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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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  • Which States Might have to Reduce Provider Taxes Under the Senate Reconciliation Bill?

    Policy Watch

    If Congress passes the reconciliation bill with the Finance Committee provision, 22 states might have to reduce their provider taxes on either hospitals or managed care organizations, cutting a key source of state Medicaid funding in those states. This policy watch explains how the Finance Committee provision would reduce states’ Medicaid spending, and the implications for expansion states.

  • 5 Key Facts About Medicaid Coverage for People Ages 50 and Older

    Issue Brief

    On May 22, the House passed a budget reconciliation bill that includes significant changes to the Medicaid program. The Congressional Budget Office (CBO) estimated that the bill would reduce federal Medicaid spending by $793 billion and reduce the number of people covered by Medicaid in 2034 by 10.3 million. Many of the reductions in coverage will be among the 22 million Medicaid enrollees ages 50 and older.

  • KFF Health Tracking Poll: Views of the One Big Beautiful Bill

    Feature

    This poll finds two-thirds of the public view the "One Big Beautiful Bill" legislation unfavorably, and its favorability erodes further when people hear about its potential health impacts. As Congress debates changes to Medicaid and the ACA as part of the bill, each program's popularity is at a record high.

  • Poll: Public Views “Big Beautiful Bill” Unfavorably by Nearly a 2-1 Margin; Democrats, Independents and Non-MAGA Republicans Oppose It, While MAGA Supporters Favor It

    News Release

    Medicaid Work Requirements Are Generally Popular, But Arguments Can Shift Views Nearly two-thirds (64%) of the public holds unfavorable views of the “One Big Beautiful Bill” passed last month by the House, nearly twice the share who view the bill favorably (35%), a new KFF Health Tracking Poll finds. The budget reconciliation bill that includes tax and budget cuts – much of which affect health care – is viewed unfavorably by large majorities of Democrats…

  • 7 Charts About Public Opinion on Medicaid

    Feature

    This data note provides an overview of recent KFF polling on the public’s views of and connections to Medicaid, the federal-state government health insurance for certain low-income adults and children and long-term care program for adults 65 and older and younger adults with disabilities.

  • What are the Implications of the 2025 Budget Reconciliation Bill for Hospitals?

    Issue Brief

    On May 22, 2025, the U.S. House of Representatives passed a budget reconciliation bill that includes significant reductions in federal Medicaid spending to help offset the cost of tax cuts, along with changes to the Affordable Care Act (ACA), immigration reforms and other provisions. This issue brief discusses the potential implications of the bill for hospitals and explains how some hospitals (such as rural hospitals as well as urban hospitals that serve a large share…