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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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  • Express Lane Eligibility: How to Enroll Large Groups of Eligible Children in Medicaid and CHIP

    Report

    This issue paper explores the potential for increasing enrollment in children's health insurance programs through "Express Lane Eligibility." Express Lane Eligibility is the accelerated enrollment of low-income uninsured children already participating in other income-comparable publicly funded programs, such as WIC or school lunch, into Medicaid or CHIP. The paper reviews Express Lane Eligibility's potential impact on Medicaid and CHIP enrollment, analyzes different models, discusses key challenges with implementation, and suggests steps states and localities can…

  • Variations in State Medicaid Buy-in Practices for Low-Income Medicare Beneficiaries: A 1999 Update

    Report

    This report updates a 1997 Foundation report to assess how states are implementing financial protections for the 16 million Medicare beneficiaries who are low-income. These protections, generally referred to as "buy-in programs," help low-income Medicare beneficiaries meet Medicare's cost-sharing requirements by using state Medicaid programs to pay either all or some portion of premiums, deductibles, and coinsurance amounts. Using information collected through a survey of state Medicaid directors and consumer advocates, the update seeks to…

  • Managed Care and Low-Income Populations in Florida: 1996-1998 Update

    Report

    This report, Managed Care and Low Income Populations in Florida: 1996-1998 Update, updates our 1996 case study of Florida's Medicaid managed care initiatives and their effect on low-income populations. The focus of this report is on how the program has matured and how it has affected access to care and the safety net. It is one of a series of reportsfrom the Kaiser/ Commonwealth Low-Income Coverage and Access Project. This project examines how changes in…

  • Managed Care and Low Income Populations in Texas: 1996-1998 Update

    Report

    This report, Managed Care and Low-Income Populations in Texas: 1996-1998 Update, updates our 1996 case study of Texas' Medicaid managed care initiatives and their affect on low-income populations. The authors conclude that Medicaid managed care in Texas has had mixed results. It is one of a series of reports from the Kaiser/ Commonwealth Low-Income Coverage and Access Project. This project examines how changes in the Medicaid program have affected health insurance coverage and access to…

  • Long-Term Care:  Medicaid’s Role and Challenges

    Issue Brief

    Long-Term Care: Medicaid's Role and Challenges This Policy Brief examines Medicaid's role in providing long-term care services. It describes long-term care services, the population that needs these services, and how people get long-term care services. It provides an overview of health insurance coverage of persons with long-term care needs and describes both Medicare's and Medicaid's role in providing these services. It also examines some of the policy issues and challenges involved in providing long-term care…

  • Medicaid and Welfare Reform: States’ Use of the $500 Million Federal Fund

    Report

    This report reviews how states have responded to the $500 million federal fund that was created by the federal welfare reform legislation in 1996 to help states maintain Medicaid coverage for individuals affected by welfare reform. State Medicaid officials were asked whether they have drawn down federal funds from the $500 million fund; to describe the factors that influenced their decision; and what activities they are supporting with the additional federal monies. The paper describes…

  • The Difference Different Approaches Make: Comparing Proposals to Expand Health Insurance

    Report

    The Difference Different Approaches Make: Comparing Proposals to Expand Health Insurance This paper estimates and compares the impacts of alternative mechanisms for expanding health insurance coverage. A variety of approaches-expansions of existing public programs, direct subsidies, and tax credits-and target populations-including children, poor adults, parents of Medicaid- or CHIP-covered children, and early retirees-are considered. The impacts of the proposals on coverage, costs and other program outcomes are compared. This paper is part of the Kaiser…

  • The New Child Health Insurance Program: A Carefully Crafted Compromise

    Report

    This paper explores the major policy compromises embodied in the CHIP program. It focuses on two areas: the relative control of the federal and state governments over the program, and the design of the program in relation to the private, employer-based health insurance market.This paper is part of the Kaiser Incremental Health Reform Project. Issue Brief (.pdf)

  • Making Child Health Coverage a Reality: Lessons From Case Studies of Medicaid and CHIP Outreach and Enrollment Strategies

    Report

    Recent expansions in public health insurance for children and changes in welfare laws present states with the challenge of identifying and enrolling the large population of uninsured children in their Medicaid and Children's Health Insurance Programs (CHIP). This study describes and analyzes the outreach and enrollment strategies and systems in place in four states at the county level, highlighting issues and challenges states face during implementation. The study sites selected were Santa Clara County (San…

  • Profiles of Disability: Employment and Health Coverage

    Report

    This Background Paper presents information on the disabled population, as well as alternative definitions of disability and the resulting impact on population estimates of the disabled population. In addition, this paper presents a profile of non-elderly persons with disabilities, including work status and health insurance coverage, and concludes with a discussion of policy issues related to facilitating participation in the workforce for persons with disabilities and improving access to health insurance coverage. Background Paper (.pdf)