After years of rapid increases, Medicare Advantage enrollment growth slowed in 2025, a trend that continued in 2026. The number of Medicare Advantage prescription drug (MA-PD) plans available to the average Medicare beneficiary has declined from a peak of 36 in 2024 to 32 in 2026. Additionally, the trend of rapidly expanding extra benefits, spurred by sharp increases in rebate payments from the federal government, has stalled, with a smaller share of plans offering over-the-counter allowances and meals after hospital stays. Medicare Advantage insurers have warned that recent changes to the Medicare Advantage payment system have already hurt enrollees, leading to plan terminations, reduced benefits, and higher costs, and that these harmful effects will be exacerbated if the Trump Administration’s proposed payment rates for the 2027 plan year are finalized.

Despite concerns raised by the industry, the Medicare Advantage market remains robust in terms of enrollment, plan choice, and extra benefits. Enrollment in Medicare Advantage surpassed 35 million people in February of 2026, as more than half of eligible beneficiaries receive their Medicare coverage from a private plan. The number of plan options has ticked down in recent years, but remains higher in 2026 than in 2022 and every year before. Virtually all Medicare beneficiaries have at least one zero-premium plan with prescription drug coverage to choose from (excluding the Part B premium that all beneficiaries pay). Almost all plans (at least 98%) offer vision, dental, and hearing – benefits that are not covered by traditional Medicare. At the same time, rebate payments to plans from the Medicare program, which must be used to lower cost sharing, pay for extra benefits, and reduce premiums, are expected to reach their highest level ever, averaging more than $2,600 per enrollee in 2026.

Nevertheless, 2.6 million people who were covered by a MA-PD plan in 2025 had that coverage terminated at the end of the year as insurers decided to discontinue or reduce the service areas where certain plans were offered. Plan terminations affected 13% of all enrollees in individual MA-PDs in 2025, a substantially larger share than in previous years (6% of enrollees in individual MA-PDs in 2024 were affected by plan terminations). There are several reasons why plan terminations may have increased going into the 2026 plan year. Increases in the utilization of health care services, consistent with higher spending growth, and slower increases in the federal payments per enrollee to Medicare Advantage plans (stemming from changes to how payments are adjusted for the health status of enrollees) have somewhat reduced the relatively high gross margins private insurers realize on their Medicare Advantage business. This has led insurers to take a more careful look at the plans they offer and reduce the number of plans or withdraw from some markets in efforts to stabilize their margins. In some cases, insurers are also investing more in special needs plans (SNPs), which restrict enrollment to people with specialized health needs or who are covered by both Medicare and Medicaid (dual-eligible individuals). The number of SNPs offered has continued to increase, more than doubling since 2020.

This analysis examines the Medicare Advantage options in 2026 for Medicare beneficiaries who were covered by a MA-PD plan that was terminated at the end of 2025. It also examines the characteristics of plans that were terminated and the areas where the terminated plans were offered in 2025. The analysis excludes special needs plans, employer-and union-sponsored group plans, and individual plans that do not include prescription drug coverage (see Methods).

Key Findings

• Virtually all (98.9%) Medicare beneficiaries enrolled in a Medicare Advantage plan that terminated coverage at the end of 2025 (2.6 million beneficiaries) have at least one MA-PD plan available in 2026, with an average of 25 MA-PD options offered in their area in 2026. Most Medicare beneficiaries affected by a plan termination that had a zero-premium MA-PD option in 2025 also had a zero-premium MA-PD option in 2026. 
• More than two-thirds (68.7%) of Medicare beneficiaries enrolled in a plan that terminated coverage have at least one Medicare Advantage plan offered by the same insurer in 2026 in addition to MA-PDs from other insurers, while 29.8% have at least one option from another insurer in 2026 but none from the same insurer. Another 0.4% can choose an MA-PD from the same insurer in 2026 but have no MA-PD options from other insurers.
• Just 1.1% of people who were in terminated plans nationwide have no MA-PD options in 2026 (less than 30,000 people).
• About half (49%) of all enrollees in terminated plans were covered by small insurers; however, UnitedHealth Group, Inc. had the largest share (20%) of enrollees in plans that terminated coverage in 2025.
• Medicare Advantage enrollees living in rural areas were disproportionately affected by plan terminations. While 14% of 2025 MA-PD enrollees lived in a rural county, nearly one in four (23%) enrollees in a plan that terminated coverage at the end of 2025 live in a rural area. Plan terminations in rural areas were also more likely to lead to no MA-PD options in 2026.
• The impact of Medicare Advantage plan terminations at the end of 2025 varied across states, ranging from less than 5% of enrollees in 12 states to 60% or more in 6 states, including Vermont where more than 90% of 2025 Medicare Advantage enrollees were in a plan that was terminated (the other states with 60% or more of enrollees affected are WY, SD, ID, NH, ND). The states where the largest shares of Medicare Advantage enrollees were impacted are mostly rural states that comprise a small share of Medicare Advantage enrollment (and a small share of enrollees affected by plan terminations).

More than two-thirds of enrollees in plans that terminated coverage at the end of 2025 have MA-PD options from the same insurer in 2026

Virtually all (98.9%) Medicare beneficiaries enrolled in a plan that was terminated at the end of 2025 have MA-PD plan options in 2026. On average, these Medicare beneficiaries can choose from 25 MA-PD plans offered by 7 firms, and for more than two-thirds of people (68.7%), those options include an MA-PD plan from the same insurer as their 2025 coverage, as well as a plan from another insurer (Figure 1). Just under a third (29.8%) of beneficiaries in a plan that was terminated at the end of 2025 have a MA-PD option from another insurer in 2026, but not the same insurer that sponsored their 2025 coverage. The vast majority (83%) of Medicare beneficiaries affected by plan terminations have at least one zero-premium MA-PD to choose from in 2026, similar to the share (86%) in 2025.

A small share of people in plans terminated at the end of 2025 (0.4%) only have the option of enrolling in a MA-PD plan from the same insurer that sponsored their 2025 coverage (no other insurers are offering a plan in their area). Just 1.1% (28,472) of Medicare beneficiaries in a plan terminated at the end of 2025 have no MA-PD plan available in 2026.

All Medicare beneficiaries enrolled in a plan that terminated coverage at the end of 2025 have the option to receive their Medicare coverage from traditional Medicare. Traditional Medicare offers broader access to providers and less utilization management than Medicare Advantage, but does not offer extra benefits, such as dental, vision, and hearing. Additionally, beneficiaries who want prescription drug coverage must purchase a standalone drug plan, and many traditional Medicare beneficiaries also purchase a supplemental Medigap policy. Beneficiaries who have had their coverage terminated by their Medicare Advantage insurer have a special guaranteed issue period to purchase a Medigap policy to supplement their coverage under traditional Medicare, meaning they cannot be denied coverage or charged a higher premium for a Medigap policy due to pre-existing conditions (something Medigap insurers are permitted to do in most states in most other cases outside of a person’s initial eligibility period for Medigap). Medigap policies require an additional monthly premium, which averaged more than $200 in 2023, though premiums vary both across and within states as well as by type of Medigap policy.

That additional cost is one reason many of the beneficiaries affected by plan terminations may choose a different Medicare Advantage plan for 2026 rather than switch to traditional Medicare. Enrolling in a different Medicare Advantage plan could lead to changes in benefits and cost sharing, as well as other plan characteristics. For example, previous KFF work has shown that Medicare Advantage provider networks vary substantially, even across plans offered by the same insurer, so having to switch plans, even if to another plan from the same insurer, could require a change in providers to stay in-network, unless the individual chooses to switch to traditional Medicare.

About half (49%) of the 2.6 million Medicare Advantage enrollees in plans that terminated coverage in 2025 were covered by small insurers

Medicare Advantage enrollment is highly concentrated among a small number of relatively large firms. Two insurers, UnitedHealth Group, Inc. and Humana Inc., together comprised just under half of all enrollment in individual MA-PDs in 2025, another four insurers comprise between 4% and 11% of enrollment each, while more than 100 small insurers (that represent less than 3% of MA-PD enrollment each) together enrolled just less than one-third (31%) of Medicare beneficiaries in an individual MA-PD in 2025. Those smaller firms, however, accounted for about half (49%) of Medicare beneficiaries enrolled in plans that were terminated at the end of 2025 (Figure 2).

UnitedHealth Group had the largest number of enrollees (532,869) in terminated plans, which represents a slightly smaller share (20%) of people affected by plan terminations than the firm’s share of individual MA-PD enrollment (24%) in 2025. Fewer than 2% of UnitedHealth Group enrollees (8,500 people) affected by plan terminations have no MA-PD options in 2026. More than half of this group lives in Vermont, where UnitedHealth Group pulled out completely.

In contrast, the second largest insurer, Humana, had a relatively small number of people affected by terminations, comprising just 2% of all terminated enrollees compared with the firm’s share of individual MA-PD enrollment (19%).

Among the smaller insurers, four firms terminated plans that affected at least 100,000 enrollees. Two of the firms, UCare Minnesota and Blue Cross Blue Shield (BCBS) of Michigan Mutual Ins. Co., were among the largest insurers in a single state, Minnesota and Vermont, respectively. (Note, while an insurer’s name may include a specific state, those insurers may operate in multiple states). UCare Minnesota, the second largest insurer in the state of Minnesota in 2025 (which also offered plans in some Wisconsin counties), terminated all of its individual MA-PD plans, which enrolled nearly 150,000 Medicare beneficiaries, although it is still offering D-SNPs. Fewer than 1% of former UCare Minnesota enrollees have no MA-PD options in 2026.

BCBS of Michigan Mutual Ins. Co., which offered MA-PDs in five states in 2025 (IA, MI, ND, SD, and VT), terminated plans that affected just over one-third of their 2025 enrollees and was one of two insurers to pull out of Vermont completely (leaving Humana as the only insurer in the market in 2026). Of the almost 110,000 enrollees in a BCBS of Michigan Mutual Ins. Co. sponsored plan in 2025 that was terminated, 17,000 (all in VT) have no MA-PD option in 2026.

Two other insurers terminated plans affecting over 100,000 enrollees and all of the Medicare beneficiaries in these two plans have other MA-PD options in 2026. Those insurers are Highmark Health, which terminated plans affecting 148,000 enrollees (44% of 2025 the firm’s individual MA-PD enrollment) in four states (DE, NY, PA, WV), and Lifetime Healthcare, Inc., which terminated plans affecting 106,000 enrollees (45% of the firm’s individual MA-PD enrollment) in New York.

The disproportionate share of Medicare beneficiaries in plans sponsored by small insurers affected by plan terminations could raise questions about the impact on competition and market concentration. However, recently released 2026 Medicare Advantage enrollment data suggests the impact of plan terminations is more mixed, as some small insurers have increased enrollment substantially year-over-year. For example, Devoted Health, Inc., which had 0.8% of enrollment in 2025, added more than 160,000 enrollees to its individual MA-PD plans between February 2025 and February 2026, more than doubling enrollment and expanding its market share to 1.6%. Overall, enrollment in individual MA-PDs sponsored by small insurers grew by more than 300,000 enrollees between February 2025 and February 2026, reflecting increases in enrollment for over half of all small insurers.

Additionally, enrollment in Medicare Advantage plans fluctuates and an insurer can lose enrollees beyond the number that were in a terminated plan or gain enrollees that offset losses from discontinuing plans or shrinking service areas. It is possible that higher levels of disruption in plan offerings from one year to the next may lead enrollees to switch plans, even if not directly affected by a plan termination. For example, enrollment in UnitedHealth Group plans declined by more than the enrollment in terminated plans, while the net increase in Humana MA-PDs between February 2025 and February 2026 was 831,000 enrollees.

Just under one-quarter (23%) of Medicare Advantage enrollees in a plan that terminated coverage live in a rural area

Medicare beneficiaries living in a rural county were disproportionately affected by plan terminations. Medicare Advantage enrollees living in a rural county comprised 23% of those who lost their coverage at the end of 2025 but just 14% of all individual MA-PD enrollment in 2025 (Figure 3). On average, enrollment in terminated plans was lower in rural counties than in urban counties. Consistent with the larger impact in rural counties, terminated plans had relatively low enrollment, on average. The median county-level enrollment per terminated plan was just 22 people.

Additionally, plan terminations in rural counties were more likely lead to no MA-PD options in 2026 than plan terminations in urban areas, though only a small number of enrollees overall were left with no options. Nearly two-thirds (65%) of the approximately 30,000 enrollees in terminated plans with no MA-PD options in 2026 live in rural counties (these counties are in just 8 states: CA, CO, MN, MT, NE, OR, SD, and VT), while the remaining 35% live in urban counties (all in VT). Among all enrollees in rural areas affected by plan terminations, 3% have no MA-PD option in 2026 compared to less than 1% in urban areas.

In some, mostly rural states, at least 60% of Medicare Advantage enrollees were affected by plan terminations

Just under 13% of enrollees in individual MA-PD plans in 2025 nationwide were affected by plan terminations, but in a handful of mostly rural states the impacts were much larger. In Vermont, more than nine-in-ten (93%) Medicare beneficiaries enrolled in an individual MA-PD in 2025 were in a plan that terminated at the end of the year. In five other states, at least 60% of enrollees were affected: Wyoming (65%), South Dakota (64%), Idaho (63%), New Hampshire (61%), and North Dakota (60%) (Figure 4). Altogether, these six states comprised 9% of the 2.6 million MA-PD enrollees who were in terminated plans, and just 2% of individual MA-PD enrollment in 2025.

In contrast, in 12 states fewer than 5% of Medicare Advantage enrollees were affected by a plan termination in 2025. These states represent less than one-tenth (9%) of people enrolled in terminated plans but nearly one-third (30%) of individual MA-PD enrollment. 

In Vermont, plan terminations were significantly more likely to leave Medicare beneficiaries without any Medicare Advantage option than in other states. More than two-thirds (68%) of enrollees in terminated plans in Vermont have no MA-PD options in 2026. In contrast, less than 5% of enrollees in terminated plans in California, Colorado, Minnesota, Montana, Nebraska, and South Dakota have no MA-PD options in 2026. In all other states, every Medicare Advantage enrollee affected by plan terminations has MA-PD options in 2026.

Methods

This analysis examined the Medicare Advantage prescription drug (MA-PD) plans that were terminated at the end of 2025 and MA-PD plan availability in 2026, including by firm and rurality. KFF uses the term “plan terminations” to apply to all county-level plan offerings that are no longer available in 2026. Those include plans that did not have their contract renewed and other types of situations, such as service area reductions where a subset of the plan’s 2025 enrollees will no longer have the option of continuing to receive coverage through the same plan. Medicare Advantage plans without prescription drug coverage, Special Needs Plans, and employer- and union-sponsored plans are excluded from this analysis. Cost plans, PACE plans, HCPPS, and MMPs are also excluded from this analysis.

Data on Medicare Advantage plan terminations, enrollment, and availability were collected from a set of data files released by the Centers for Medicare & Medicaid Services (CMS): 2025 and 2026 Medicare Advantage plan landscape files, released each fall prior to the annual enrollment period and the Medicare Advantage contract/plan/state/county level enrollment file for February 2025, June 2025, and February 2026.

Enrollment data is only provided for plan-county combinations that have at least 11 beneficiaries; thus, this analysis excludes enrollees who reside in a county where county-wide plan enrollment does not meet this threshold.

This analysis determines urban and rural analysis based on the 2024 Urban Influence Codes (UIC) published by the U.S. Department of Agriculture (USDA) Economic Research Service. See Methods of KFF, “Key Facts About Medicare Beneficiaries in Rural Areas” (June 2025) for more details. Connecticut is excluded from the analysis by rurality because of differences in FIPS codes in the CMS Medicare Advantage data and the USDA 2024 UIC.

Medicaid is the primary program providing comprehensive health and long-term care to low-income people, including access to prescription drugs to treat acute problems and manage ongoing chronic conditions, covering about one in five people in the United States. In recent years, Medicaid spending on prescription drugs has grown substantially, in part due to the emergence of new, high-cost drugs, including GLP-1s and cell and gene therapies that treat, and sometimes cure, rare diseases. At the same time, a more tenuous fiscal climate coupled with federal funding cuts and policy changes in the 2025 reconciliation law have put pressure on state Medicaid programs. As a result, both states and the federal government continue to prioritize the management of rising pharmacy costs. There have been several recent Trump administration prescription drug initiatives, including new payment models, that could help combat rising costs for state Medicaid programs, though questions remain about their impact. While lower prices for state Medicaid programs through the new models could result in reduced Medicaid prescription drug spending and potentially expanded coverage of certain drugs, the extent of the savings and how states or manufacturers will respond remain unclear. To provide context for emerging debates about federal actions to address prescription drug costs, this issue brief highlights five key facts about Medicaid prescription drug coverage, payment, and administration.

1. Despite growth in net Medicaid spending on prescription drugs, drug spending continues to account for a relatively small share of Medicaid spending.

Drug spending accounts for a relatively small share of overall Medicaid spending. The percent of Medicaid spending on prescription drugs was 6% in 2024, substantially smaller than Medicaid’s spending on hospitals (38%), long-term care (37%), and providers (15%) (Figure 1). Following the enactment of the Medicare prescription drug benefit in 2006 — which shifted some drug spending for dually-eligible beneficiaries to the federal government — the percent of Medicaid spending on prescription drugs has remained relatively stable between 5% and 7%. Despite this, management of prescription drug expenditures continues to be a focus area at both the state and federal levels. Net spending on prescription drugs increased by 46% between federal fiscal year (FY) 2019 and FY 2024, which is a similar rate to growth in Medicaid spending overall (52%) over the period. The emergence of new, high-cost drugs can put pressure on state budgets, and states reported experiencing several substantial Medicaid budget pressures including increasing pharmacy costs in KFF’s latest annual Medicaid budget survey.

2. Low out-of-pocket costs help Medicaid enrollees access needed prescriptions.

Federal law limits out-of-pocket costs for Medicaid enrollees to nominal amounts. Since people on Medicaid must have low incomes to qualify for the program, Medicaid is designed to provide access to prescription drugs with little cost to enrollees. Federal rules limit beneficiary cost-sharing or copays to up to $4 for preferred drugs and $8 for non-preferred drugs for individuals with incomes at or below 150% of the federal poverty level (FPL) and slightly higher for those with higher incomes. Some Medicaid populations (e.g. most children under 18, pregnant women, etc.) are exempt from cost-sharing requirements. Within those limits, states have flexibility to establish their cost sharing levels, though fewer than half of states required prescription drug cost-sharing for non-exempt enrollees as of July 1, 2023.

Medicaid coverage helps adults avoid cost-related prescription medication rationing or delays. Over two-thirds of Medicaid-enrolled adults took prescription medication in the past year, which is similar to the share of adults with private insurance (68%) but much higher than the share of uninsured adults (37%) (Figure 2). Uninsured adults (17%) were also more likely than Medicaid-enrolled adults (10%) and privately insured adults (8%) to report delaying filling, taking less, or not getting a needed prescription at all due to cost. Medicaid adults report cost-related rationing or delays at slightly higher rates than privately insured adults (10% compared with 8%), likely because Medicaid covers a predominantly low-income population. While prescription out-of-pocket costs in Medicaid are limited to nominal amounts, even low amounts may still be prohibitive for some families. Recently proposed federal prescription drug initiatives may affect overall Medicaid spending for prescription drugs, but they are not expected to have an impact on Medicaid enrollee affordability.

3. States vary in how they administer the prescription drug benefit.

While not required by Medicaid statute, all state Medicaid programs cover prescription drugs, though states administer the benefit in different ways. Within federal rules regarding payment and medical necessity requirements, states have flexibility to administer and manage the pharmacy benefit within their Medicaid programs. Capitated managed care is now the dominant way in which states deliver services, including prescription drugs, to Medicaid enrollees. As of July 2025, only eight out of 42 states that contract with managed care organizations (MCOs) “carved out” prescription drug coverage from managed care and delivered the pharmacy benefit through fee-for-service (FFS) (Figure 3). For the other MCO states, the pharmacy benefit is included in the overall capitation rate paid to the plan, though as a MCO risk mitigation strategy or for other reasons, states may also carve out one or more specific drugs (or drug classes) from MCO capitation payments. While most Medicaid prescription drugs are covered through the pharmacy benefit, some drugs, including outpatient physician-administered drugs or drugs provided as part of a hospital stay, are covered through the medical benefit or both, depending on how the drug is dispensed, administered, and billed.

States and MCOs often contract with external vendors like pharmacy benefit managers (PBMs) to manage or administer the pharmacy benefit. PBMs may perform a variety of administrative and clinical services for Medicaid programs (e.g., negotiating supplemental rebates with drug manufacturers, adjudicating claims, monitoring utilization, overseeing and formulating preferred drug lists, etc.) and are used in both FFS and managed care settings. States have increased their reliance on PBMs over the years, with 33 states reporting contracting with a PBM to administer their FFS pharmacy benefit as of July 1, 2023. However, PBMs have faced increased scrutiny in recent years as more states adopt reforms to increase transparency and improve oversight. Congress also included Medicare and employer health plan PBM reforms in the Consolidated Appropriations Act, 2026, though Medicaid PBM provisions were not included.

4. Medicaid payments for prescription drugs are determined by a complex set of policies.

Total Medicaid spending for a given outpatient drug is based on the amount paid to the pharmacy less rebates received from the manufacturer. Pharmacies negotiate prices and purchase drugs from manufacturers or wholesalers and then fill prescriptions for Medicaid enrollees. In return, the pharmacy receives payment from the state Medicaid agency based on the ingredient cost of the drug and professional dispensing fees, plus any copays paid by the enrollee (Figure 4). States set policies on dispensing fees and, within federal guidelines, enrollee cost-sharing, while federal regulations guide FFS payment levels for outpatient drug ingredient costs (physician-administered drugs or those received in an inpatient setting follow a different set of payment guidelines). If the state delivers the pharmacy benefit through managed care, MCOs reimburse the pharmacy, usually through a PBM. MCOs have more flexibility to set payment rates, though they must set payment rates sufficient to guarantee enrollee access. The final cost to Medicaid is then offset by any rebates received under the federal Medicaid Drug Rebate Program (MDRP) and state-negotiated supplemental rebates (if any).

Under FFS, state Medicaid programs reimburse pharmacies for prescription drugs based on the ingredient costs for the drug and a dispensing fee for filling the prescription (Figure 4). The ingredient cost must reflect the actual acquisition cost (AAC) or the price to the pharmacy of acquiring the drug from a manufacturer or wholesaler (see Box 1 for a list of key Medicaid drug pricing terms and their definitions). States have some flexibility to determine AAC, which can include using the National Average Drug Acquisition Cost (NADAC) survey or average manufacturer price (AMP) as a benchmark. With the exception of some multiple-source drugs for which there are additional limits, federal regulations require Medicaid programs to reimburse pharmacies based on the lesser of:

• (1) AAC plus a professional dispensing fee or
• (2) the pharmacy’s “usual and customary charge” to the public.

For certain multiple-source drugs, AAC is capped at the federal upper limits (FUL) or state maximum allowable costs (MAC). Overall, depending on the drug and state, reimbursement is typically set at the lesser of:

• (1) the state’s AAC formula plus dispensing fee,
• (2) the FUL plus dispensing fee,
• (3) the state MAC plus dispensing fee, or
• (4) the pharmacy’s usual and customary charge to the public. 

These limits ensure Medicaid is paying a reasonable market price for prescription drugs. The dispensing fee is intended to cover reasonable pharmacy costs associated with filling a prescription. States establish dispensing fees, and they can vary by type of pharmacy or drug. The ingredient and dispensing fee cost are considered together when assessing the adequacy of a state’s drug payment, and the total payment must meet federal requirements.

Manufacturers who want their drugs covered by Medicaid are required to rebate a portion of drug payments under the MDRP, and in return, Medicaid must cover almost all FDA-approved drugs produced by those manufacturers. The rebate formula is set in statute, varies by type of drug (brand or generic), and is the same regardless if drugs are purchased through FFS or managed care. For most brand name drugs, the rebate is the greater of either 23.1% of average manufacturer price (AMP), which is the average price paid to drug manufacturers, or the difference between AMP and “best price”, which is the lowest available price to any wholesaler, retailer, or provider, excluding certain government programs. The best price provision ensures that Medicaid gets the lowest drug prices (with some exceptions), and a majority of brand drug rebates are based on best price. For generic drugs, the rebate amount is 13% of AMP, and there is no best price provision. The rebate calculation also includes an additional inflationary component, which requires additional rebates if a drug’s price rises faster than inflation, and as of January 1, 2024, there is no longer a cap on the total rebate amount if a drug’s price increases quickly over time. The rebates are paid to the states quarterly, and shared between the states and federal government based on the state’s federal medical assistance percentage or “FMAP” to offset the total cost of prescription drug payments. Drugs not dispensed by the pharmacy but received in other settings, including physician-administered drugs, can be eligible for rebates under the MDRP if they meet the definition of a “covered outpatient drug,” generally meaning a prescription drug that is FDA approved from a rebating manufacturer and identified separately on a claim for payment.

In addition to federal statutory rebates, most states negotiate with manufacturers for supplemental rebates. As of September 2025, 48 states and DC had supplemental rebate agreements in place. States often use placement on a preferred drug list (PDL) as leverage to negotiate supplemental rebates with manufacturers (see Box 2). Some states have also formed multi-state purchasing pools to increase negotiating power and/or negotiated value-based arrangements (VBAs), which increase supplemental rebates if a drug does not perform as expected. In addition, Medicaid managed care plans (or typically PBMs on behalf of the plan) may negotiate their own supplemental rebate agreements with manufacturers, which then, when passed on to the plan, may result in lower capitation rates. In Medicaid and in general, there are many opaque aspects to the pricing of prescription drugs, and much of the data is proprietary, which makes it difficult to understand which prescription drugs and parts of the supply chain are the spending drivers.

5. While states must cover nearly all drugs under the MDRP, states use an array of payment strategies and utilization controls to manage prescription drug expenditures.

While rebates through the MDRP are a key tool to manage prescription drug expenditures, states also use an array of payment strategies and utilization controls. Under the MDRP, state Medicaid programs must cover nearly all of a rebating manufacturer’s FDA-approved drugs, essentially creating an open formulary. There is a small group of drugs that can be excluded from coverage, including drugs used for weight loss, though some states have opted to cover GLP-1s for obesity treatment or weight loss. The open formulary facilitates greater access to prescription drugs for enrollees but can also limit states’ ability to control drug costs through restrictive formularies. Instead, states use several tools to manage pharmacy expenditures and ensure safe use of medications. This includes innovative payment strategies such as VBAs, subscription models, or participating in recent federal drug payment models as well as tools such as preferred drug lists (PDLs), prior authorization linked to clinical criteria, quantity limits, and more to manage utilization (see Box 2). MCOs may apply differing utilization controls and medical necessity criteria unless the state’s MCO contract specifies otherwise. Utilization controls can also differ for physician-administered drugs covered under the medical benefit, and states have identified a number of challenges managing utilization and spending of drugs under the medical benefit in particular.

States continually develop, update, and expand their payment strategies and utilization controls. KFF’s 2025 Medicaid budget survey found that most responding states reported at least one new or expanded initiative to contain prescription drug costs, including participating in CMS’s cell and gene therapy access model or other initiatives related to VBAs, or implementing other policy changes related to maximizing rebates, expanding utilization controls, or oversight. Many of the cost containment initiatives reported specifically targeted high-cost specialty drugs, which are contributing to increases in Medicaid drug spending. At the federal level, there have been several recent prescription drug initiatives, including new drug payment models, that could help combat rising costs for state Medicaid programs, though questions remain about the implementation and impact of the deals.

In recent years, Medicaid spending on prescription drugs has grown, in part due to the emergence of new, high-cost drugs, including GLP-1s and cell and gene therapies that treat, and sometimes cure, rare diseases. There have been several recent Trump administration prescription drug initiatives (Box 1), including new payment models, that could help combat rising costs for state Medicaid programs, though questions remain about the implementation and impact of the deals. While lower prices for state Medicaid programs through the new models could result in reduced Medicaid prescription drug spending and potentially expanded coverage of certain drugs, the extent of the savings and how states or manufacturers will respond remain unclear. In most cases, Medicaid programs already pay lower prices, net of rebates, than other payers.

Medicaid enrollees are typically protected from high out-of-pocket costs for prescription drugs, meaning the recent federal prescription drug deals will not impact costs for people with Medicaid. However, the 2025 reconciliation law, signed by President Trump on July 4, 2025, is expected to result in significant Medicaid funding cuts and coverage losses. The loss of Medicaid coverage altogether could make it more difficult and costly for families to access the prescription drugs they need. While TrumpRx (see Box 1) offers discounts for uninsured or other cash-paying patients, the costs would likely still be prohibitive for low-income people with Medicaid or people who have recently lost Medicaid coverage.

This issue brief describes recent trends in the number of Medicaid outpatient prescriptions and the spending on those drugs and examines the implications of recent federal actions on future trends. Key findings include:

• Net spending on Medicaid prescription drugs after rebates is estimated to have grown substantially in recent years, increasing from $31 billion in FY 2019 to $46 billion in FY 2024 (or 46%). Both net spending per prescription and net spending per enrollee also grew over the period, increasing by 42% (from $43 in FY 2019 to $61 in FY 2024) and 25% (from $481 in FY 2019 to $603 in FY 2024), respectively.
• Rebates reduce Medicaid spending on prescription drugs by over half, with state supplemental rebates making up an increasing share of all rebates.
• While net spending increased substantially, the number of prescriptions paid for by Medicaid only grew slightly in recent years, increasing from 734 million in FY 2019 to 751 million in FY 2024 (or 2%). At the same time, the number of Medicaid prescriptions per enrollee declined by 12% (from 11.2 in FY 2019 to 9.9 in FY 2024).
• Looking ahead, more recent quarterly data show the number of Medicaid prescriptions and Medicaid enrollment declining while gross Medicaid spending remains elevated.

What are recent trends in Medicaid prescription drug spending?

Net spending (spending after rebates) on Medicaid prescription drugs is estimated to have grown substantially in recent years, increasing from $31 billion in FY 2019 to $46 billion in FY 2024, a 46% increase (Figure 1). However, from FY 2023 to FY 2024 alone, gross spending remained relatively steady and rebates grew, resulting in net spending decreasing by 10%. Net spending per prescription grew by 42% over the period (from $43 in FY 2019 to $61 in FY 2024) (data not shown), and net spending per enrollee grew by 25% over the period (from $481 in FY 2019 to $603 in FY 2024). There are a number of factors that contribute to changes in drug spending including changes in enrollment and utilization patterns, policy changes, changes in existing drug prices, and the number and price of new drugs coming to market. Analysis has shown that recent growth in Medicaid drug spending is being increasingly driven by spending on high-cost specialty drugs, including new cell and gene therapies that treat, and sometimes cure, rare diseases and other high-cost specialty drugs like those for cancer treatment. Other drugs such as GLP-1s, which are both costly and widely utilized, also further contribute to spending increases. In addition, while there has been a substantial increase in net prescription drug spending over the period, the increase in net spending on prescription drugs is in line with increases in total Medicaid spending, which grew by 52% over the period based on KFF analysis of CMS-64 financial management reports. Overall, prescription drug spending accounted for 6% of all Medicaid spending in 2024 and has remained relatively stable between 5% and 7% of all Medicaid spending over the last two decades.

Rebates reduce Medicaid spending on prescription drugs by over half, with state supplemental rebates making up an increasing share of all rebates (Figure 2). Rebates reduced gross Medicaid spending on prescription drugs by 53% on average over the period; the share of gross spending rebates accounted for declined slightly from 54% in FY 2019 to 51% in FY 2023 before increasing to 56% in FY 2024 (Figure 1). State supplemental rebates account for an increasingly larger share of all Medicaid drug rebates (Figure 2). In addition to federal statutory rebates, most states negotiate directly with manufacturers for supplemental rebates, and recent data signal states may be expanding the scope of their negotiations to combat rising drug spending. The recently announced federal models (Box 1) plan to provide lower drug prices by negotiating supplemental rebates on top of statutory rebates, though it is not clear how most-favored nation (MFN) prices under the model compared to net prices states may have already negotiated through supplemental rebate agreements. A number of factors are likely contributing to the overall uptick in rebates for FY 2024 including increasing state supplemental rebates as well as the lifting of the rebate cap beginning January 1, 2024.

What are recent trends in the number of Medicaid prescriptions?

While net spending increased substantially, the number of prescriptions paid for by Medicaid only increased slightly from 734 million in FY 2019 to 751 million in FY 2024, a 2% increase (Figure 3). The number of Medicaid prescriptions declined in FY 2020 before steadily rising and peaking in FY 2023 and then beginning to decline again in FY 2024. The number of Medicaid prescriptions per enrollee declined by 12% over the period, falling from 11.2 in FY 2019 to 9.2 in FY 2023 before increasing to 9.9 in FY 2024. Following the initial onset of the COVID-19 pandemic, increases in Medicaid enrollment due to the continuous enrollment provision likely contributed to modest increases in prescriptions overall but declines in prescriptions per enrollee through FY 2023. Other factors, including increases in the number of days supplied per prescription, may have also played a role (this analysis does not account for days supply, see Methods). For FY 2024, Medicaid enrollment declines during the unwinding of the continuous enrollment provision as well as higher health care needs among enrollees post-unwinding are likely resulting in a decrease in the number of prescriptions but increase in prescriptions per enrollee.

What are early indicators of future Medicaid prescription drug trends?

Quarterly data through most of FY 2025 show the number of Medicaid prescriptions and Medicaid enrollment continue to decline, while gross Medicaid spending remains elevated (Figure 4). Recent trends in the number of prescriptions paid for by Medicaid appear to roughly mirror trends in Medicaid enrollment, with both the quarterly number of Medicaid outpatient prescriptions and average quarterly Medicaid enrollment peaking in 2023, due to the pandemic-era continuous enrollment provision. After, during the unwinding of the provision, both enrollment and the number of prescriptions began to fall. As more provisions in the 2025 reconciliation law are implemented and individuals begin to lose coverage, Medicaid enrollment and the number of prescriptions may continue to decline. Quarterly gross spending has remained elevated despite declines in Medicaid enrollment and in the number of prescriptions. It remains unclear if recent increases in rebates will continue — blunting the increase in gross spending — or how federal changes in the 2025 reconciliation law and recent federal prescription drug initiatives (Box 1) may impact future gross and net spending trends.

Methods

Number of Prescriptions and Gross Spending Data: This analysis uses 2018 through 2025 State Drug Utilization Data (SDUD) (downloaded in January 2026) converted to federal fiscal years (FY). The SDUD is publicly available data provided as part of the Medicaid Drug Rebate Program (MDRP), and provides information on the number of prescriptions, Medicaid spending before rebates, and cost-sharing for rebate-eligible Medicaid outpatient drugs by national drug code (NDC), quarter, managed care or fee-for-service, and state. It also provides this data summarized for the whole country. The data do not include information on the number of days supplied in each prescription. CMS has suppressed SDUD cells with fewer than 11 prescriptions, citing the Federal Privacy Act and the HIPAA Privacy Rule. This analysis used the national totals data because less data is suppressed at the national versus state level.

Rebate Data: This analysis uses CMS-64 Financial Management Reports (FMR) for FY 2019 through FY 2024 (downloaded in August 2025). These reports include total Medicaid expenditures broken out by various service categories, and this analysis pulls out the drug rebate line items. The rebate data used includes statutory rebates, state supplemental rebates, rebates under the ACA offset, rebates from VBAs, and rebates for opioid use disorder medication assisted treatment. To estimate net Medicaid spending on prescription drugs each fiscal year in figure 1, the rebates collected in the CMS-64 were subtracted from the gross spending totals from the SDUD. State supplemental rebates in figure 2 include all “state sidebar” drug rebates in CMS-64 and rebates collected under value-based arrangements; all other rebates are categorized as federally required rebates. Supplemental rebate agreements negotiated between Medicaid managed care plans and manufacturers are not included.

Limitations: There are a number of limitations to the estimates of Medicaid prescriptions and spending found in this analysis, including:

• This analysis examines the number of Medicaid prescriptions in the data and does not adjust for days supplied by each prescription. An increase in prescription lengths, especially during the pandemic, could contribute to fewer prescriptions.
• The SDUD are updated quarterly; a new quarter of data is typically released, and the prior five years of data are also updated. This means prescription and gross spending totals can vary depending on when the data is downloaded, and totals may not match other outside sources or prior KFF analysis for this reason.
• The spending collected on the CMS-64 and reported in the FMR data uses a cash-basis of accounting, meaning expenditures are based on the date of payment not necessarily when the service occurred. In practice, states have two years following the date a service was rendered to report their spending. There may be timing differences causing misalignment between the prescriptions paid for by Medicaid in the SDUD and the rebates reported in the CMS-64.
• Drugs not dispensed by a pharmacy but received in other settings, including physician-administered drugs, can be eligible for rebates under the MDRP if they meet the definition of a “covered outpatient drug,” generally meaning a prescription drug that is FDA approved from a rebating manufacturer and identified separately on a claim for payment. This analysis includes any rebate eligible drugs, though billing practices may vary by state.
• Spending data is not adjusted for inflation.

Gun violence affects many children and adolescents across the U.S. In response to growing gun violence – including school shootings – federal firearm policies and awareness of the physical and mental harm associated with gun violence have increased. However, during the second Trump Administration, some of these policies are being rolled back, including broadening access to mental health and trauma services in schools.

Over the past decade, nearly 22,000 youth ages 17 and younger died by firearm.¹ For every firearm fatality, there are at least two survivors of firearm injuries. Additionally, a growing body of research links gun violence exposure – both direct and indirect – to adverse impacts on the mental health and well-being of youth. This suggests that many youths across the U.S. have experienced some form of gun violence and subsequent mental health impacts. Although the number impacted cannot be quantified due to data limitations, findings from a KFF survey provide insight on the extent of youth exposure to guns and gun violence in the U.S. For example, 20% of parents reported that they have changed or considered changing their child’s school to protect them from gun violence; and 44% of parents have a gun in the home and many of these parents have at least one gun that is not safely stored (Figure 1).

Figure 1

This brief explores the different ways in which youth gun violence occurs, disparities among youth, and how exposure is linked to negative impacts on mental health and well-being.

What is known about nonfatal firearm injury exposure among children and adolescents?

The number of nonfatal firearm injuries far exceeds the number of firearm fatalities among children and adolescents. However, estimates vary, with research suggesting nonfatal firearm injuries occur anywhere from two to four times more often than firearm fatalities. After the COVID-19 pandemic began, nonfatal firearm injuries among children and adolescents increased. The majority of youth nonfatal firearm injuries are a result of assaults.

Many children and adolescents are exposed to gun violence, even if they are not directly injured. Data on exposure to gun violence among youth is generally limited. However, a KFF analysis found that 51 per 100,000 U.S. school-age children were exposed to a school shooting from 2020-2024. Additionally, a CDC analysis found that in 34% of unintentional child and adolescent firearm deaths, at least one other child was present during the incident. Prior data from the National Survey of Children’s Exposure to Violence found that 8% of children and adolescents were exposed to a shooting in their lifetime, with a higher share (13%) reported among adolescents (ages 14-17). Further, 17% of adults in the U.S. reported witnessing someone being injured by a gun, based on a KFF poll.

Black children and adolescents are more likely to experience firearm injuries and exposures than their White peers.  Black and male children and adolescents are more likely to experience nonfatal firearm injuries than their peers – a disparity that grew alongside the pandemic. In general, children of color are more often exposed to gun violence than their White peers. Children living in areas with a high concentration of poverty are more likely to experience firearm-related deaths, and poverty disproportionately affects children of color.

How does gun violence affect the mental health and well-being of children and adolescents?

Gun violence can adversely affect the mental health and well-being of children and adolescents. Exposure to gun violence is linked to post-traumatic stress disorder and anxiety, in addition to other mental health concerns among youth. Gun violence may also lead to challenges with school performance, including increased absenteeism and difficulty concentrating. In response to indirect gun violence, such as witnessing a shooting or hearing gunshots, many children and adolescents report feeling sad, anxious, or fearful. Children and adolescents are exposed to gun violence in multiple ways, outlined below.

• Neighborhood and community violence. Many children and adolescents experience violence within their communities. Firearm homicides occurring within an adolescent’s community have been linked to anxiety and depression among adolescents, particularly for females. Other analyses have similarly found an association between incidents of neighborhood firearm homicides and poor mental health outcomes among youth.
• Suicide. Suicides are the second leading cause of death among adolescents and many suicides involve a firearm. Research has found that access to firearms, particularly in the home, is a risk factor for suicide deaths among children and adolescents. Nearly half of suicide attempts occur within 10 minutes of the current suicide thought, further underscoring access to firearms as a risk factor for suicide.
• Domestic or intimate partner violence. Women and children are often the victims of intimate partner violence, which may involve firearms. The presence of a firearm in the home is linked to the escalation of intimate partner violence to homicides. Even when firearms are not used, they may serve as a means of threatening and intimidating victims of domestic violence.
• Mass shootings. Although mass shootings, including school shootings, account for a small portion of firearm-related deaths, they can negatively impact the mental health of children and communities at large.  Youth antidepressant use and suicide risk may increase in communities with exposures to school shootings. Survey data showed that the majority of teenagers and their parents felt at least somewhat worried that a school shooting may occur at their school. School shootings are on the rise, with the U.S. average yearly rate of student exposure to a school shooting increasing threefold over time (from 19 per 100,000 students in 1999-2004 to 51 in 2020-2024, Figure 2). In response to school shootings, nearly all schools practice active shooter drills, which may have a negative psychological impact on participants. Although research is limited on how mass shootings affect individuals not directly exposed to them, current literature suggests that information and knowledge of mass shootings may be linked to increased levels of fear and anxiety.

Youth survivors of firearm injuries are at increased risk of mental health and substance use issues, in addition to chronic physical health conditions. An analysis of commercially insured children and adolescents found that, in the year following a firearm injury, survivors were significantly more likely to experience psychiatric and substance use disorders compared to their peers. Increases in psychiatric disorders were more pronounced among youth with more severe firearm injuries compared to youth with less severe firearm injuries. Youth gunshot survivors are more likely to utilize mental health services following their injury compared to their uninjured peers. However, a study of youth survivors enrolled in Medicaid found that more than three out of five survivors had not received mental health services within the first six months following their injury.

Negative mental health impacts can extend to the family members of youth gun violence victims and to the children of parents with firearm injury. Parents, particularly mothers, of youth firearm-injury survivors had an increase in psychiatric disorders and mental health visits in the year following a firearm incident, based on an analysis of commercially insured individuals. These increases in psychiatric disorders and mental health visits were more pronounced among families of youth firearm fatalities.

1. KFF analysis of youth firearm mortality is based on data from Center for Disease Control and Prevention (CDC) Wonder injury and mortality database. In this analysis, firearm-related deaths are defined as gun assault deaths, suicide deaths by firearm, deaths due to accidental firearm discharge, legal intervention leading to firearm death, and firearm deaths from an undetermined cause. ↩︎

Youth gun violence sharply increased in the United States in recent years. At the same time, a growing body of research links gun violence to adverse impacts on the mental health and well-being of youth. However, understanding the full scope of the youth gun violence epidemic is limited by the lack of data on nonfatal firearm injuries. Estimates find that for every firearm fatality, there are at least two survivors of firearm injuries. Over the past decade, the number of youth who died by firearm increased by 68% (Figure 1), suggesting that many more youth have experienced nonfatal firearm injuries or some other exposure to gun violence which may impact their mental health (for example, school shootings have increased over time, as has exposure of school-aged children to these shootings).

Beginning in 2020, firearm deaths among youth (ages 17 and younger) surpassed motor vehicle deaths for the first time. Motor vehicle deaths – a longstanding leading cause of death among youth – have decreased over several decades and levelled off in recent years, largely as a result of nationwide efforts to improve safety. However, firearm deaths remain elevated in recent years and a number of safety efforts put forth in the previous Biden administration are being rolled back during the second Trump administration. This includes dismantling the White House Office of Gun Violence Prevention; building a Second Amendment Section under the Department of Justice, focused on expanding gun-rights protections; and reducing a number of funds through the Department of Justice and Bipartisan Safer Communities Act (BSCA), which were intended for improving safety and mental health resources for children. The BSCA also allocated funds to support states with Extreme Risk Protection Order policies – a red flag law linked to a reduction in suicide deaths – however, it is unclear how this funding will be impacted going forward. Separately, a KFF poll found that 44% of parents with children below 18 have a gun in their home; and large shares of these parents said a gun is stored loaded (32%), stored in an unlocked location (32%), or any gun in is stored in the same location as ammunition (61%).

This brief explores the impacts of gun violence on children and adolescents (ages 17 and below), including changes in death rates over time and by demographics, methods of gun violence exposure, and how gun violence can impact mental health and well-being. Key findings include:

• Firearm death rates among children and adolescents increased with the onset of the pandemic, primarily driven by gun assaults. From 2021 to 2023, the firearm death rate held steady at 3.5 per 100,000 children and adolescents, before declining to 3.0 in 2024, but remaining above pre-pandemic levels.
• Firearm deaths are more common among adolescents (ages 12-17) than younger children; Black and American Indian and Alaska Native children and adolescents than their White peers; and male children and adolescents than female.
• States vary widely by firearm death rate, although high rates are more common in Southern states.

How have firearm deaths changed in recent years among children and adolescents?

Firearm-related death rates among children and adolescents sharply increased in 2020, alongside the onset of the pandemic; however, the latest CDC data shows a decline from 2023 to 2024 (Figure 2). From 2014 to 2024, nearly 22,000 youth ages 17 and younger died by firearm.¹ During this period, firearm death rates gradually rose until 2017, held steady for a few years, and then quickly increased during the pandemic (Figure 1). While the death rate remains higher than pre-pandemic rates, there was a decrease from 2023 to 2024 (3.5 vs. 3.0 firearm-related deaths per 100,000 children and adolescents).

The increase in firearm deaths in recent years was driven by gun assaults, which accounted for at least three out of five firearm deaths among children and adolescents since 2020. Gun assault deaths among children and adolescents increased over the past decade, peaking in 2022 with 1,674 deaths, before decreasing to 1,337 deaths in 2024 (Figure 3). The number of suicide deaths by firearm among children and adolescents increased overall in the past decade; and, in 2024, accounted for 31% of firearm deaths.

By 2024, 68% of total assault deaths among children and adolescents involved a firearm; and 45% of total suicide deaths involved a firearm (Figure 4). From 2014 to 2024, the share of total assault deaths involving a firearm increased from 49% (703 out of 1,439 deaths among children ages 17 and younger) to 68% (1,337 out of 1,959 deaths). During the same period, the share of total suicide deaths involving a firearm also increased but to a lesser extent compared to firearm assaults. In 2024, 45% of suicide deaths involved a firearm (687 out of 1,530 deaths among children ages 17 and younger) compared to 40% in 2014 (532 out of 1,344 deaths).  

How do youth firearm deaths vary by demographic characteristics?

In 2024, firearm death rates were highest among adolescents (ages 12-17), Black and American Indian and Alaska Native (AIAN) youth, and male youth (Figure 5). The adolescent (ages 12-17) firearm death rate was 7.5 per 100,000 compared to 0.6 for children ages 11 and below. Black and AIAN youth experienced a significantly higher firearm death rate (10.0 and 6.8 per 100,000) compared to their White peers (1.9). Males ages 17 and below were five times more likely than their female peers to die by firearm (5.0 per 100,000 vs. 1.0 in 2024).

In 2024, Black youth accounted for 46% of all youth firearm deaths although they made up only 14% of the U.S. youth population (Figure 6).  In contrast, White youth accounted for 29% of all youth firearm deaths and they made up nearly half (48%) of the youth population in 2024. 

How do youth firearm deaths vary across states?

Firearm death rates among children and adolescents range from a high of 10.1 per 100,000 in the District of Columbia to a low of 0.7 in Massachusetts; however, many states with high rates are concentrated in the south (Figure 9). From 2020 to 2024 the states with the highest firearm death rates among children and adolescents were the District of Columbia, Mississippi, and Louisiana (10.1, 8.7, and 8.4 per 100,000 respectively for combined years, 2020-2024). Almost all states experienced an increase in firearm death rates over the decade, with the largest increases seen in North Carolina and Mississippi (109% and 107% respectively) (see Appendix). The states with the lowest firearm death rates were Massachusetts, New Jersey, and New York (0.7, 0.9, and 1.1 per 100,000 respectively for combined years, 2020-2024). States also vary widely in their provisions on gun safety, including child access prevention laws and Extreme Risk Protection Order (ERPO) policies. 

Appendix

1. KFF analysis of youth firearm mortality is based on data from Center for Disease Control and Prevention (CDC) Wonder injury and mortality database. In this analysis, firearm-related deaths are defined as gun assault deaths, suicide deaths by firearm, deaths due to accidental firearm discharge, legal intervention leading to firearm death, and firearm deaths from an undetermined cause. ↩︎