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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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  • Racial/Ethnic Disparities in Access to Care Among Children: How Does Medicaid do in Closing the Gaps?

    Other Post

    While Medicaid and the Children's Health Insurance Program (CHIP) have become increasingly important sources of health coverage for low-income children in all racial and ethnic groups, the program plays an especially large role for children of color, who are more likely than white children to be low-income. In 2007, Medicaid and CHIP covered nearly one in five white children, but roughly two in five African American and Hispanic children. As policymakers engaged in health reform…

  • Medicaid Enrollment in 50 States: June 2004 Data Update

    Other Post

    This update on Medicaid enrollment in 50 states demonstrates that in June 2004, a total of 41.3 million persons were enrolled in Medicaid, an increase of 1.6 million or 4.1 percent from June 2003. Medicaid enrollment nationally has increased at every six-month interval since December 1998. Report (.pdf)

  • A Challenge for States: Assuring Timely Access to Optimal Long-Term Services and Supports in the Community

    Issue Brief

    The Medicaid program is a major payer for long-term services and supports (LTSS) in the United States, accounting for 40 percent of total spending for long-term services and supports. The federal government has played an active role in sponsoring initiatives to promote a shift to community-based care; and evidence from several states suggests that providing care in the community can be less expensive than providing institutional care. The Affordable Care Act (ACA) provides incentives for…

  • Medicaid Policy Options for Meeting the Needs of Adults with Mental Illness under the Affordable Care Act

    Issue Brief

    This paper examines the salient issues raised in a November 2010 roundtable discussion of national and state experts convened by the Kaiser Commission on Medicaid and the Uninsured, in partnership with the Bazelon Center for Mental Health Law, to discuss Medicaid policy options available under health reform to help meet the needs of adults with mental illness. The Patient Protection and Affordable Care Act will expand the Medicaid program, offering the opportunity to improve access…

  • Small Area Variations and the ACA’s Coverage Expansions

    From Drew Altman

    A new Kaiser analysis sheds light on how the country might react to the Affordable Care Act (ACA) when it is implemented.  It looks at how the benefits of the ACA's coverage expansions will vary around the country by census areas (technically, Public Use Microdata Areas, or PUMAs).  PUMAs are artificial areas of about 100,000 people each created by the Census Bureau to provide more detailed demographic, social and economic information at the local level.  They…

  • Health Care Use and Chronic Conditions Among Childless Adult Medicaid Enrollees in Arizona

    Issue Brief

    Under the Affordable Care Act (ACA), beginning in 2014, Medicaid eligibility will expand to 133% of the federal poverty level for nearly all individuals. Arizona is one of the few states that already cover adults without dependent children in Medicaid through a longstanding Section 1115 waiver. This report, based on 2007 Medicaid claims data for adult Medicaid enrollees in Arizona, provides an analysis of health care utilization and health conditions for childless adults and compares…

  • Oral Health in the U.S.: Key Facts

    Fact Sheet

    This fact sheet provides data on oral health care coverage and access for children, nonelderly adults and Medicaid beneficiaries, including state-by-state data on measures such as the share of adults who have had a dental visit within the past year. Fact Sheet (.pdf)

  • Total Medicaid Spending and Enrollment Growth Slowed Significantly in FY 2012 Amid Signs of Economic Recovery and States’ Efforts To Curb Costs

    News Release

    Washington, D.C. - Growth in total Medicaid spending and enrollment slowed substantially in state fiscal year 2012 as the economy began to improve and states continued to work to control costs. Relatively slow spending and enrollment growth are expected to continue in FY 2013, according to the 12th annual 50-state Medicaid budget survey by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured, conducted with Health Management Associates. Total Medicaid spending increased 2 percent…

  • New Study Shows Medicaid Spending Growth Can Be Sustained By Expected Increases in Government Revenues

    Event Date:
    Event

    A new study from the Foundation's Kaiser Commission on Medicaid and the Uninsured, published in Health Affairs, concludes that expected growth in government revenues is likely to be large enough to sustain Medicaid spending increases over the next 40 years, while also allowing substantial real growth in spending for other public services. The study projects that Medicaid's share of national health spending will remain virtually unchanged until 2025 and then increase slowly by 2045. News…

  • Giving Voice to the People of New Orleans: The Kaiser Post-Katrina Baseline Survey

    Poll Finding

    This house-to-house survey of people living in the New Orleans area examines the ongoing struggles of residents seeking to recover from the Hurricane Katrina disaster, including a detailed look at differences in views and experiences by race. Designed and analyzed by researchers at the Kaiser Family Foundation, the survey provides a portrait of the enormous needs of the population in order to inform recovery efforts and policy development on the Gulf Coast and in Washington.…