishable.

Among states with managed care, some states responded that they did not know the payment rates for agencies because the services were paid for by managed care plans and they did not have access to those payment rates.

Other states responded that they knew the payment rates for agencies but not what the agencies paid their home care workers. Multiple states reported that they do not “dictate” what agencies pay to providers or that individual providers negotiate their own payment rates with the agencies.

In addition to having difficulty reporting payment rates, many states reported different payment rates for personal care across different waivers and the waiver payment rates often differ from the payment rates for personal care provided through the state plan. When states reported multiple payment rates for personal care, KFF used the median of those payment rates in the analysis.

The payment rates to home care providers show considerable variation and are somewhat higher than those reported by other organizations on account of differences in reporting and provider categorization (Figure 4). KFF’s survey estimates that median payment rates to providers are $18 per hour for personal care providers, $40 for home health aides, and $64 for registered nurses. It is difficult to compare those numbers to other sources of data for the following reasons.

Other organizations group classes of providers together differently. PHI reports that in 2023, the median rate for home care workers was $16.13 per hour and $17.15 per hour for residential care aides. The Bureau of Labor Statistics reports $16.12 per hour for home health and personal care aides in 2023.

Other organizations include payment rates for workers regardless of the source of payment whereas KFF rates only reflect the Medicaid rates. Medicaid often covers more intensive personal care services than other payers, which may contribute to the higher rates.

Payment rates to home health agencies are generally larger than those to personal care agencies, but there is considerable variation in both (Figure 4). Among states reporting hourly rates, the rates for home health agencies range from $25 to $154 whereas those for personal care agencies range from $14 to $176. Those states reported that the median hourly payment to home health agencies was $62 and $25 for personal care agencies.

There is Considerable Variation in Payment Rates for Medicaid Home Care, Across States and Provider Types

Among states able to report any payment rate data, payments for personal care workers range from below $10 to over $20 per hour (Figure 5, Appendix Table 4). Rates for home health aides are somewhat higher than those of personal care workers, reflecting the additional training requirements for such workers. Among the states with payment rates for home health aides in the highest category, some states reported that the rates were per visit or per day (which is noted in Appendix Table 4). There were other states with particularly high payment rates that did not report providing rates per visit or per day, but the rates may still reflect a non-hourly payment basis.

Payment Rates for Home Care Vary Across States and Type of Provider

How Might the End of Enhanced Federal Funding Affect Payment Rates for Medicaid Home Care?

States received $37 billion in additional federal funding to expand Medicaid home care during COVID-19 though Section 9817 of the American Rescue Plan Act (ARPA). This provision increased the percentage of expenditures that the federal government paid by ten percentage points for spending on Medicaid home care between April 1, 2021 and March 31, 2022. States were required to use the new funding to enhance, expand, or strengthen their home care program. Most states will exhaust these funds by March 31, 2025, though some states have received extensions through September 2026. The number one use of the ARPA funds—accounting for more than $30 billion in new funding—was for workforce recruitment, retention, and training.

As enhanced federal funding comes to an end, most states are hoping to keep their increased payment rates for home care providers (Figure 6). The clear top priority for states is preserving provider payment rates (30 states). In comparison, far fewer states reported prioritizing other enhancements with 16 states reporting that a top priority was added or expanded services and 5 states (California, New Mexico, North Carolina, Oklahoma, and Texas) reporting that reducing or eliminating waiting lists for home care was a top priority. (Those five states account for 55% of people on waiting lists.) Arkansas, Delaware, and Washington reported providing family caregiver supports to be a priority to continue once funding depletes.

States' Top Priorities for Continuation After Federal Funds are Exhausted

While many states would like to maintain enhancements made using additional federal funds, five states reported plans to eliminate provider payment increases after federal funds are exhausted. Connecticut, Maryland, New Jersey, Washington, and Wyoming reported such plans, and Arizona, Maine, and Nebraska also noted that they would be eliminating some type of additional payments to providers, but did not categorize the payments as provider payments in the KFF survey.

Appendix Tables

States' Use of Strategies to Increase the Number of Medicaid Home Care Workers in 2024

States' Responses to Whether They Were Experiencing Workforce Shortages by Type of Worker in 2024

States Reporting Permanent Closures of Home Care Providers in 2024, by the Location in Which Services are Offered

States' Hourly Payment Rates for Home Care Agencies and Workers in 2024

5 Key Facts About Medicaid Work Requirements

Published: Feb 18, 2025

Work requirements in Medicaid have resurfaced as part of a broader legislative package of potential changes to Medicaid designed to significantly reduce federal Medicaid spending. Reductions could help offset the costs of extending expiring tax cuts. A draft bill introduced in the U.S. House of Representatives in February 2025 includes a minimum work requirement for certain adults enrolled in Medicaid as a condition of coverage. The idea of promoting “work” is popular, particularly among Republicans who view Medicaid as a form of welfare. As debate heats up about Medicaid work requirements, data show most Medicaid adults are working or face barriers to work. Many Medicaid adults who are working low-wage jobs are employed by small firms and in industries that have low employer-sponsored insurance offer rates.

If Congress does not include work requirements in federal legislation, some states will pursue Medicaid work requirements through Medicaid demonstration waivers. The first Trump administration encouraged and approved “Section 1115” demonstration waivers that conditioned Medicaid coverage on meeting work and reporting requirements, approving 13 state work requirement waivers. Only Arkansas implemented such requirements with consequences for noncompliance, which resulted in over 18,000 people losing coverage. These approvals were either rescinded by the Biden administration or withdrawn by states, and Georgia is the only state with a Medicaid work requirement waiver in place (following litigation over the Biden administration’s attempt to stop it). While work requirement waivers were the subject of litigation during the Trump and Biden administrations, the Supreme Court never ruled on the issue leaving it open for future administrations. This issue brief highlights five key facts about Medicaid work requirements, including what research shows about the impact of work requirements.

1. Most Medicaid adults under age 65 are working already, without a “work requirement.”

Among adults under age 65 with Medicaid who do not receive benefits from the Social Security disability programs, Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI), and who are not also covered by Medicare, 92% were working full or part-time (64%), or not working due to caregiving responsibilities (12%), illness or disability (10%), or school attendance (7%) (Figure 1). The remaining 8% of Medicaid adults reported that they are retired, unable to find work, or were not working for another reason. Those in better health, with more education, and without disabilities are more likely to be working. Many Medicaid adults who work are employed by small firms or in industries (e.g., agriculture, service) with historically low employer-sponsored health insurance rates; even if eligible for job-based insurance, some low-wage workers may not take up the offer because it is not affordable to them.

Work Status & Barriers to Work Among Medicaid Adults, 2023

2. CBO estimates of national work requirements show lower federal spending and an increase in the number of uninsured, but no increase in employment.

In April 2023, the U.S. House of Representatives passed a debt ceiling bill (HR 2811, the Limit, Save, Grow Act of 2023) that included a requirement for states to implement work requirements for certain Medicaid enrollees. While this bill never became law, the Congressional Budget Office (CBO) estimated (under this proposal) each year an average of 15 million enrollees would be subject to the requirements and 1.5 million would lose eligibility for federal funding, resulting in federal savings of $109 billion over a ten-year period (2023 – 2033). CBO analysis also showed the policy would increase the number of people without health insurance (by 600,000) but would not increase employment. CBO cited evidence of the effects of Medicaid work and reporting requirements implemented in Arkansas, the only state where a work requirement was established with disenrollment for noncompliance.

A 2022 CBO report notes high rates of employment among SNAP and Medicaid recipients leave little room to increase employment rates further. When people (who are not working) have conditions that make it difficult to find and keep employment (e.g., disabilities, caregiving responsibilities etc.), CBO indicates work requirements are less likely to lead to employment and more likely to reduce income/benefits. Targeted work supports (e.g., childcare, transportation, job training) can boost employment for some; however, CBO notes Medicaid and SNAP do not provide such supports.

3. In Arkansas, implementing Medicaid work requirements resulted in more than 18,000 people losing coverage.

Arkansas implemented Medicaid work and reporting requirements with consequences for noncompliance before a federal court deemed the work requirement unlawful. The requirements were in effect from June 2018 through March 2019. More than 18,000 people lost coverage, or about 25% of the population subject to the requirement, primarily due to failure to regularly report work status or document eligibility for an exemption. Researchers found work and reporting requirements in Arkansas were associated with losses in Medicaid coverage, an increase in the percentage of adults who were uninsured, and no significant change in employment—as nearly everyone targeted by the policy met the requirements already or qualified for an exemption. More recent research looking at two-year impacts of Arkansas’s work and reporting requirements found disenrollment was also associated with poorer medication adherence, delays in care, and medical debt.

Georgia has not expanded Medicaid under the ACA but expanded eligibility (under its “Pathways” waiver) to 100% of the federal poverty level (FPL) for parents and childless adults, with initial and continued enrollment conditioned on meeting work requirements. The current waiver does not include any exemptions (e.g., for caregiving). The waiver was implemented in July 2023 and as of January 2025, the state had only enrolled about 6,500 adults, considerably short of the state’s own estimates (25,000 adults in the first year and 64,000 over 5 years). In August 2024, Georgia’s governor announced a $10.7 million ad campaign aimed at boosting Pathways low enrollment. The Pathways waiver expires in September 2025. The state is seeking changes in its waiver renewal application including allowing parents / caretakers of children up to age 6 (in households at or below 100% FPL) to receive Medicaid without work requirements and eliminating the requirement to monthly report work activities (in exchange for annual reporting).

4. Evidence shows Medicaid work and reporting requirements are confusing to enrollees and complex and costly for states to implement.

In Arkansas, lack of awareness and confusion about the requirements were common. Despite robust outreach efforts, many enrollees were not successfully contacted. Lack of computer literacy and internet access were also barriers, as individuals were required to report on their work or exemption status monthly using an online portal. Providers reported the most vulnerable enrollees (e.g., people with disabilities, people experiencing homelessness) were the most likely to face barriers in complying with the requirements. (While proponents of Medicaid work requirements often describe these policies as applying to “able-bodied” adults, people with disabilities may be subject to the requirements—as many people with disabilities do not meet criteria to receive Supplemental Security Income (SSI) and therefore qualify for Medicaid based on income (vs. disability status).) Although Arkansas’s program included safeguards intended to protect coverage for people with disabilities and others who should not have been subject to the requirements from losing coverage, few people used these safeguard measures relative to the number who lost coverage.

For states, implementing work requirements involves complex systems changes (e.g., developing or adapting eligibility and enrollment systems), enrollee outreach and education, and staff training. GAO examined selected states’ estimates of the administrative costs to implement work requirements and found costs varied from under $10 million to over $270 million. States estimated that federal funds would cover most of these costs, largely due to higher matching rates of 75% and 90% percent of applicable IT costs. GAO found CMS did not consider administrative costs when approving Medicaid work requirement demonstrations. According to data obtained by KFF Health News, Georgia’s “Pathways” program cost the state and federal government more than $40 million (through June 2024), with nearly 80% of costs spent on program administration and consulting fees (vs. paying for health care).

5. Research shows access to affordable health insurance and care promotes individuals’ ability to obtain and maintain employment.

Research shows that being in poor health is associated with increased risk of job loss, while access to affordable health insurance has a positive effect on the ability to obtain and maintain employment. Many of the jobs held by people with low incomes involve walking, standing, lifting and carrying objects, repetitive motions, and other physical labor. Most Medicaid adults work in industries with low offer rates for employer-sponsored insurance, such as the agriculture and service industries. As a result, working does not replace the need for affordable coverage, including Medicaid coverage. Having access to regular preventive health care to manage chronic conditions, access medications, and address health issues before they worsen can help support work. In addition, an unmet need for mental health or addiction treatment results in greater difficulty with obtaining and maintaining employment, and Medicaid is an important source of coverage for mental health and addiction treatment services, such as opioid addiction.

10 Things to Know About Medicaid

Published: Feb 18, 2025

Medicaid is the primary program providing comprehensive coverage of health and long-term care to 83 million low-income people in the United States. Medicaid accounts for one-fifth of health care spending, more than half of spending for long-term care, and a large share of state budgets. Medicaid is jointly financed by states and the federal government but administered by states within broad federal rules. Because states have a degree of flexibility to determine what populations and services to cover, how to deliver care, and how much to reimburse providers, there is significant variation across states in program spending and the share of state residents covered by the program.

At the start of 2025, many issues are at play that will affect Medicaid coverage, financing, and access to care. While Medicaid was not discussed much on the campaign trail, Congress may consider big changes as part of tax and spending debates and the Trump administration may make changes to Medicaid through executive actions. Amid the potential changes, this brief highlights ten key things to know about Medicaid.

1. Nationally, one in five people have Medicaid, but this varies across the states.

The percentage of people who report having Medicaid is 21% nationally, but ranges from 11% in Utah to 34% in New Mexico (Figure 1). The percentage tends to be higher in the 41 states that expanded Medicaid under the Affordable Care Act (ACA), which includes 21 states that voted for Trump and 20 that voted for Harris. Rates of Medicaid coverage are also higher in states with lower average incomes and lower rates of health insurance offered through employers.

Nationally, One in Five People Have Medicaid, but This Varies Across States.

2. Medicaid is a key source of coverage for certain populations.

While Medicaid covers 1 in 5 people living in the United States, Medicaid is a key source of coverage for certain populations. In 2023, Medicaid covered nearly 4 in 10 children, over 8 in 10 children in poverty, 1 in 6 adults, and almost half of adults in poverty. Relative to White children and adults, Medicaid covers a higher share of Black, Hispanic, and American Indian or Alaska Native (AIAN) children and adults. Medicaid covers more than 1 in 4 adults ages 19-64 with disabilities, who are defined as having one or more difficulty related to hearing, vision, cognition, ambulation, self-care, or independent living (Figure 2).

Medicaid provides coverage for several special populations.  For example, Medicaid covers 41% of all births in the United States, nearly half of children with special health care needs, 5 in 8 nursing home residents, 29% of non-elderly adults with any mental illness, and 40% of non-elderly adults with HIV. Medicaid pays Medicare premiums and often provides wraparound coverage for services not covered by Medicare (like most long-term care) for nearly 1 in 5 Medicare beneficiaries (13 million).  Medicaid is a key source of coverage for individuals experiencing homelessness and those transitioning out of carceral settings, particularly in states that have adopted the Medicaid expansion.

Medicaid is a Key Source of Coverage for Certain Populations.

3. Medicaid is jointly financed by the federal government and states.

States are guaranteed federal matching dollars without a cap for qualified services provided to eligible enrollees. The match rate for most Medicaid enrollees is determined by a formula in the law that provides a match of at least 50% and provides a higher federal match rate for states with lower per capita income (Figure 2). States may receive a higher match rate for certain services and populations. The ACA expansion group is financed with a 90% federal match rate, so states pay 10%; however, the American Rescue Plan Act included an additional temporary fiscal incentive to states that newly adopt the Medicaid expansion. In FY 2023, Medicaid spending totaled $880 billion of which 69% was federal spending. Total Medicaid spending typically accelerates during economic downturns because people may lose income and enroll in the program. To help states manage increased costs, the federal government has temporarily increased the federal share of Medicaid. Most recently, states received an increase in the match rate between 2020 and 2024 to help manage increased enrollment and costs due to the pandemic related continuous enrollment provision.

Medicaid is Jointly Financed by the Federal Government and States.

4. Medicaid accounts for one fifth of all health care spending, and over half of spending on long-term care.

Medicaid provides a major source of funding for the U.S. health care system, covering 19% of all health care spending and 19% of hospital spending (Figure 4). In addition to covering the services required by federal Medicaid law, all states elect to cover optional benefits including prescription drugs and home care. Home care, also known as home- and community-based services or HCBS, is long-term care provided in non-institutional settings including homes, day care centers, and assisted living facilities. Other long-term care is provided in institutions such as nursing facilities. Medicaid is the primary payer for long-term care in the United States, covering 61% of total spending. Beyond long-term care, Medicaid provides other benefits not usually covered by health insurance including non-emergency medical transportation, which helps enrollees get to appointments, and comprehensive benefits for children, known as Early Periodic Screening Diagnosis and Treatment (EPSDT) services.

Medicaid Accounts for One Fifth of All Health Care Spending, and Over Half of Spending on Long-term Care.

5. People who qualify for Medicaid based on age or disability account for more than half of spending.

Overall, seniors and individuals with disabilities account for 23% of enrollment but 51% of spending whereas children account for 34% of enrollment, but 14% of spending (Figure 5). The disproportionate spending on certain eligibility groups stems from variation in spending per enrollee across the eligibility groups. Spending per enrollee was highest for enrollees ages 65 and older ($18,923) and eligible because of disability ($18,437). Seniors and people with disabilities often have higher health care costs than other enrollees due to more complex health care needs, higher rates of chronic conditions and being more likely to utilize long-term care. There is significant state variation in the percentage of Medicaid spending that pays for enrollees eligible because of a disability or being age 65 and older: In some states (Alaska, Nevada, Montana, Illinois, and Indiana), only a third of spending went to those populations, and in five states (Alabama, Florida, Kansas, Mississippi, and North Dakota), care for people eligible because of disabilities or being over age 64 accounted for at least two-thirds of spending.

People Who Qualify for Medicaid Based on Age or Disability Account for More than Half of Spending.

6. Flexibility to administer Medicaid results in variation in per enrollee costs across states.

Across the states, spending per full-benefit enrollee ranged from a low of $3,713 in Alabama to $10,229 in the District of Columbia in 2020 (Figure 6). Variation in spending across the states reflects considerable flexibility for states to design and administer their own programs – including what benefits are covered and how much providers are paid — and variation in the health and population characteristics of state residents as well as overall health care costs. Although all states are required to provide some Medicaid benefits, many others are optional, including prescription drugs (covered by all states), vision services, dental care and most home care. In recent years, states have expanded coverage of behavioral health services and benefits to help enrollees address social determinants of health (SDOH) like nutrition or housing.

Flexibility to Administer Medicaid Results in Variation in Per Enrollee Costs Across States.

7. Three-quarters of all Medicaid enrollees receive care through comprehensive, risk-based MCOs.

Overall, 75% of all Medicaid enrollees receive care through comprehensive, risk-based managed care organizations (MCOs) (Figure 7). Payments to MCOs accounted for more than half (52%) of Medicaid spending in FY 2023. As of July 2024, 42 states (including DC) contract with comprehensive MCOs. Medicaid MCOs provide comprehensive acute care (i.e., most physician and hospital services) and in some cases long-term care to Medicaid enrollees and are paid a set per member per month payment for these services. Medicaid MCOs represent a mix of private for-profit, private non-profit, and government plans. Five for-profit parent firms (Centene, Elevance (formerly Anthem), UnitedHealth Group, Molina, and CVS) account for 50% of all Medicaid MCO enrollment. States have increased their reliance on MCOs with the aim of improving access to certain services, enhancing care coordination and management, and making future costs more predictable. While the shift to MCOs has increased budget predictability for states, the evidence about the impact of managed care on access to care, costs, and outcomes is both limited and mixed.

In Most States With Comprehensive MCOs, at Least 75% of Beneficiaries Are Enrolled in One.

8. Medicaid coverage facilitates access to care, improves health outcomes, and provides financial protection from medical debt.

A large body of research shows that Medicaid beneficiaries have substantially better access to care than people who are uninsured (who are also primarily low-income) and are less likely to postpone or go without needed care due to cost, as federal rules generally limit out of pocket Medicaid costs. Key measures of access to care among Medicaid enrollees are generally comparable to rates for people with private insurance (Figure 8). Gaps in access to certain providers (e.g., psychiatrists and dentists) is an ongoing challenge in Medicaid that may reflect system-wide problems, but may be exacerbated by provider shortages in low-income communities, Medicaid’s lower physician payment rates, and lower Medicaid physician participation compared with private insurance.

Longstanding research shows that Medicaid eligibility during childhood is associated with positive effects on health (including reduced avoidable hospitalizations and mortality) and impacts beyond health, such as improved long-run educational attainment. Early and updated research findings show that state Medicaid expansions to low-income adults are associated with increased access to care, increased economic security, improved self-reported health status, and other outcomes including increased early-stage cancer diagnosis rates, lower mortality rates for certain conditions (e.g., cancer, cardiovascular disease, liver disease), decreased maternal mortality, improved treatment management for conditions (e.g., diabetes, HIV), and improved outcomes related to substance use disorders. Research conducted by NBER (National Bureau of Economic Research) suggests that the ACA Medicaid expansion had impacts beyond health care use, including on consumer financial outcomes – reducing unpaid bills and medical debt sent to collections.

People with Medicaid Report Similar Access to Care as People with Private Insurance and Much Better Access to Care than People who are Uninsured.

9. Section 1115 demonstration waivers reflect changing priorities across presidential administrations.

Section 1115 demonstration waivers offer states an avenue to test new approaches in Medicaid that differ from what is required by federal statute, if [in the HHS Secretary’s view] the approach is likely to “promote the objectives of the Medicaid program.” Waivers generally reflect priorities identified by states as well as changing priorities from one presidential administration to another (Figure 9). Waivers have been used to expand coverage or benefits, change policies for existing Medicaid populations (e.g., testing premiums or other eligibility requirements), modify delivery systems, restructure financing or authorize new payments (e.g., supplemental payments or incentive-based payments), as well as make other program changes. Waivers vary in size and scope. States can obtain “comprehensive” Section 1115 waivers that make broad program changes or narrow waivers focused on a specific population. Nearly all states have at least one active Section 1115 waiver and some states have multiple 1115 waivers.

Section 1115 Demonstration Waivers Reflect Changing Priorities Across Presidential Administrations.

10. The majority of the public holds favorable views of Medicaid.

In the most recent KFF tracking poll, more than three-fourths (77%) of Americans held favorable views of Medicaid, including six in ten Republicans (63%), and at least eight in ten independents (81%) and Democrats (87%) (Figure 10). Medicaid is also viewed favorably by a majority of voters who say they voted for President Trump in the 2024 election (62%). Nearly half of the public (46%) say the federal government doesn’t spend enough on the Medicaid program, with another third (33%) saying it spends “about the right amount,” and around one in five (19%) saying it spends “too much.” With possible changes to government health programs, seven in ten (72%) say they are worried about the level of benefits that will be available to people covered by Medicaid in the future

Majorities Across Partisanship, Race and Ethnicity, Vote Choice, and Income View Medicaid Favorably.

What Drives Differences in Life Expectancy between the U.S. and Comparable Countries?

Published: Feb 14, 2025

Americans’ life expectancy is significantly lower than the average for people in other large, wealthy countries.

This analysis compares 2021 data about deaths in the U.S. and 11 other large, wealthy countries by age and cause to understand the primary drivers of the longevity gap between the U.S. and the comparable countries. It finds that the primary reasons for the gap in 2021 were chronic disease, COVID-19 and substance use disorders.

The analysis is available through the Peterson-KFF Health System Tracker, an information hub dedicated to monitoring and assessing the performance of the U.S. health system.