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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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  • 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.…

  • Determining Income Eligibility in Children’s Health Coverage Programs: How States Use Disregards in Children’s Medicaid and SCHIP

    Issue Brief

    The Center for Medicare and Medicaid Services issued an August 17, 2007, directive that would restrict states’ flexibility to continue to apply income disregards when determining eligibility for Medicaid and SCHIP coverage for expansions to children above 250 percent of the federal poverty level. This issue brief describes the purpose of income “disregards” (which refer to both income that is excluded and expenses that are deducted from a family’s earnings); how disregards help enable children…

  • Rethinking Medicaid’s Financing Role for Medicare Enrollees

    Issue Brief

    This issue brief examines coverage of the nearly 9 million "dual eligible" beneficiaries, the low-income elderly and persons with disabilities who are enrolled in both Medicare and Medicaid. It explores the national and state impacts of shifting the financing of selected services for dual eligibles from Medicaid to Medicare, including having the federal government pick up the full cost of Medicare premiums, cost-sharing and gaps in Medicare-covered services and long-term care services for this population.…

  • Health and the Economy in the Detroit Area

    Poll Finding

    One year after the federal government intervened to aid the automakers, the Foundation along with The Washington Post and Harvard School of Public Health surveyed the residents of the tri-county Detroit area of Macomb, Oakland, and Wayne Counties to ask about their views and experiences in the midst of the area’s economic meltdown. Using data from the comprehensive survey and other publicly available information, this data note provides an overview of the current economic and…

  • Health Reform Roundtables: Charting A Course Forward

    Report

    Health Reform Roundtables: Charting A Course Forward is a series of discussions among federal officials, state officials and outside experts that provides an opportunity to share insights and explore key issues related to implementing a significant expansion of the Medicaid program as part of the new health reform law that will require most U.S. citizens and legal residents to obtain health coverage. States will be largely responsible for implementing the Medicaid expansion, which will provide…

  • Resources Examine Recession-Driven Record Medicaid Enrollment and Assess Medicaid Spending Growth

    Fact Sheet

    Three papers from the Foundation's Commission on Medicaid and the Uninsured examine Medicaid enrollment and spending during the recent recession. The analyses show Medicaid enrollment rose above 50 million people nationally for the first time in 2010, reflecting the program’s counter-cyclical role of helping people who become uninsured when the economy falters, with many turning to Medicaid after losing jobs and employer-based health insurance. Without access to Medicaid coverage, millions more people who suffered economic…

  • 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…

  • Key Issues in Understanding the Economic and Health Security of Current and Future Generations of Seniors

    Issue Brief

    As part of broad deficit-reduction plans, policymakers are considering reforms to the nation's three major entitlement programs - Medicare, Medicaid and Social Security - that could significantly affect the economic security of seniors in their retirement years. This brief examines the role of these programs in ensuring seniors' financial security as well as the challenges facing current and future generations when it comes to economic and health security. Drawing from current research and data, the…