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Spending on Medicaid State Directed Payments Before New Limits Take Effect

Forty states and DC currently receive $93 billion in annual federal Medicaid spending through state directed payments (SDPs) and may be at risk due to forthcoming limits on these payments, according to new KFF estimates. Annual federal spending on SDPs is highest in California (an estimated $10.6 billion)—followed by Texas ($6.3 billion), North Carolina ($5.2 billion), and Illinois ($5.1 billion).

Forthcoming Policy Changes to Medicaid State Directed Payments

Changes to Medicaid State Directed Payments

The 2025 reconciliation law cut federal Medicaid spending by an estimated $911 billion from 2025 through 2034, some of which stems from new restrictions on Medicaid state directed payments (SDPs) for hospital and other health care services. This issue brief describes SDPs and forthcoming policy changes stemming from the 2025 law and the proposed regulation to implement those requirements and make other changes.

Medicaid Work RequiremEnts

Tracking the 2025 Reconciliation Law’s Medicaid Work Requirements: Data and Policies

To implement Medicaid work requirements, states will need to make important policy and operational decisions, implement needed system upgrades or changes, develop new outreach and education strategies, and hire and train staff, all within a relatively short timeframe. The information tracked here can serve as a resource to understand Medicaid work requirements and state options, gauge readiness, and track implementation of the requirements.

understanding medicaid

Medicaid Financing

Medicaid represents $1 out of every $5 spent on health care in the U.S. and is the major source of financing for states to provide health coverage and long-term care. This brief examines key questions about Medicaid financing and how it works.

Medicaid Program Integrity

This brief explains what is known about improper payments and fraud and abuse in Medicaid and describes ongoing state and federal actions to address program integrity.

Medicaid and Provider Taxes

All states except Alaska cover some state Medicaid costs with taxes on health care providers. This brief uses data from KFF’s 2024-2025 survey of Medicaid directors to describe current practices and the federal rules governing them.

Medicaid and Hospitals

Absorbing reductions in Medicaid spending could be challenging for hospitals, particularly for those that are financially vulnerable. This brief provides data on the reach of Medicaid across hospitals, patients, and charity care.

Medicaid Home Care

This issue brief provides an overview of what Medicaid home care (also known as “home- and community-based services”) is, who is covered, and what services were available in 2025.

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  • What Paul Ryan’s Stance on 2016 Means for Health Care

    From Drew Altman

    In this column for The Wall Street Journal's Think Tank, Drew Altman discusses the implications of Paul Ryan’s decision to rule out being drafted as a Republican presidential candidate for the 2017 health care agenda and how it could focus greater attention on proposals to change Medicare and Medicaid along with the Affordable Care Act.

  • Medicaid Spending Growth Compared to Other Payers: A Look at the Evidence

    Issue Brief

    A number of studies have demonstrated that Medicaid coverage helps to improve receipt of preventive health care, access to care, and out-of-pocket spending burdens and other financial outcomes. However, given ongoing concerns about federal and state budgets, the costs of the Medicaid program are likely to be again at the forefront of state and federal policy discussions. As federal policy makers consider proposals to reform Medicaid financing, this issue brief examines evidence from over 40…

  • The Affordable Care Act After Six Years

    From Drew Altman

    In this column for The Wall Street Journal’s Think Tank, Drew Altman examines the role of the Affordable Care Act in the health system on its sixth anniversary, and how the hot debate about the law may have created an exaggerated impression of the good and the bad it can do.

  • How has the ACA Medicaid Expansion Affected Providers Serving the Homeless Population: Analysis of Coverage, Revenues, and Costs

    Issue Brief

    To further understand how the first full year of Medicaid expansion has affected patients who are homeless and the providers who care for them, this analysis uses data from the Uniform Data System (UDS) for health centers to examine changes in insurance coverage, revenues and costs among Health Care for the Homeless (HCH) projects serving the homeless population.

  • Michigan’s Medicaid Section 1115 Waiver to Address Effects of Lead Exposure in Flint

    Fact Sheet

    On February 13, 2016, Governor Rick Snyder submitted a Medicaid Section 1115 Waiver proposal to the Centers for Medicare and Medicaid Services (CMS) to address issues related to lead exposure in Flint, Michigan. This fact sheet provides some insight into the situation in Flint, Michigan, the history of Medicaid disaster relief waivers and the details of the Medicaid waiver request.

  • Medi-Cal Managed Care: An Overview and Key Issues

    Issue Brief

    California’s Medicaid program, Medi-Cal, is the largest state Medicaid program in the nation, insuring almost one-third of Californians. For several decades, Medi-Cal has been transitioning from a fee-for-service (FFS) system to risk-based managed care, and more than three-quarters of all Medi-Cal beneficiaries, including low-income children, adults, seniors, and people with disabilities, are now enrolled in managed care plans. As other state Medicaid programs increase their reliance on risk-based managed care, a review of California’s transition…

  • Outreach and Enrollment Strategies for Reaching the Medicaid Eligible but Uninsured Population

    Issue Brief

    This brief identifies a range of successful strategies to reach and enroll Medicaid- and CHIP-eligible individuals as well as options to facilitate renewals. It draws on a collection of previous work examining state enrollment experiences after implementation of the ACA. In sum, it shows that states that have achieved enrollment success have embraced an array of strategies and approaches that include promoting the expansion through strong leadership and collaboration, implementing broad marketing and outreach campaigns,…

  • Medicaid Expansion Waivers: What Will We Learn?

    Issue Brief

    Section 1115 waivers authorize research and demonstration projects that, in the view of the Health and Human Services (HHS) Secretary, further the purposes of the Medicaid program. The ACA implemented new requirements for these waivers, including that states must have a publicly available, approved evaluation strategy. This brief examines some of the major research questions and hypotheses relevant to the federal and state evaluations of Medicaid expansion Section 1115 waivers and explores key challenges that…