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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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  • Capping Per Enrollee Spending Could Reduce Federal Medicaid Expenditures by $532 billion to Nearly $1 Trillion Over 10 Years Depending on How States Respond and Result in as Many as 15 Million People Losing Medicaid Coverage by 2034

    News Release

    As Congress considers ways to cut Medicaid spending to help finance the extension of federal tax cuts, a new KFF analysis finds that imposing a cap on federal spending per Medicaid enrollee—known as a “per capita cap”—could trigger a decrease in federal Medicaid spending over a 10-year period of $532 billion to almost $1 trillion, depending on how states respond to the cuts. An estimated 15 million people could lose Medicaid coverage by 2034, if…

  • 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 Primary Medicaid Eligibility Pathways for Dual-Eligible Individuals?

    Issue Brief

    This brief examines current Medicaid eligibility policies and enrollment patterns using data from KFF’s 2024 50-state survey of states’ eligibility and enrollment policies for seniors and people with disabilities, and 2021 Medicare and Medicaid claims data from the Centers for Medicare and Medicaid Services (CMS).

  • Understanding Fraud and Abuse in Medicaid

    Event Date:
    Event

    As Congress considers ways to help pay for extending tax cuts, some lawmakers have suggested that hundreds of billions of dollars in federal savings could be achieved by addressing fraud, waste and abuse in the Medicaid program. Three experts joined Health Wonk Shop series moderator Larry Levitt in an hour-long discussion designed to unpack claims about fraud and abuse and put them in a larger context.

  • Most of the Public Oppose Major Federal Cuts to Health Agencies and Programs and Say They Have Been Made “Recklessly”

    News Release

    As the Trump administration and Congress pursue broad cuts to federal health agencies and budgets, most of the public, including some Republicans, oppose deep budget and staffing cuts to federal health programs and agencies, a new KFF Health Tracking Poll finds. Across a range of questions, large majorities of Democrats and independents oppose the Trump administration’s major cuts to federal health agencies and programs, while Republicans are more supportive. Those who identify with President Trump’s…

  • Responding to Federal Medicaid Reductions: Which States Are Most at Risk?

    Issue Brief

    A new KFF analysis examines a range of measures that may make it harder for states to respond to possible federal Medicaid cuts and finds that six states (Kentucky, Mississippi, Missouri, New Mexico, South Carolina, and West Virginia) rank in the top five for multiple risk categories. Across four broad categories of measures that could affect demand for Medicaid and states’ abilities to raise revenue or reduce spending—population demographic characteristics, health status of Medicaid enrollees,…

  • What to Make of the $50 Billion Rural Hospital Grants Program

    From Drew Altman

    In his latest Beyond the Data column, KFF President and CEO Dr. Drew Altman examines the controversial rural hospital grant program, noting “Will the new $50 billion rural hospital grant program in the big Republican tax and spending law just amount to a bunch of ribbon cutting and big check ceremonies, or will it help rural hospitals offset coming Medicaid cuts, help them in general, or all of the above?”

  • New Publications Summarize and Explain Trends in Medicaid Spending and Enrollment

    Fact Sheet

    A new fact sheet and report analyze Medicaid spending and enrollment trends for 2000-2004. Medicaid trends are related to the state of the nation's economy, and as the economy has strengthened, increases in enrollment and spending have slowed. Rising enrollment and health care inflation produced most of Medicaid's spending increases. Even with a stronger economy, however, Medicaid's enrollment pressures remain due to demographic trends and continued declines in employer-sponsored insurance. Medicaid Enrollment and Spending Trends…

  • Profiles of Nursing Home Residents on Medicaid

    Report

    This report illustrates through case examples the experiences and challenges of low- and modest-income people who rely on Medicaid to pay for nursing home expenses. These case examples were developed through in-person interviews with nursing home residents and their families in three states: Georgia, Kansas and Virginia. The first section of the report summarizes the themes and issues shared across the interviews Kaiser conducted, while the second section presents the individual stories of a subset…