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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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  • Changes in Health Insurance Coverage in the Great Recession, 2007-2010

    Issue Brief

    This issue brief examines changes in health insurance coverage over the last decade, with a focus on how changes in the economy, particularly during the "Great Recession" of 2007 to 2009, have affected coverage and the number of uninsured. The paper finds that the number of uninsured grew substantially during the first recession of the decade, increasing by 5 million people from 2000 to 2004; increased more slowly during the brief recovery, growing by 2.1…

  • The Texas Health Care Landscape

    Fact Sheet

    This fact sheet summarizes the Texas health care landscape, including data on demographics, population health, the uninsured and the state Medicaid program. Fact Sheet (.pdf)

  • California and Texas: Section 1115 Medicaid Demonstration Waivers Compared

    Fact Sheet

    This fact sheet compares and contrasts key provisions of the California and Texas Section 1115 Medicaid demonstration waivers. The Texas waiver, approved in December 2011, is modeled, in part, on the California waiver, which has been underway in that state since November 2010. Both waivers affect hundreds of thousands of Medicaid beneficiaries, involve billions of federal Medicaid matching funds, and are designed, in part, to promote changes in the health care delivery system that will…

  • Webcast: New CMS Estimates of State-by-State Health Expenditures

    Event Date:
    Event

    The Kaiser Family Foundation held a live interactive webcast on December 7, 2011, to discuss trends in state health care expenditures and the implications for national and state efforts to constrain health care costs. The webcast examines new state-by-state estimates of public and private health spending from the Centers for Medicare and Medicaid Services (CMS) published in the online journal, Medicare and Medicaid Research Review. An expert panel offers perspectives on the trends within and…

  • Inside Deficit Reduction: What It Means For Medicaid

    Event Date:
    Event

    This briefing, co-sponsored by the Alliance for Health Reform, the Kaiser Family Foundation, the Robert Wood Johnson Foundation and The SCAN Foundation, featured panelists discussing which deficit-reduction proposals affecting Medicaid might receive serious consideration by the congressional "super committee," as well as what kind of impact such changes would have on Medicaid enrollees, providers and state Medicaid programs. For more information, please visit the Alliance's event page. Full Video   Speakers for this session: The…

  • Edward Henry

    Other Post

    Edward Henry, age 64, lives independently now, following three years in nursing homes after he lost both legs to an infection. Edward’s goal was always to live again on his own, and he was able to make this transition through Georgia Medicaid’s “Money Follows the Person” (MFP) program. Under MFP, the federal government provides states with enhanced Medicaid matching funds to help individuals receiving care in institutions move back to the community. MFP helped Edward…

  • Carmen, Crystal, and Nelly Rosado

    Other Post

    When Carmen Rosado got divorced a few years ago, she and her two teen daughters, Crystal and Nelly, lost their private health insurance. Carmen took a new job working nights, but it offered no health coverage and, without Medicaid, the family would have been uninsured. With Medicaid, Crystal and Nelly have stayed up-to-date on their well-child visits and immunizations, and the eyeglasses they need and the doctor visits they occasionally make when they get sick…

  • Michelle Foster

    Other Post

    Michelle Foster and her four-month-old baby, Anthwonnia, have both benefited from Medicaid. With Medicaid, Michelle received all her prenatal care on time, and, when she developed gestational diabetes, she was able to get the specialist care that she needed as well. Because Medicaid paid for Anthwonnia

  • Brenda Christiansen

    Other Post

    Brenda Christiansen, age 52, was diagnosed with breast cancer about a year ago. When she first noticed a worrisome lump, she was in the three-month waiting period for the health insurance offered through the nursing job she had recently taken. Within days of qualifying for this coverage, she was laid off. Uninsured and facing this diagnosis, Brenda was eligible to enroll in Utah Medicaid’s Breast and Cervical Cancer Prevention and Treatment Program. This Medicaid program…

  • Claire Smith

    Other Post

    Claire Smith, now 5 years old, was born with a rare genetic syndrome whose symptoms include multiple, severe physical, developmental, and intellectual disabilities. Claire’s family has private health insurance, but because of its bureaucratic barriers, her parents have had to struggle to obtain the care Claire needs. About a year ago, Claire’s parents learned that Claire could qualify for D.C. Medicaid’s “Katie Beckett” program. This program enables families like the Smiths, whose child with disabilities…