With the Trump administration instituting a foreign aid freeze, including a stop-work order, cancelling the vast majority of foreign aid grants and contracts, and moving to dismantle USAID, U.S. global health programs have been effectively shuttered. Even the limited waivers that have been granted for some services have not resulted in any significant funds flowing or services offered, according to multiple lawsuits and other reports.

This situation presents considerable risks to the health of millions of people in low- and middle-income countries, given the role the U.S. has played in this area. Indeed, the U.S. government has been the largest donor to global health for decades, carving out health one of its main sectors of international development, across multiple administrations and Congresses, through the provision of significant financial assistance, technical expertise, and personnel. However, this has also meant that the U.S. has disproportionately shouldered the burden for health programs, making health especially vulnerable to U.S. policy fluctuations and changes, and especially to the recent, abrupt halt in funding.

A recent analysis from the Center for Global Development identified countries most vulnerable to these cuts. This analysis examines the relative role of the U.S., compared to other donors (governments as well as multilateral institutions), in global health. We used disbursement data from the Organisation of Economic Development (OECD) Creditor Reporting System (CRS), averaged over a three-year period (2021-2023), to smooth out spending fluctuations (all totals and percent share present the per year average over the period). We focused on bilateral donor spending (e.g., the funding a donor gives directly to or on behalf of specific countries) vs. multilateral spending (e.g., the funding a donor gives to a multilateral institution that is then pooled with other donor contributions and provided to countries) because such funding is attributed to the multilateral institution as the donor in the CRS database. In addition, at this time, no U.S. government funding to the main multilateral funders of global health services has been halted. We looked at overall health spending as well as spending for HIV, tuberculosis (TB), and malaria. We removed COVID-19 funding given that it was emergency in nature and not enduring. Due to lack of available data, this analysis does not include domestic funding from recipient countries that are also used for health and in some case may be significant, although in general, GDP growth in low and middle income countries continues to lag due to the effects of COVID-19 and many face significant debt burdens that limit their ability to increase resources for health.

As this analysis shows, given that the U.S. has been the largest donor to global health, the gap left, should cuts and disruption continue, would be quite significant. This is especially true in the case of HIV for which the U.S. provides almost two-thirds of bilateral assistance. In addition, there are several countries that could be disproportionately affected by U.S. cuts, given that they are both very low-income and rely heavily on the U.S. for health assistance. Whether other donors, or countries themselves, would be able to make up such losses is unknown but seems unlikely given broader global economic trends.

Findings

The U.S. government was the single largest donor to health in low- and middle-income countries over the 2021-2023 period. The U.S. provided 30% of all health assistance, or $8.3 billion per year in bilateral support. The next largest donor was the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund), providing 19% or $5.2 billion each year over the period. The third largest donor was the World Bank’s International Development Association (IDA) (10% or $2.8 billion per year), followed by Gavi, the Global Alliance for Vaccines and Immunization (Gavi) at 6% ($1.7 billion per year) Germany (5% or $1.3 billion per year). All other donors each represented less than 5%. See Figure 1. It is important to note that government donors also fund multilateral entities focused on health and other areas, so these data underestimate the relative contributions of governments to health. The U.S., for example, is the Global Fund’s largest donor, providing approximately a third of its funding while the UK is Gavi’s largest donor providing about a quarter of its funding. Still, at this point, the Trump administration has not issued stop-work orders for the main multilateral entities that support health.

For HIV, the U.S. provided almost two-thirds of all donor support (63% or $5.2 billion per year) over the 2021-2023, making this area of health especially vulnerable to U.S. cuts. The next largest donor was the Global Fund (32% or $2.6 billion). The EU and UNAIDS provided 1%; while all other donors each provided less than 1%. Because the U.S. is the largest donor to the Global Fund, any reductions in its support would have an even greater and disproportionate impact on the HIV response. See Figure 2.

For malaria, the Global Fund was the single largest donor (65% or $1.6 billion) over the period. The U.S. was second largest at 28% or $673 million. The EU and IDA each provided 2% and all other donors were at 1% or less. As with HIV, reductions to Global Fund support by the U.S. would affect the global malaria response. See Figure 2.

Similarly, the Global Fund was the largest donor to TB efforts, providing 64% or $707 million per year over the period. The U.S. was the next largest, at 24% or $266 million, followed by the EU (4%) and Australia (2%). All other donors provided 1% or less. See Figure 2.

Some countries would be disproportionately affected by U.S. cuts in health aid, compared to others. Whereas the U.S. provided 30% of direct health assistance per year during the 2021-2023 period, it provided 50% or more of health assistance in 11 countries, including several low or lower-middle-income countries (Eswatini, Haiti, Kenya, Lesotho, and Zambia), one of which is currently conflict-affected (Haiti). Others are upper-middle-income (Botswana, Dominican Republic, Namibia, Jamaica, and South Africa) or high-income (Panama) and could likely more easily absorb U.S. cuts. See Figure 3.

Country reliance on U.S. support is even more concentrated for HIV. Eight countries receive 80% or more of their donor support for HIV from the U.S., compared to 63% across all recipients. For malaria, seven countries receive 50% or more of their funding from the U.S., and for TB the U.S. accounts for more than 50% of funding in nine countries. See Figure 4.

There are several options under consideration in Congress to significantly reduce Medicaid spending to help pay for tax cuts, with the recently passed House budget resolution targeting cuts to Medicaid of up to $880 billion or more over a decade. Large reductions in Medicaid spending are likely to have direct implications for the 83 million people covered by Medicaid, state budgets, and health care providers, including hospitals. Medicaid accounted for about one fifth (19%) of all spending on hospital care in 2023. Changes in hospital finances could affect patient care and may have broader economic implications, given that, for example, hospitals employ 6.7 million people and are the sixth largest employer in the country when comparing industry subsectors.

A number of policies to achieve large Medicaid savings have been discussed. These include imposing a per capita cap on federal Medicaid spending, reducing the federal government’s share of costs for the ACA Medicaid expansion group, imposing Medicaid work requirements, limiting states’ use of provider taxes to finance the state share of Medicaid spending, and placing restrictions on supplemental payments to providers and/or state-directed payments (which are payments managed care plans make to providers, including hospitals). Such policies could force states to make tough choices about raising state revenues to replace the lost federal dollars or making cuts to Medicaid by reducing the number of people covered; covering fewer benefits; or reducing payment rates for hospitals, physicians, nursing homes, and other health care providers.

Absorbing reductions in Medicaid spending could be challenging for hospitals, particularly for those that are financially vulnerable, such as hospitals that care for a relatively large share of Medicaid patients. Reducing reimbursement rates or cutting supplemental payments to hospitals would have a direct impact on hospital finances. Rolling back coverage would increase the number of uninsured patients, which could result in higher uncompensated care costs (and have implications for the health of Medicaid enrollees who lose coverage or have access to fewer benefits). Hospitals may respond to those financial pressures by operating more efficiently or by making various cuts—such as offering fewer services, laying off staff, or investing less in quality improvements—and lower payment rates could reduce the willingness of hospitals to see Medicaid patients. Cuts to Medicaid spending could also potentially accelerate the pace of hospital closures, including in rural areas. Given differences in state responses to potential federal Medicaid cuts, the impact would likely vary across states and hospitals.

1. Medicaid covered about one fifth of all hospital spending in 2023.

Medicaid accounted for 19% of all spending on hospital care in 2023, or $283 billion out of the $1.5 trillion spent on hospital care (Figure 1). The other major payers for hospital care are Medicare (25%) and private health insurance (37%). Medicaid also covered about one fifth of hospital discharges in 2023.

2. Hospital care accounted for about one third of total Medicaid spending in 2023.

Hospital care accounted for about one third (32%) of Medicaid spending in 2023, or $283 billion out of $872 billion in total Medicaid expenditures. For purposes of comparison, hospital care represented a larger share of Medicaid spending (32%) than physician and clinical services (14%) or retail prescription drugs (6%). Because hospital care accounts for a large share of Medicaid expenditures, it is likely that any substantial reduction in Medicaid spending would impact hospitals, and some proposed policy changes directly target supplemental or state directed payments to hospitals.

3. Medicaid covered about four in ten births nationally in 2023 and almost half of births in rural areas.

Medicaid covered 1.5 million births in 2023—representing 41% of all U.S. births—and financed nearly half (47%) of births in rural areas (Figure 3). Births are the most common reason for a hospital inpatient stay. Medicaid covered more than two in ten births in nearly every state, at least four in ten births in 25 states and DC, and 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).

State Medicaid programs are required to cover pregnancy-related services without cost sharing for people with incomes up to 138% of the federal poverty level (FPL), including in states that have not adopted the ACA Medicaid expansion. For births covered by Medicaid, states must also provide pregnancy-related coverage for at least 60 days postpartum and cover infants for twelve months. Nearly all states have taken up the option to extend postpartum coverage through one year postpartum.

4. The ACA Medicaid expansion has helped improve hospital finances and is associated with lower charity care costs.

Expanding Medicaid under the ACA has had financial benefits for hospitals, according to several studies. These benefits include:

• Improvements in payer mix (fewer uninsured patients, more Medicaid patients, or both),
• Reductions in uncompensated care,
• Increases in hospital revenues and operating margins, and
• Fewer hospital closures.

The financial impact of Medicaid expansion for at least certain measures may be most evident among rural hospitals, small hospitals, and hospitals that see a higher proportion of low-income patients, based on some of the research.

Hospital charity care costs (one component of uncompensated care) were generally higher in 2023 in states that had not expanded Medicaid (Figure 4). 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 and are one component of uncompensated care. Among the ten states with the highest charity care costs as a percentage of operating expenses in 2023, eight had not expanded Medicaid as of November of that year (one did so in December).

Texas, a non-expansion state, 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 percentage of operating expenses were less than 1.0% had expanded Medicaid. Wisconsin, which had the lowest uninsured rate and average charity care as a percentage of operating costs in 2023 among non-expansion states, has expanded Medicaid eligibility up to 100% of the federal poverty level under a Medicaid waiver and therefore does not have a coverage gap.

Although Medicaid expansion has helped improve hospitals’ finances, operating margins were lower than average in 2023 among hospitals with relatively high Medicaid shares, according to KFF analysis. This is true overall and in both rural and urban areas.

5. Medicaid financing for hospitals is complex.

States deliver and pay for services in Medicaid through fee-for-service (FFS) or managed care (Box 1). Hospital FFS rates consist of base rates and supplemental payments. Base rates vary considerably across states and, on average, are below hospitals’ costs of providing services to Medicaid enrollees. States may rely on supplemental payments – such as payments to hospitals that serve a disproportionate share of low-income patients – to help cover hospitals’ costs. FFS supplemental hospital payments as a share of total FFS hospital payments vary widely across states. In eight states, FFS hospital supplemental payments make up more than 75% of total FFS hospital payments (Figure 5). States with capitated managed care arrangements are generally prohibited from contractually directing how managed care plans pay providers. Subject to CMS approval, however, states may implement certain “state directed payments” (SDPs). Many states that contract with managed care plans use SDPs to make uniform hospital rate increases that are like FFS supplemental payments (Box 1).

According to MACPAC, in FY 2022, 61% of Medicaid payments to hospitals were made through managed care delivery systems and 39% were made on a FFS basis. About half of FFS payments to hospitals were made through supplemental payments, while one third of managed care payments to hospitals were made through state directed payments. States are permitted to finance the non-federal share of Medicaid spending through multiple sources, including state general funds, health-care related taxes, and local government funds (Box 1). Most FFS hospital supplemental payments and state directed uniform rate increases are financed by provider taxes and funds from local governments. Efforts to restrict provider taxes or intergovernmental transfers could have bigger implications for states that rely more heavily on these financing mechanisms as well as states with larger shares of hospital funding for supplemental payments.

In an effort to increase access for Medicaid enrollees, Medicaid managed care rules finalized in 2024 permit states to pay hospitals and nursing facilities at the average commercial payment rate (ACR) when using directed payments, which is substantially higher than the Medicare payment ceiling used for Medicaid FFS supplemental payments. CBO Medicaid spending projections for 2025-2034 included a 4% (or $267 billion) increase from the February 2024 baseline to the June 2024 baseline, with half of the increase attributed to expected growth in directed payments in Medicaid managed care (driven in part by the rule change allowing states to pay at the ACR). Federal policy options under consideration include proposals to repeal the 2024 managed care rules (including the provision that formalized/codified states’ ability to pay certain providers up to the ACR) and proposals to limit the use of provider taxes.

Introduction

There have been several high-profile cases regarding exceptions to save the health or the life of pregnant patients in state abortion bans. Major cases that have reached the US Supreme Court (Moyle v. Idaho) and Texas Supreme Court (Zurawski v. Texas) have highlighted the significant challenges for physicians providing pregnancy-related care in states with abortion bans. According to a 2023 KFF survey, 61% of OBGYNs practicing in states where abortion is banned report being concerned about their legal risk when making decisions about patient care and the necessity of abortion care for their patients. Some of the concern about legal risks stems from the “reasonable medical judgment” legal standard used in most states for when an abortion qualifies for an exception. This legal standard does not defer to the treating physician’s judgment but rather allows a court to review circumstances after the abortion has been completed and rely on the testimony of other medical experts to determine whether the treating physician met the standard. Some anti-abortion advocates, legislators, and state attorneys general maintain, however, that it is physicians, not the abortion bans, that are responsible for denial and delays of care, and have implied that providers should face medical malpractice lawsuits for not properly following the exceptions. This brief examines the legal considerations for physicians providing abortion care, including criminal and professional penalties, as well as the potential for medical malpractice lawsuits for delayed care to patients due to bans and prosecution for violation of abortion bans across state lines.

What Criminal Penalties Do Physicians Face for Providing Abortions?

Eleven of the 12 states with abortion bans impose criminal penalties on clinicians who violate their respective bans. These penalties range in severity from a few months in prison to the possibility of a life sentence. All but two of these 11 states — Arkansas and South Dakota — impose minimum sentences for violation of their abortion bans. In Alabama, for example, violation of the total ban constitutes a Class A felony and carries a minimum prison sentence of ten years and a maximum sentence of 99 years. Class A felony is the most serious offense in Alabama, which places abortion in the same criminal category as murder and first-degree domestic violence. Other states place the violation of their abortion bans in the same category as crimes such as aggravated assault (Tennessee), involuntary manslaughter (Indiana), and stalking in violation of a protective order (Kentucky). West Virginia’s law does not include jail time for licensed physicians who violate the abortion ban, but it does include a 3–10-year sentence for other people who violate the law. However, other pre-Dobbs abortion restrictions in the state, such as minor consent requirements, carry criminal penalties for physicians.

In addition, penalties include fines, and in many states, violation of the abortion ban or conviction of a felony are grounds for medical license revocation. If a physician’s license is revoked, even after they have served their sentence, they may not return to practicing medicine. License revocation penalties jeopardize physicians’ livelihoods. In many states, license revocation in a different state is grounds for denying a new medical license or revoking an existing license. This means that if a physician loses their license as a result of providing an abortion in a state where abortion is banned, they may not be able to practice medicine in other parts of the country.

Many states where abortion rights are supported have passed laws to protect clinicians from losing their license, amending their licensing provisions such that if a physician’s license has been revoked in a different state solely due to the provision of abortion care that would have been lawful in the state, the physician may not be denied a license. However, in these circumstances, there is no certainty that a physician would be able to receive a license in another state. And even if physicians had the certainty, continuing to practice medicine would require moving to another state.

No clinician has yet been convicted and jailed for performing an abortion since the Dobbs ruling, but a physician in New York, where abortion is protected, has been charged with a felony crime for mailing medication abortion pills that were given to a minor in Louisiana (discussed below). However, there have been cases indicating that the threat of criminal prosecution has led physicians to delay health- or life-preserving care and prevented them from practicing medicine based on accepted standards of care. A UCSF study identified multiple cases of patients with pregnancy complications being denied abortion care that met clinical standards in states where abortion is banned. Cases included second trimester obstetric complications such as preterm labor, preterm pre-labor rupture of membranes (PPROM), hemorrhage, cervical dilation, and hypertension, as well as ectopic pregnancy, Abortion care was also denied in case of patients with underlying medical conditions that made continuing a pregnancy dangerous, who were experiencing miscarriages, or were carrying a pregnancy with a severe fetal anomaly.

Medical Malpractice

While physicians are faced with criminal and professional penalties if they provide abortion care for health reasons that are later second-guessed in court, if they do not provide this care or delay it, they could potentially be sued for medical malpractice for failing to provide timely and necessary care.

Post-Dobbs, there are no documented cases of medical malpractice lawsuits being filed by pregnant patients who were denied care or did not receive it in a timely manner. However, there have been growing calls from anti-abortion advocates to hold treating physicians liable for delays or denials of miscarriage management care or other care to pregnant people.

In response to calls for exceptions to abortion bans to be widened in scope or be further clarified, anti-abortion lawmakers and attorneys general have argued that it is not policies, but rather the physicians who are at fault in situations where care has been delayed or denied. For instance, in the case Zurawski v. Texas, where women facing dangerous pregnancy complications who had been denied emergency abortion care and two OB-GYNs asked Texas courts to clarify the scope of the medical emergency exceptions in the state’s abortion bans, attorneys for the state of Texas argued that it was not the state’s abortion bans that prevented plaintiffs from receiving timely care. Instead, he argued that physicians committed malpractice and are at fault and suggested that people should sue their physicians, not the state, when they are unable to receive timely abortion care in life-threatening medical emergencies.

Prosecution of Providers Across State Lines

In 2023, some states started passing “shield” laws. These laws aim to protect physicians from prosecution brought by states where abortion is banned as long as the physician is located within the state with the shield law and the care they provided is legal in that same state, regardless of patient location. From July 2023 through June 2024, the Society of Family Planning estimates that 1 in 10 abortions in the U.S. have been medication abortions for which the pills were mailed by providers practicing in states with shield laws.

In December 2024, in the first action testing a shield law, the Texas Attorney General filed a lawsuit against a New York doctor for mailing medication abortion pills into the state. The lawsuit alleges the physician violated Texas law by practicing medicine in the state of Texas without a Texas license and for violating the state’s abortion ban and prohibitions on telehealth for abortion care. On February 13, 2025, after the physician did not respond to the lawsuit or appear at court proceedings, a trial court issued a default judgment for the state, enjoining the physician from prescribing medication abortions to Texas residents and ordering her to pay $100,000 in civil fines. Additionally, in January 2025, a Louisiana grand jury indicted the same New York physician for violating Louisiana’s abortion ban and restrictions. The mother of the minor who received the medication abortion was also indicted. Shield laws in the state of New York seek to protect providers from this kind of litigation, so these cases will likely serve as a test case for shield laws and their ability to protect clinicians providing abortion care via telehealth to patients located in states that ban or restrict abortion. In the Louisiana case, however, the minor’s mother does not have a similar protection from the ban.

Challenges to Exceptions to Abortion Bans

In response to the abortion bans, physicians practicing in Idaho, South Carolina, Tennessee, and Texas have filed lawsuits challenging the vagueness, narrowness, and lack of deference to physician judgment of the medical exceptions in state abortion bans. Among other claims, these challenges contend the vagueness of the exceptions unduly places physicians’ livelihoods and liberty at stake. Additionally, a complaint filed by South Carolina providers argues the state ban’s exceptions violate their First Amendment rights to practice their faith, which includes beliefs that they should use their medical training to honor patients’ requests to end pregnancies that threaten to profoundly harm them or when a fetus is diagnosed with a fatal anomaly, beyond what the exceptions allow.

The Texas Supreme Court has issued rulings in both the challenges in the state – Zurawski v. Texas and Cox v. Texas – ruling in favor of the state and leaving the narrow exceptions untouched. A Tennessee court partly granted a preliminary injunction blocking the state from taking disciplinary action against physicians who provide abortion care to safeguard the health of the pregnant person (unlike Texas, Tennessee has a health exception to their abortion ban). However, because the court lacked authority over criminal laws, it did not block criminal enforcement of the law against physicians. Whether or not these lawsuits will ultimately expand the scope of the exceptions or the deference granted to physician judgment will depend on the rulings of each state’s respective supreme court.

As the Trump administration works to dissolve the U.S. Agency for International Development (USAID), a new KFF poll finds that two-thirds (67%) of the public believe these actions will increase illness and death in low-income countries, and a similar majority (62%) believe it will result in more humanitarian crises around the world.At the same time, nearly half of the public believe the dissolution of USAID will significantly reduce the U.S. budget deficit (47%) and allow funds to be redirected to domestic programs (47%).  Views on the impact of downsizing USAID divide sharply along partisan lines, with most Democrats and independents expecting more illness and death in low-income countries (91% and 69%, respectively), and most Republicans expecting positive impacts on domestic programs (72%) and the budget deficit (67%).The poll also finds that most of the public grossly overestimates how much the federal government spends on foreign aid. When informed that it is actually about 1% of the federal budget, far fewer people say the U.S. spends “too much” on foreign aid. 

About one in ten (11%) adults correctly estimate that 1% or less of the federal budget goes to foreign aid, with others guessing higher amounts, including more than half (54%) who guess more than 10%. On average, U.S. adults guess that foreign aid accounts for 26% of the federal budget.When initially asked about the level of U.S. foreign aid prior to President Trump taking office, most say the country was spending “too much” (58%). After being informed that foreign aid accounts for about 1% of the federal budget, the share of the public who says that the U.S. spends too much on foreign aid drops more than 20 percentage points to one-third (34%). This shift is similar across partisans. After hearing that only about 1% percent of the federal budget is spent on foreign aid, the share saying the U.S. spends too much drops to 50% among Republicans, 39% among independents, and 15% among Democrats. 

The Public is More Supportive of Global Health Spending than Foreign Aid Overall

The poll also finds that half (50%) of the public believe the U.S. should play “the leading role” or “a major role” in efforts to improve health for people in developing countries. About a third (36%) say the U.S. should play a minor role in global health, while fewer (14%) say it should not play any role.Republicans’ views on the role that the U.S. should play in global health have shifted since President Trump’s first term. In the most recent poll, one-third (32%) of Republicans say the U.S. should play at least a major role in improving the health of people in developing countries, down from about half in KFF polls in 2016 and 2018. At the same time, the share of Republicans who say the U.S. should take “no role” in global health has risen from 9% in 2016 to one in four (24%) now. 

When asked about U.S. spending on global health, the public is more supportive than they are of spending on foreign aid generally. Nearly six in ten say that prior to President Trump taking office, the U.S. was spending either too little (19%) or about the right amount (37%) to improve health for people in developing countries, while about four in ten (43%) say the U.S. was spending “too much.”Seven in ten adults say spending money on improving health in developing countries helps protect the health of Americans by preventing the spread of infectious diseases, including about nine in ten Democrats (86%) and two-thirds of independents (67%). Republicans are split, with half saying this spending helps Americans in this way (49%) and half saying it does not have much of an impact (51%). 

Designed and analyzed by public opinion researchers at KFF. The survey was conducted Feb. 18-25, 2025, online and by telephone among a nationally representative sample of 1,322 U.S. adults in English and in Spanish. The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on other subgroups, the margin of sampling error may be higher.

Enhanced subsidies for Affordable Care Act (ACA) Marketplace plans are set to expire at the end of 2025, unless they are renewed by Congress. Since 2021, these enhanced subsidies have lowered monthly premium payments for the vast majority of Marketplace enrollees, across incomes. For example, instead of a lower-income person paying 2% of their income on their premium, they pay nothing. Higher income people currently pay no more than 8.5% of their income on their premium, whereas they were originally ineligible for financial assistance.

While virtually all subsidized ACA enrollees can expect to see their premium payments rise substantially without extension of these subsidies, most will still be eligible for some financial assistance (with the original ACA subsidies). However, those who earn more than four times the federal poverty level ($62,600 for an individual or $128,600 for a family of four with 2026 coverage) would lose eligibility for subsidies altogether and would therefore have to pay full price for their health plans. Based on 2025 premiums, for example, a 60-year-old couple earning $85,000 annually (416% of the federal poverty level in the contiguous 48 states), would see their monthly premium payment increase by $1,507 per month (an increase in payments of over $18,000 for the year), on average.

Relative to other Americans, subsidy-eligible individual market enrollees with incomes over four times poverty (who would lose subsidy eligibility if enhanced tax credits expire) are disproportionately:

• Early and pre-retirees: About half (51%) of enrollees with incomes over four times poverty who would lose subsidy eligibility are between the ages of 50 and 64, compared to 23% of the non-elderly U.S. population.
• Self-employed: Among non-elderly adults (ages 19 to 64) with incomes over four times poverty who would lose ACA subsidy eligibility, 38% are self-employed, compared to 7% of non-elderly adults (19-64) nationally. Small business owners often rely on the ACA Marketplaces because they do not have employer-sponsored insurance.
• Living in rural areas: 15% of people with individual market insurance who would lose subsidy eligibility live outside metropolitan areas, compared to 9% of Americans with incomes over four times poverty. (12% of all Americans live in rural area; this is not statistically different from the share of people who would lose subsidy eligibility living in rural areas.)

Relatively few Marketplace enrollees have incomes above four times poverty. According to administrative data, in 2024, 7% of Marketplace enrollees reported an income over four times poverty, with 3% having an income between four and five times poverty and another 4% with incomes over five times poverty (another 4% did not have a known income and may have also exceeded four times the poverty level, but most likely are not receiving an advanced premium tax credit). However, before the enhanced subsidies were introduced – and particularly in 2017 when there were large premium increases and debates about repealing the ACA – this group of people with incomes over four times poverty were the focus of a great deal of media attention because they were fully exposed to the underlying premiums. For those who were priced out of coverage before the enhanced subsidies, they often faced a choice of being uninsured, or – if they were healthy enough to qualify – buying a short-term (non-ACA-compliant) plan off of the Marketplace.

Note: The data above is based on KFF analysis of the 2024 Current Population Survey Annual Social and Economic Supplement. The analysis includes people under age 65 who buy individual market insurance, are subsidy eligible, and would receive a subsidy based on household income. Household offer units were imputed as described previously; enrollees were considered not subsidy eligible if a member of the unit reported being offered employer-sponsored insurance.

The U.S. health insurance system has become a “complex labyrinth” for consumers to understand and navigate. Whether public or private coverage, the information needed and the hoops the average health care consumer must go through to use their health coverage effectively is itself a public policy concern, exacerbating continued access and affordability challenges. The KFF 2023 Survey of Consumer Experiences with Health Insurance found that half of insured adults have some difficulty understanding at least some aspects of their insurance. This is the first of two Issue Briefs exploring specific survey findings about gaps in understanding health coverage, highlighting problems and federal consumer protections in place today designed to bridge the gap.

This brief discusses how consumers understand what their insurance covers, what to do when coverage for care is denied, and what protections exist to ensure that information is available and coverage determinations are fair, accurate, and timely. The second brief will discuss survey findings of consumer understanding of the cost of their coverage, existing consumer protections designed to assist with understanding how much they will have to pay for a covered service, and balanced billing and other federal consumer health insurance protections.

The Labyrinth

What does a consumer need to know in order to use their health coverage effectively? The U.S. insurance system of managed care networks, utilization review, and changing coverage options can result in a complicated maze for a patient to navigate on their own. Federal and state policymakers have developed a series of incremental reforms to address understanding and transparency for consumers, but these can differ considerably based on the type of coverage, the plan the consumer chooses (if they have a choice), and sometimes, the state where they live. For private coverage in particular, the current regulatory framework is a complicated system of overlapping state and federal standards, sometimes leaving consumers to sort through a barrage of questions in order to get the care they thought was covered by their insurance.

KFF Consumer Survey Findings

The KFF 2023 Survey of Consumer Experiences with Health Insurance (“Consumer Survey”) included a nationally representative sample of 3,605 U.S. adults ages 18 and older with health insurance. The survey asked consumers about their experiences with their health insurance, including questions regarding how well enrollees understood what was covered, insurance problems that arose when enrollees tried to use their insurance, and where they sought help when they experienced insurance problems.

Understanding What is Covered

According to the 2023 KFF Consumer Survey, more than one-third (36%) of all insured adults said it was somewhat or very difficult for them to understand what their insurance will and will not cover. These shares vary by insurance type, with larger shares of those with Affordable Care Act (ACA) Marketplace plans (46%) and employer-sponsored plans (40%) reporting greater difficulty than those with Medicaid (28%) or Medicare (24%) (Figure 1). There were also differences in understanding certain aspects of insurance by demographic characteristics. Hispanic (36%) and White (36%) insured adults were more likely than insured Black adults (26%) to say it is somewhat or very difficult to understand what their insurance will and will not cover. Among insured adults, Hispanic adults (37%) were more likely than their Black (24%) and White (29%) counterparts to say it is at least somewhat difficult to understand their Explanation of Benefits (EOB). (An EOB is a written statement from a health insurance plan explaining what costs it will cover for medical care an enrollee has received and what the enrollee must pay, though it is not a bill). While the precise explanation for these demographic differences is not clear from the survey data, these trends are similar to those found in other research that noted health insurance literacy challenges across consumers generally, but found racial and ethnic disparities. Additionally, about three in ten insured adults ages 18-29 (30%) and 30-49 (28%) found it somewhat or very difficult to understand how to find information about which doctors, hospitals, and other providers are covered in their plan’s network, compared to 13% of insured adults ages 65 and older. (For the full list of consumer items asked about in this question, see the survey toplines.)

Educational attainment does not necessarily explain lack of understanding. The KFF Consumer Survey found that a slightly higher share of college graduates (58%) had difficulty understanding some aspect of their health insurance coverage than those without a college degree (46%). College graduates (43%) were more likely to report that it was somewhat or very difficult to understand what their health insurance will or will not cover compared to those without a college degree (31%). It is not entirely clear why education does not seem to increase understanding of insurance, though one possible explanation is that those with higher educational attainment are more likely to have private insurance (employer-sponsored insurance or Marketplace), with variable and changing insurance designs that may be more difficult to understand generally.

Areas where consumers note trouble with understanding insurance are often consistent with the top problems that consumers face with insurance. About six in ten (58%) insured adults reported experiencing a problem with their health insurance in the past year. This share is even higher (78%) among high utilizers of health care – those who had more than ten visits with a health care provider in the past year. While having a problem with health insurance does not necessarily indicate that a consumer had trouble understanding their insurance, determining what services are covered and what providers are in-network are items that cut across both topics. Several survey respondents reported problems related to using insurance that involved services or providers not covered by their plan. For example, 18% of insured adults indicated that their health insurance did not pay for a service that they thought was covered. Those with employer-sponsored (21%) and Marketplace (20%) coverage were more likely to report having this problem than those with Medicaid (12%) or Medicare (10%) (Figure 2). A somewhat larger share of insured Black (17%) and Hispanic (16%) adults reported that a doctor or hospital they needed was not covered by their insurance in the past 12 months compared to White adults (12%). Marketplace (20%) and Medicaid (19%) enrollees were more likely to encounter this problem than those with Medicare (9%) or employer-sponsored insurance (ESI) (13%). One in five (20%) insured adults ages 30-64 reported their health insurance denied or delayed a prior approval request in the past 12 months, relative to 11% of those ages 18-29 (11%) and 9% of those age 65 and older. (For the full list of consumer problems asked about in this question, see the survey toplines.)

Knowing Where To Go For Help

What actions, if any, consumers take when they encounter a problem with their health insurance might be instructive in addressing barriers to understanding coverage or best practices to assist consumers in navigating coverage questions.

Among the nearly six in ten insured adults who reported experiencing problems with their health insurance in the past 12 months, more than half (53%) said they contacted their health insurance company to resolve the problem(s) (Figure 3). A similar share (49%) said that they referred to their health insurance website or documents. Fewer said they asked a Navigator or broker for help (11%) or contacted their state Consumer Assistance Program or Ombudsman (3%).

Nearly three in five (57%) of all insured adults reported contacting their insurance at least once in the past 12 months, either by phone, online, in-person, or in writing (Figure 4). Forty-two percent of insured adults did not contact their insurance company at all. Among those who did reach out to their insurance at least once, half (50%) inquired whether a health care expense (such as a prescription, procedure, treatment, or visit with a health care provider) was covered by their health insurance, making it the most common reason for contacting their insurance. Receiving a medical bill (42%) was another reason insured adults contacted their insurance, followed closely by finding out what steps needed to be taken for their insurance to cover a prescription, procedure, or medical visit (39%). Fewer (31%) contacted their insurance at least once in the past year to find out how much a medical procedure would cost out-of-pocket.

Most insured adults are unaware that they have the legal right to appeal to a government agency or independent medical expert if their health insurance refuses to cover needed medical services (Figure 5). Those with public insurance are more likely than those with private insurance to be aware of this right. Just one-third (34%) of those with ESI or Marketplace coverage know they have this right, compared to 58% of Medicare beneficiaries and 45% of those with Medicaid. Further, just one in ten (10%) insured adults who experienced a problem with their health insurance in the past year filed a complaint with their health insurance company (data not shown). This share is similar across all four coverage types.

Three-quarters (76%) of adults with insurance reported not knowing what government agency they would call for help if they wanted to. Adults with ESI (83%) or Marketplace (81%) coverage were more likely to report that they did not know which government agency to contact compared to Medicare (61%) and Medicaid (70%) enrollees. Among insured adults with ESI or Marketplace coverage who reported that they did know which government agency they would contact, 15% of those with ESI and 6% of those with Marketplace coverage reported that they would reach out to their state insurance department/commission(er), the lead agency that is responsible for regulating non-group health coverage and insured group coverage. No one reported that they would contact the Department of Labor (DOL), the government agency that regulates health plans sponsored by private employers, including self-insured employer health plans.

Federal Consumer Protections Seek to Address Barriers to Understanding Coverage

Many federal reforms have focused on providing consumers with better information about their plan, standardizing and simplifying information, and making sure notice is provided of key design features and reforms. While public programs such as Medicare and Medicaid also provide consumer protections, this section focuses primarily on federal protections for those with private health insurance coverage (individual and employer-sponsored).

Understanding What is Covered

The ability to access accurate and easy-to-understand written information has long been a core consumer protection. Below is the landscape of written materials a consumer can access to get information to understand their coverage. Figure 6 is a snapshot of some key consumer protections for those with private insurance.

Coverage documents and summaries: All forms of coverage, whether Medicare, Medicaid, or private insurance available through an employer or a health insurance Marketplace, are required as a form of consumer protection to provide information about benefits and coverage, with varying content requirements, formats, and frequency of updates. Although there are fewer required standardized information formats across private coverage than in public programs such as Medicare, the ACA ushered in a standardized template across most private insurance through the Summary of Benefits and Coverage (SBC), with information on key coverage items and exclusions, cost-sharing, and rules for accessing care. All ACA-compliant plans in the individual and group insurance market and all employer-sponsored plans must provide consumers with an SBC.

More detailed coverage documents can extend to one hundred written pages or more; however, electronic formats and machine-readable files may make it easier to access information for those with the technology and ability to research this information. Examples in the private insurance market include state-regulated insurance documents (including Marketplace plans) sometimes called Certificates of Coverage, or plan documents and Summary Plan Descriptions that set out benefits for those in employer group health plans covered by ERISA.

Provider directories and formularies: Provider directories and formularies allow consumers to see what providers and medications are covered by their insurance. While these items might be easy to access online, several research studies have found that provider directories are often inaccurate. Federal consumer protections across public and private coverage include various features designed to ensure that plans maintain more accurate and up-to-date information. In some cases, these protections also require plans to meet minimum network adequacy standards and test that accuracy through “secret shopper” compliance programs.

Private coverage protections include the No Surprises Act (NSA) requirements, which apply to all private insurance (including employer coverage) and set standards for both plans and in-network providers to ensure accurate provider directory information. Consumers must be reimbursed for cost sharing in excess of in-network amounts when they rely on inaccurate directory information indicating that a provider was in-network. Plans must also continue to cover care from certain providers for a limited period of time after they leave an insurance network.

There is little research on prescription drug formulary accuracy and how consumers determine what medications are covered, but some public programs have model formulary templates to make it easier for consumers to review. There are no federal standards for private employer plans for formulary format, accuracy, and usability.

Consumer notice of rights, disclaimers, and marketing restrictions: Nearly every new consumer protection includes a requirement on an employer or insurance plan and/or provider to notify patients that the protection exists. For example, the NSA requires providers and facilities, as well as plans, to provide patients with information about the NSA’s balanced billing protections. Other federal reforms are meant to alert consumers about aspects of their coverage that might easily be misunderstood with a clear warning or disclaimer. For instance, federal rules for short-term limited duration coverage require a prominent statement that this coverage is “NOT COMPREHENSIVE COVERAGE.” This federally required warning on plan materials, as well as one for fixed indemnity plans, has been the subject of recent litigation questioning the need for and validity of these disclaimers. Another federal agency, the Federal Trade Commission, enforces protections against unfair or deceptive marketing or advertising to consumers that, for example, misrepresents certain limited coverage arrangements as comprehensive health insurance. Several recent investigations have been in collaboration with the federal health insurance agency Centers for Medicare and Medicaid Services (CMS).

Information about coverage determinations and appeals: Even if a consumer has located written information that an item, service, or provider visit is covered by their insurance, they could still face a denial of coverage (e.g., because the plan does not deem the care “medically necessary”), which can create frustrating hurdles for consumers. Medicare and Medicaid have longstanding processes for claims review and appeals. Private coverage also includes certain protections including:

• Processes for reviewing claims: All private insurers and employer plans must ensure a “full and fair” review of enrollee claims. In addition, the ACA includes a “transparency in coverage” provision that requires all non-grandfathered private health plans to provide information and statistics about plan practices to the public and to federal and state agencies, including data on claims payment policies and procedures and the number of claims denied.
• Prior authorization: The longstanding practice of health plans requiring patients to obtain approval for a health care service or medication before the care is provided has received renewed scrutiny in recent years. New federal protections issued in 2024 and effective in 2027 streamline the process and require aggregate reporting of the number of claims denials for federal Marketplace plans as well as Medicare Advantage and Medicaid managed care organizations.
• Information about why a claim was denied: Health insurers and employer plans must clearly disclose to consumers the reason(s) their claim was denied, provide information on their right to appeal the decision, and include the name of any Consumer Assistance Program (CAP) in their state. Consumers can also request more specific information from their plan about the decision (e.g., policy provisions related to the denied claim, names of experts consulted for decision).
• Internal appeal to the plan: If a consumer disagrees with a denied claim from their health plan, they can file an internal appeal with their plan. Plans are required to inform consumers of their appeal decision within 30 days for a service not yet received, within 60 days for a service that was already administered, and within 72 hours in urgent medical cases (sometimes less depending on the situation).
• External independent review: Consumers whose claims denial is upheld at internal appeal may have the right to an external review by an entity independent of the plan for certain types of claims.

Language assistance and information in alternative formats: Requirements to provide some form of language assistance and auxiliary aids to help with understanding coverage exist across most forms of coverage. Private employer plans have long been required to offer assistance in a non-English language where the plan covers a specific percentage of participants in the plan who are “only literate” in the same non-English language. The ACA requires that the SBC and certain claims and appeal notices be provided in a “culturally and linguistically appropriate manner” by individual and group insurers and self-insured employer plans. This could include items such as oral language services and a notice in a certain non-English language provided to enrollees upon request if they live in a county where 10% or more of the population is literate only in the same non-English language.

Separate language access standards apply to recipients of federal financial assistance, programs that HHS administers, and entities established under the ACA, such as health insurance Marketplaces. As a result, most private insurers participating in public and private insurance programs (including some who also provide insurance or administrative services to employer-sponsored coverage) must comply.

Effective communication for individuals with disabilities is also required under the ACA. Current regulations likely extend to information about health insurance coverage through the use of “auxiliary aids” for individuals with disabilities, such as sign language interpreters onsite or by video. Electronic information technology used to provide information about health coverage to enrollees must also be accessible for individuals with disabilities unless doing so creates an undue burden or fundamentally alters the program. Similar access standards for persons with disabilities might also apply to those who sponsor coverage and are also subject to the Americans with Disabilities Act or the Rehabilitation Act.

Direct Assistance

Some consumers may seek one-on-one communication to understand technical details in an insurance coverage document, to get more information about plan or provider policies and procedures, or to navigate the claims appeal process. The 2023 KFF Consumer Survey indicates that more insured adults reach out to their insurance company when encountering a problem than look to written plan material for resolution. Ensuring that consumers have access to effective and impartial one-on-one help has been the subject of federal consumer protection requirements. Figure 7 is a snapshot of key channels for direct consumer assistance.

Customer service options: Private insurers generally make certain customer services available to enrollees. Customer service provided by health plans is commonly offered via call centers, electronic messaging platforms, and increasingly, virtual chatbots. States may have specific customer service requirements for insurers selling state-regulated plans, such as call center wait time standards or staffing a minimum number of customer service representatives.

Health insurance marketplaces are required to provide consumer tools. Healthcare.gov operates a toll-free call center 24 hours a day, 7 days a week, for consumers with questions related to the federal health insurance Marketplace. The ACA also requires all state-based marketplaces to provide a live call center during their hours of operation. Call center representatives must assist consumers with inquiries related to qualified health plans, enrollment, cost-sharing reductions, and advanced premium tax credits (APTCs). Beyond relying just on insurers to provide this information, Congress also created the Navigator grant program to give enrollees access to an additional source of information from organizations other than health insurers to help navigate Marketplace coverage.

For those with private employer-sponsored coverage, there is no specific requirement under federal law to provide direct assistance to help covered employees and their families. Human resources staff sometimes perform this role if a consumer is unable to get answers from customer service personnel available from their insurer or third-party administrator. Some firms contract with third-party vendors to provide patient navigation or “concierge” services that help enrollees navigate plan services and advocate for enrollees as patients, among other services. According to the KFF Employer Health Benefits Survey, in 2024, 29% of firms with 200 or more employees that offered health benefits contracted with a vendor to provide “concierge” services to their enrollees. Separately, the DOL’s Employee Benefits Security Administration (EBSA) operates a toll-free phone number and an online message platform for consumers with questions or concerns related to federal legal requirements, obtaining health plan documents, and assistance getting claims paid.

Funding to state and other entities providing direct assistance: Before the ACA, some states had already established their own Consumer Assistance Programs (CAPs) or health insurance ombudsman programs to help all consumers explore coverage options or assist in resolving problems with their health insurance. Federal CAP grants as part of the ACA allowed for the improvement of existing programs and the creation of new CAPs in other states. In addition to assisting with consumer education and enrollment, the ACA listed one of the duties of CAPs as “assisting with the filing of complaints and appeals… of group health plans…and providing information about the external appeal process.” However, CAPs still operating today have not been supported by federal grant funding since 2012, effectively eliminating the only federally-funded assistance program available to consumers with employer coverage. Several have ceased operations due to lack of funding.

As referenced above, in addition to CAPs, Navigators were established under the ACA as a program to provide direct assistance to consumers in both HealthCare.gov states and in states that operate their own marketplace. Navigators offer support by conducting public education and outreach, helping consumers apply for financial assistance, assisting with enrollment and post-enrollment issues, and providing fair and impartial information about health plan options. Navigators cannot be insurers, nor can they receive any direct or indirect payment from an insurer. These programs in HealthCare.gov states are funded by federal grants, the amounts of which have fluctuated over the years depending on which political party is in power. In February 2025, the Trump administration announced it would cut funding for the Navigator program from its current $100 million to $10 million for 2026.

Standards for health insurance agents and brokers: Agents and (web)brokers play a large role in selling coverage in the individual and group insurance markets and can assist consumers in understanding their health insurance options and costs. While most agents and brokers are certified and regulated at the state level, federal requirements for those agents and brokers involved with Marketplace plans are meant to protect consumers from fraudulent activity and misleading information from agents and brokers, and to make sure consumers are aware of how they are paid and the possibility of conflicts of interest in steering consumers to certain products that financially benefit the agent/broker/web broker. Federal law also requires agents, brokers, and other service providers that work with private employer plans to disclose to employers how they are paid.

Looking forward

KFF 2023 Consumer Survey findings about how consumers understand and navigate the health insurance system reveal frustrating hurdles to determine what items and services and what providers are covered by their insurance. It presents the question of whether we have a system that is impossible for a consumer to navigate alone, leaving consumers vulnerable to exploitation and confusion as they are caught in the middle of health plan and provider interests and arbitrary boundaries of authority between state and federal agencies. Coming out of an election widely viewed to have turned on concerns about the economy, including health care costs, and following public outrage against insurers following the killing of the United Healthcare CEO at the end of 2024, expect that health care consumer issues will not go away, but perhaps will shift focus to include:

Use of digital technology such as artificial intelligence (AI) to assist consumers: Though imperfect and with some pitfalls, digital technology, including AI, can help consumers navigate the complexities of health insurance. These tools are increasingly being promoted to both companies and individuals and in 2024, nearly two-thirds (64%) of adults say they have used or interacted with AI. AI tools can be appealing to consumers looking for answers to health insurance-related questions without the need to make a phone call, wait on hold, or read through plan documents, and are often available 24/7. From guiding consumers through the insurance claims process, including filing appeals, to helping determine whether a plan that applies coinsurance or copayments for their prescription drugs will meet their needs, and identifying in-network doctors near a patient’s home, these tools have the potential to transform the ways in which people seek health information.

However, AI has also been in the spotlight following investigations and litigation in recent years related to health plans’ use of these tools in making coverage determinations, such as for prior authorization requests and in the claims review process. Much of the existing research and criticisms related to the use of AI in health care more broadly, such as clinical decision-making and claims processing, feature overarching concerns related to their accuracy, reliability, confidentiality, and accessibility that could also apply to consumers using AI and other digital technology to navigate their health insurance.

Patient input in coverage practices: Broader and different mechanisms to gather information about consumer experiences in real time could assist in determining the most pressing concerns for patients and engage more consumers in policy discussions about what structural changes and protections are most needed and impactful for them. One of the largest health insurers recently announced changes aimed at improving the patient experience in using their coverage, expanding consumer support, and improving transparency. Employers are making changes to better oversee and understand their benefit programs and provide consumer input and navigation services as plan sponsors face real scrutiny for the first time under longstanding federal fiduciary requirements.

For the federal government, while deregulation across health care, as well as federal agency upheaval, is likely to be the focus in the coming years, the Trump administration will be tasked with implementing key provisions of the No Surprises Act, which he signed into law, that requires upfront information about what services cost and more accurate provider directories. The Trump administration has already issued an Executive Order for agencies to “rapidly implement” price transparency regulations.

Promoting other forms of coverage: A reaction to the health insurance labyrinth has some promoting mechanisms to move away from traditional insurance to direct payment alternatives such as direct primary care arrangements and account-based arrangements where consumers use dollars available in a health savings account or other type of account to purchase care. The pros and cons of these arrangements will be up for debate, as well as whether consumers—especially those with lower incomes and/or chronic illnesses—are well served by the financial and coverage limitations that may be part of these arrangements, including existing problems with the price transparency data available to them and the rising cost of care due to provider consolidation. Patients might be faced with a different set of understanding challenges under these arrangements.

Understanding how health coverage works, what services are covered and by whom, and what rights consumers have is one piece of the health insurance labyrinth. The second brief in this series on consumer understanding will focus on the cost-related aspects and challenges of health insurance and health care.

As Congress considers ways to cut Medicaid spending to help finance the extension of federal tax cuts, a new KFF analysis finds that imposing a cap on federal spending per Medicaid enrollee—known as a “per capita cap”—could trigger a decrease in federal Medicaid spending over a 10-year period of $532 billion to almost $1 trillion, depending on how states respond to the cuts. An estimated 15 million people could lose Medicaid coverage by 2034, if states were to respond to the change by reducing their own Medicaid spending and curtailing eligibility.

The size of the cuts and which states would be hit hardest would depend on how states respond, and also whether the policy is combined with other changes, such as ending the 90% federal match for the Affordable Care Act’s Medicaid expansion.

The analysis shows that if states choose to increase their own Medicaid spending to offset federal reductions and maintain coverage and benefits, federal Medicaid spending would fall by $532 billion and state costs would increase by the same amount. State responses to federal cuts may vary. 

However, if Congress at the same time eliminates the enhanced federal matching rate for the Medicaid expansion (another significant policy being discussed, and which was examined by a previous KFF analysis), the impact would be bigger. Federal Medicaid spending cuts could range from $1 trillion–if states offset costs–to $2.1 trillion–if states respond by cutting state spending and eligibility over 10 years, with 30 million people losing Medicaid coverage by the end of the period.

In a party-line vote, the Republican-controlled House last night passed a budget resolution that would target cuts to Medicaid of up to $880 billion or more over a decade to help pay for tax cuts.

“The current proposals being discussed by Congress would lead to the largest Medicaid spending cuts and enrollment declines in the program’s history with an unprecedented cut in federal Medicaid funding to states,” said KFF President and CEO Drew Altman. “As our polling and focus groups with voters show, Americans, including many Trump voters, are not expecting, nor would they want, cuts to Medicaid, which would be felt across the country.” 

The analysis examines the potential impacts of two of the Medicaid proposals being discussed that would generate significant federal savings. It looks at the combination of them because lawmakers may pursue multiple, simultaneous changes to the program that would have interacting effects. Other proposals being discussed reportedly include imposing Medicaid work requirements, reducing the minimum federal matching rate, restricting states’ use of provider taxes to finance their share of Medicaid spending, and repealing certain Medicaid regulations. Future KFF analyses will examine these proposals as well.

Under the current system, the federal government reimburses states for a share of Medicaid enrollees’ costs, with no upper limit on expenditures, and states pick up the rest. Capping the federal contribution would force states to choose how to offset the funding reductions and could lead to increases in the uninsured rate and reduced revenue for health plans, hospitals and nursing homes.

Other key takeaways of the analysis include:

• Maintaining current Medicaid benefit levels and enrollment would require states to pay $1,500 more per enrollee under a per capita cap, or up to $2,300 more per enrollee under a per capita cap that is combined with the elimination of the enhanced Medicaid expansion match rate, by FY 2034.
• Decreases in Medicaid enrollment would vary by state and could be as high as 57% in some states if Congress implements both per capita cap financing and the elimination of the Medicaid expansion match.
• Spending reductions under a per capita cap would compound in future years as the per enrollee cap levels diverge further from spending levels expected without the cap, limiting states’ ability to meet changing program needs.

All states would be affected by a per capita cap, but the magnitude would vary due to differences in the mix of the types of Medicaid enrollees in each state. The effects would vary across eligibility groups because spending for different groups is expected to grow at different rates over time.  Also, the elimination of the enhanced Medicaid expansion match rate would only affect the 40 states and the District of Columbia that have adopted the expansion. 

For detailed state-by-state impacts of the proposed Medicaid financing changes on spending and enrollment, see Appendix Tables 1 and 2.

A related report released this week highlights the experiences and opinions of Medicaid enrollees who participated in five virtual focus groups that KFF conducted in January with enrollees who voted for President Trump or for Vice President Harris. Despite differences in political leanings, participants reported having favorable experiences with Medicaid and concerns about potential cuts to the program. While some Trump voters enrolled in Medicaid believed there is fraud in the program and were open to work requirements, they also didn’t think that President Trump would follow through on cuts to Medicaid because they believed he understood their financial struggles.

Medicaid covers one in five people in the U.S., and accounts for nearly $1 out of every $5 spent on health care. It covers 41% of all births, nearly half of children with special health care needs, and five in eight nursing home residents.

There are several options under consideration in Congress to significantly reduce Medicaid spending to help pay for tax cuts, with the recently passed House budget resolution targeting cuts to Medicaid of up to $880 billion or more over a decade. Medicaid is the primary program providing comprehensive health and long-term care to one in five people living in the U.S and accounts for nearly $1 out of every $5 spent on health care. Medicaid is administered by states within broad federal rules and jointly funded by states and the federal government, meaning restrictions in federal Medicaid spending could leave states with tough choices about how to offset reductions through cuts to Medicaid, cuts to other programs, or tax increases.

This analysis examines the potential impacts on states, Medicaid enrollees, and providers of implementing a per capita cap on federal Medicaid spending, which is one proposal that has been discussed in Congress. The analysis assumes, based on proposals floated in Congress, that the plan would cap federal Medicaid spending growth per enrollee for each of the five major eligibility groups at medical inflation. Given the likelihood of multiple, simultaneous changes to Medicaid and the interactive nature of those changes, the analysis also illustrates the effects of a per capita cap on Medicaid if implemented jointly with the elimination of the 90% federal match rate for the Affordable Care Act (ACA) expansion, another significant policy change that has been discussed in Congress and which was examined by a previous KFF analysis. Other proposals to reduce federal Medicaid spending have also been reportedly raised, including work requirements, a reduced federal matching rate, limits on provider taxes to finance the state share of Medicaid spending, and repeal of certain Medicaid regulations issued by the Biden administration. Future KFF analyses will examine these proposals as well.

Key takeaways

• The estimated effects of a per capita cap depend highly on what assumptions are made about policy specifications, future growth in Medicaid spending, and states’ responses to federal cuts.
• Capping per enrollee spending could reduce federal spending by $532 billion to nearly $1 trillion dollars between FY 2025 and FY 2034. Depending on how states respond, the policy could shift costs to states by $532 billion and leave total Medicaid spending unchanged or total Medicaid spending could decline by 14% (or $1.4 trillion).
• If per capita caps were implemented jointly with the elimination of the enhanced ACA expansion match rate, federal Medicaid spending could decline by $1 trillion to $2.1 trillion dollars between FY 2025 and FY 2034. Depending on how states respond, this combination of policies could shift costs to states by $1 trillion and leave total Medicaid spending unchanged or total Medicaid spending could decline by a quarter (or $2.6 trillion).
• If states reduced Medicaid eligibility proportionally to the cuts in federal spending, 15 million enrollees could lose Medicaid coverage under a per capita cap by the final year of the analysis, with that figure doubling to 30 million when combined with elimination of the ACA expansion match rate.
• States would face tough choices about Medicaid’s future under a per capita cap: maintaining current Medicaid benefit levels and enrollment would require states to pay $1,500 to $2,300 more per enrollee in the final year of the analysis.
• The effects of a per capita cap differ across eligibility groups because spending for different eligibility groups is expected to grow at different rates, with larger estimated effects among children and adults who are not eligible because they have a disability or are ages 65 and older.
• All states would be affected by a per capita cap, but the size of the effects vary due to differences in the mix of enrollees. Depending on state responses, state spending could increase up to 57% in some states if they chose to pay for the cuts. Enrollment could decrease by similar levels if states chose to restrict eligibility in response to the federal funding cuts.

Spending reductions under a per capita cap would compound over time as expected increases in Medicaid spending diverge from the caps. The effects would be smaller immediately following implementation, larger in FY 2034, the final year of this analysis, and continue to grow in the years after 2034. A per capita cap can provide lower and more predictable federal costs over time, but it would also fundamentally change the Medicaid federal-state partnership by eliminating the federal guaranteed match and transferring new financial risk to states. States would face significant challenges in efforts to pay for federal cuts and there would be pressure to reduce benefits and eligibility, with even larger effects if a per capita cap were paired with other Medicaid cuts. Beyond reduced Medicaid spending and enrollment, there could be increases in the number of people who are uninsured, fewer covered benefits for future Medicaid enrollees, and reduced revenues available for health plans and providers such as hospitals and nursing facilities.

What is the proposed policy change?

Medicaid spending is currently shared by states and the federal government with a guarantee to states for federal matching payments without a cap on federal expenditures. The percentage of costs paid by the federal government (known as the federal medical assistance percentage or “FMAP”) for most Medicaid enrollees is determined by a formula set in law designed to provide a higher federal match rate for states with lower per capita incomes. There are also higher match rates for certain services and populations like the ACA expansion group (90%). This leads to variation in the federal share of Medicaid spending across states. There is also considerable variation in per enrollee spending across states, due to state flexibility to determine eligibility levels, benefits, and provider payment, and across eligibility groups,reflecting differences in health care needs and utilization.

This analysis estimates the impact of implementing a per capita cap on the federal share of Medicaid spending. One proposal under consideration would “establish a per capita cap [on federal Medicaid expenditures] for each of the different enrollment populations set to grow at medical inflation.” While specifics on the implementation of this policy would be included in a legislative proposal, further details have yet to be released, and assumptions made here may differ from details included in proposed legislation. To estimate a per capita (i.e., per enrollee) cap policy, this analysis first establishes FY 2025 per enrollee spending as the base year estimate; then, starting in FY 2027, the analysis limits federal spending growth for the five major eligibility groups (children, adults, expansion adults, people with disabilities and aged 65+) to the consumer price index (CPI-U) plus 0.4 percentage points, which is KFF’s estimate of the difference between CPI-U and medical inflation (CPI-M) over the past 20 years (see Methods).

The analysis also estimates the combined impact of implementing a per capita cap and eliminating the ACA expansion federal match rate. The combined policy would include the same per capita caps on federal spending and also assumes that, starting in FY 2027, expenditures for people eligible through Medicaid expansion would be matched at each state’s traditional FY 2026 FMAP rate. This part of the analysis accounts for the interactive effects of these two policy changes; therefore, savings are lower than if each policy was modeled separately and the totals were added together (see Methods). There are a number of other Medicaid policy changes that have been suggested, and policy estimates would likely differ depending on the combination of policies and their interactive effects.

What is the potential impact on Medicaid spending?

This analysis does not make assumptions about specific state behavioral responses and instead examines how the impacts of the two policy alternatives vary based on two types of state responses to the cuts. The state responses are designed to illustrate the spectrum of potential policy change effects. However, in practice, each state is likely to respond to the policy change differently and spending impacts overall would likely fall within the range. While some states may choose to increase state spending to maintain current programs with substantially reduced federal funding, many would likely need to make programmatic cuts, making both the lower end and higher end estimates unlikely. The analysis does not explore people’s insurance coverage after losing Medicaid; some may enroll in another source of coverage, but many others would likely become uninsured. The estimates presented here are not directly comparable to the estimates of federal savings from the Congressional Budget Office (CBO) because CBO’s estimates account for people enrolling in other coverage and make assumptions about how states would respond in the aggregate. While the estimates assume that spending per enrollee by eligibility group would grow uniformly across states based on CBO’s national projections, it is likely that growth rates would vary by state, and that a cap would therefore have varying effects

Per Capita Cap

In analyzing the effects of a per capita cap on Medicaid spending, KFF considered the following two types of state responses.

• Pay for Federal Cuts: States maintain per enrollee spending and eligibility at current levels, picking up new costs due to the federal cap on per enrollee spending. Enrollment and total spending would remain constant while costs would shift from the federal government to the states. States would have to make offsetting cuts in programs other than Medicaid or raise revenues.
• Reduce Spending and Eligibility: States cap their share of per enrollee spending at medical inflation – e.g., by reducing payment rates to health care providers — and also reduce eligibility by the same percentage that federal spending is cut for each eligibility group to reflect the fact that the federal government is contributing less towards the cost. As a result, there would be decreases in enrollment and total, federal, and state spending. 

Capping per enrollee spending could shift costs to states or reduce total Medicaid spending by 14% ($1.4 trillion) over a 10-year period (Figure 1). If states offset the federal cuts, federal Medicaid spending could decrease by 8% or $532 billion over the 10-year period, and states would pay those costs, increasing the state share by 14% across all states. If instead, states cap their share of per enrollee spending and reduce Medicaid eligibility, federal Medicaid spending could decline by 15% or $989 billion, reflecting the fact that per enrollee spending is capped and enrollment goes down. State spending could decline by 12% or $450 billion. Combined, Medicaid spending could decrease by 14% or $1.4 trillion over the 10-year period. The analysis assumes states would reduce Medicaid eligibility proportionally to the cuts in federal spending, and the effects compound over time, meaning spending and enrollment effects are smaller in years just following implementation but grow over time. By the end of the 10-year period, enrollment could be 17% lower than current policy, meaning 15 million people could lose Medicaid coverage. Some who lose Medicaid may enroll in another source of coverage, but many others would become uninsured.

Per Capita Cap and Elimination of the ACA Expansion Match Rate

In analyzing the effects of a per capita cap on Medicaid spending if it were combined with the elimination of the ACA expansion match rate, KFF considered the following two types of state responses.

• Pay for Federal Cuts: States maintain per enrollee spending and eligibility at current levels, picking up new costs due to the federal cap on per enrollee spending and the loss of the higher match rate for expansion enrollees. Enrollment and total spending would remain constant while costs would shift from the federal government to the states.
• Reduce Spending and Eligibility: States cap their share of per enrollee spending at medical inflation, drop the ACA Medicaid expansion, and reduce eligibility by the same percentage that federal spending per enrollee is cut for each eligibility group, resulting in changes to enrollment and to total, federal, and state spending as well as per enrollee spending.

Capping per enrollee spending and eliminating the ACA expansion match rate could shift costs to states or reduce total Medicaid spending by a quarter ($2.6 trillion) over a 10-year period (Figure 2). If states pay for the cuts, federal Medicaid spending could decrease by 15% or $1 trillion over the 10-year period, and states would pay those costs, increasing the state share by 27% across all states. If instead, states cap their share of per enrollee spending and reduce Medicaid eligibility, federal Medicaid spending could decrease by 32% or $2.1 trillion, and state spending could decrease by 15% or $571 billion. Combined, Medicaid spending could decrease by 26% or $2.6 trillion over the 10-year period. Enrollment losses could increase each year proportionally with the increase in federal spending cuts, resulting in 30 million (or 36%) fewer people with Medicaid coverage by the end of the 10-year period.

Impacts on State Spending if States Pay for Federal Cuts to Medicaid

Under both policy alternatives, costs would shift significantly from the federal government to the states if states chose to maintain current benefits and eligibility, causing state Medicaid spending per enrollee to increase by $1,500 to $2,300 in FY 2034 (Figure 3). With federal Medicaid spending per enrollee capped, state spending per enrollee could increase from $5,500 under current policy to $7,000 with a per capita cap and $7,800 if the per capita cap were paired with the elimination of the ACA expansion match rate. By FY 2034, the federal share of Medicaid spending on average across states could fall from 64% to 54% with a per capita cap and 49% if the per capita cap were paired with elimination of the ACA expansion match rate.

All states would be affected by a per capita cap, but the specific effects vary depending on the mix of enrollees in a state, with state spending increasing by as much as 57% in some states if paired with the elimination of the ACA expansion match rate (Figure 4). If states opted to pay for the federal Medicaid cuts, state spending on Medicaid could increase anywhere from 6% to 57% over 10 years. Expansion states could experience much larger state cost increases, ranging from 18% to 57% if the per capita cap were paired with the elimination of the ACA expansion match rate, whereas state cost increases for all non-expansion states could remain at or below 21%. While this analysis assumes that growth rates for each eligibility group are uniform across states under current policy, it’s likely that growth rates would vary by state in any given period based on policy choices and underlying factors related to their economies and health systems.

Impacts on Medicaid Spending and Enrollment if States Respond to Federal by Cutting Spending and Eligibility

The effects of per capita caps differ across eligibility groups because spending for different eligibility groups grows at different rates, with larger effects among children and adults who are not eligible because they have a disability or are ages 65 and older. The effects vary by eligibility group because spending estimates under current policy assume that per enrollee spending for each group grows at different rates (aligning with CBO per enrollee spending growth assumptions), but the per capita cap policy would limit the growth for all groups using the same inflation rate. Spending grows at different rates largely based on the percentage of spending that comes from use of long-term care for each eligibility group. Although Medicaid enrollees who use long-term care have much higher per enrollee costs, CBO expects those costs to grow more slowly in future years. By FY 2034, the decline in per enrollee spending under a per capita cap could be: 24% for expansion adults, 20% for other adults, 19% for children, 11% for people eligible because of a disability, and 6% for adults ages 65 and older.

This analysis assumes that states would reduce eligibility in proportion with the cuts to federal spending, resulting in larger total spending and eligibility cuts among children and adults who are not eligible because they have a disability or are ages 65 and older (Figure 5). Under a per capita cap, total spending would drop to reflect the lower per person costs and the reductions in eligibility, which would be proportional to the cuts in federal spending. In FY 2034, an estimated 15 million fewer people could be covered by Medicaid including:

• 5.3 million children,
• 4.8 million adults eligible through the ACA expansion,
• 2.9 million parents and other adults under age 65,
• 1.3 million people with disabilities, and
• 0.6 million people ages 65 and older.

An additional 15 million expansion enrollees could lose Medicaid coverage (totaling about 20 million expansion enrollees by FY 2034) if the ACA expansion match rate is also eliminated. Some people losing Medicaid would be eligible for ACA marketplace coverage (those with incomes 100-138% of the poverty level) and others would be able to obtain employer-sponsored health insurance. But, others would become uninsured. Most people over age 65 and some who qualify for Medicaid based on a disability would generally be able to maintain Medicare coverage but could lose access to wrap-around services not covered by Medicare.

All states would be affected by a per capita cap, but the specific effects vary, with enrollment decreasing by as much as 57% in some states if paired with the elimination of the ACA expansion match rate in 2034 (Figure 6). If states respond to federal cuts by reducing eligibility, Medicaid enrollment could decrease anywhere from 12% to 57% in 2034. Expansion states could experience much larger enrollment declines if paired with the elimination of the ACA expansion match rate, ranging from 31% to 57%, whereas enrollment declines for all non-expansion states could remain at or below 17%.

What are other implications to consider?

Medicaid per capita caps lock in historical spending patterns, and the effects would compound overtime so the full implications would not be visible until after FY 2034. Per capita caps are initially set to reflect historical spending patterns that vary by state and eligibility group. Spending per enrollee will grow at the same rate for all states and eligibility groups, meaning that the low-spending states today will continue to be low-spending states indefinitely, and the same is true for spending across the eligibility groups. Moreover, the caps are typically designed to constrain federal Medicaid spending growth to a rate slower than is expected under current law, which is how they achieve federal savings. As time passes, the effects compound, limiting states’ ability to meet changing needs and demands. Federal spending reductions in FY 2034, the final year of the analysis, are larger than reductions over the full 10-year period (Figure 7), and the effects on enrollment and spending in future years would continue to grow.

The effects of a per capita cap on Medicaid spending and enrollment are also highly sensitive to policy design, inflation rates, and how states respond to the cuts; and estimates are highly sensitive to assumptions about those factors. Decisions about how to calculate the per enrollee allotments for the base year and how to grow the allotments over time would determine the magnitude of costs shifted to states. The effects also depend on how much Medicaid costs grow over time and how they compare with changes in the inflator used to calculate the caps. States’ responses to the cuts would determine how much total spending and enrollment changed. If per capita caps are paired with other cuts to Medicaid, effects would be larger, and there would be more pressure on states to respond with programmatic cuts. Estimates of the effects of different per capita cap proposals may find a wide range of outcomes depending on what assumptions are made to complete the analysis.

A per capita cap would fundamentally change the Medicaid federal-state partnership by eliminating the federal guaranteed match and transferring new financial risk to states. Per capita caps allow federal spending to rise with enrollment; however, spending would not rise to account for: increasing costs due to the emergence of new technology such as cell and gene therapies, changes in population health status that increase per enrollee spending, or increased provider payment rates enacted to address workforce shortages. Medicaid is currently a partnership between the federal and state governments with both entities sharing the financial risk. Under a per capita cap scenario, federal spending would be lower and more predictable. The federal government would only bear risk associated with enrollment changes and the states would assume 100% of the risks associated with other factors that affect health care spending.

Under any per capita cap policy, states would face challenges and there would be pressure to reduce benefits and eligibility, but the effects would be larger if a per capita cap were paired with other Medicaid cuts. To maintain current policy, states would have to increase state tax revenues or decrease spending on non-Medicaid services such as education, which is the largest source of expenditures from state funds. Given the size of the federal funding cuts, states would face significant challenges in efforts to replace the loss of federal funds, which would be exacerbated if paired with other reductions in federal funding for areas beyond Medicaid. The loss of federal revenues would create significant pressure to eliminate the Medicaid expansion and restrain the growth in per enrollee spending for other enrollees. Medicaid spending per enrollee already grows at a slower rate compared with private insurance and Medicare, leaving fewer options for cutting per enrollee costs. States would all respond differently but could reduce spending by cutting optional benefits (which includes prescription drugs and nearly all home care, also known as home and community-based services or HCBS), reducing provider payment rates, or cutting eligibility for the specific eligibility groups with higher per person spending, such as those linked to the use of long-term care.

If states are unable to maintain Medicaid eligibility, benefits, and payment rates, there could be increases in the number of people who are uninsured, reduced access to care, and significant reductions in payment rates to providers. Reduced Medicaid eligibility would mean an increase in the number of uninsured people, with the most notable increases likely among people eligible for coverage through the ACA expansion, though people with disabilities may be particularly vulnerable on account of their more extensive health needs. Enrollees with incomes between 100% and 138% of poverty could be eligible for coverage through the ACA marketplaces, but ACA coverage could soon become more costly for enrollees if the enhanced subsidies expire at the end of 2025, and few low-income people have access to insurance through their employer. An increase in the number of uninsured people could reverse gains in financial security, access to care, and health outcomes as well as lead to loss of revenues and increased uncompensated care costs for providers. Providers could also face revenue losses from lower Medicaid payment rates or coverage of fewer services, which could exacerbate issues with access to care for Medicaid enrollees and within the health care system more broadly.

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