The state Medicaid spending indicator measures the difference, for each state, between the share of own-source revenue spent on Medicaid in the most recent year and the average share over the previous 15 years. Because Medicaid is the largest expense for most states after K-12 education, the amount of each dollar of revenue that it consumes directly affects how much a state has available to spend on other public services. But, unlike other programs, policymakers have limited control over Medicaid’s growth, regardless of revenue conditions. This analysis examines the changing budget pressures stemming from state Medicaid spending and how current conditions stack up against long-term averages.
Updated: June 16, 2025
In fiscal year 2024, rising healthcare costs, weakening tax revenue growth, and the expiration of federal COVID-19 pandemic aid caused the share of state-generated dollars spent on Medicaid to grow by double digits for the second consecutive year. States collectively spent $334.7 billion of their own resources on the program, up 20.1% from fiscal 2023, the largest year-over-year jump in at least two decades. As a result, Medicaid accounted for 17.1% of every state-generated dollar, a 2-percentage-point increase from the previous year.
The 50-state share—that is, aggregate Medicaid spending as a share of states’ combined own-source revenue—was 1.2 percentage points above its 15-year average. Medicaid also took up a larger share of state dollars than it had, on average, over the previous 15 years in 39 states, more than double the number of states that were above their long-term trends in fiscal 2023 and an even more notable change from fiscal 2022, when all but one state were below their historical averages. Among the states above their long-term trend in fiscal 2024, the overages ranged from 5.4 percentage points in Indiana to 0.1 percentage point in Vermont.
Medicaid’s share of state budgets is likely to remain elevated, at least through fiscal 2025, amid rising Medicaid costs. Further, fiscal 2024 spending and revenue data, the most recent available, does not reflect the effects of policy changes enacted as part of H.R. 1, the federal budget reconciliation measure passed in July 2025, or states’ responses to those changes—all of which are widely expected to reshape Medicaid’s fiscal footprint in states over the longer term.
States and the federal government share costs for Medicaid, which provides medical coverage for eligible children, adults, people with disabilities, and older Americans. Medicaid is most states’ second-biggest expense after K-12 education.
The Pew Charitable Trusts’ state Medicaid spending indicator excludes federal support, examining only the cost to states because this spending exerts pressure on state operating budgets, which rely on state-generated revenue.
Medicaid’s claim on each revenue dollar affects the share of state resources that is available for other priorities, such as education, transportation, and public safety. Federal law requires states to provide certain benefits for all Medicaid enrollees, even during times of sluggish revenue growth. So policymakers have less control over growth in Medicaid costs than they do with many other programs.
In fiscal 2024, all but three states spent a larger share of their own funds on Medicaid than they did the previous year. The biggest spike was in Indiana—where the share rose 5.9 percentage points—and the smallest increase was in Kansas, up 0.1 percentage point.
State highlights
A comparison of the share of own-source revenue that each state spent on Medicaid in fiscal 2024 versus the previous year and versus the average over the previous 15 years shows that:
- In 47 states, Medicaid claimed a larger share of state-generated revenue in fiscal 2024 than in fiscal 2023. The largest increases were in Indiana, where the share rose 5.9 percentage points; Oregon, up 5.3 points; and New York, 5.2 points. Only Nebraska, North Dakota, and Texas saw year-over-year drops in the shares of their own dollars devoted to Medicaid, and each of those states’ declines was less than 1 percentage point.
- In 39 states, Medicaid took up a larger share of own-source revenue than it had, on average, over the previous 15 years. Indiana was furthest above its long-term trend, at 5.4 percentage points over, followed by Colorado at 5.2 percentage points and Oregon at 5.1 points.
- The share of state resources going to Medicaid in fiscal 2024 varied widely across the states. Four states devoted more than a fifth of their own revenue: New York (28.8%), Pennsylvania (23.5%), Colorado (22.2%), and Massachusetts (21.1%). The smallest shares were in Hawaii (6.5%), Utah (6.5%), and North Dakota (6.9%).
Trend drivers
In fiscal 2024, states collectively allocated $334.7 billion of their own resources to Medicaid, up 20.1%, or $56.1 billion, from the previous year. At the same time, states’ own-source revenue grew more slowly, resulting in Medicaid consuming a growing share of state-generated dollars for the second consecutive year.
Several factors drove the rise in state Medicaid spending. During the COVID-19 pandemic, states received enhanced federal matching funds in exchange for keeping existing enrollees covered. That policy helped hold down states’ costs even as enrollment surged by 35.5% from 64.5 million in February 2020 to 87.4 million by April 2023. But that continuous coverage requirement ended in March 2023, and as of May 2024, states had unenrolled more than 25 million people from their Medicaid programs. The enhanced federal match also phased out by the end of that calendar year, shifting more of the costs back to states. Enrollment declined in fiscal 2024 as states resumed eligibility checks, but caseloads remained well above pre-pandemic levels. Average monthly Medicaid enrollment totaled 77.9 million in fiscal 2024, or 21.2% above February 2020. State-by-state enrollment levels varied widely compared with pre-pandemic levels, from more than 50% above in Oklahoma (60.6%), Missouri (59.8%), and Nebraska (54.8%) to virtually unchanged in Montana (-0.1%) and Arkansas (0.1%). In addition, many states experienced rising enrollment because of their own policy choices that expanded eligibility as well as growth in their Medicaid-eligible populations.
At the same time, rising prescription drug expenses, especially for GLP-1-based medicines and cell and gene therapies; increases in provider payment rates intended to help address workforce shortages; and higher service utilization rates associated with the pandemic and the aging population’s growing reliance on long-term care are all putting additional pressure on Medicaid costs. As a result, total federal and state Medicaid spending reached $10,760 per full-year equivalent enrollee in fiscal 2024, the highest level in 50 years of available data.
State revenue conditions compounded the effects of rising costs. After surging in fiscal 2021 and fiscal 2022, tax collections—states’ largest revenue source—slowed substantially in fiscal 2023 and fiscal 2024, leaving states with fewer resources.
Medicaid spending by level of government
States administer Medicaid, but the federal government covered 54.8% to 77.6% of states’ bills for the program in federal fiscal 2024, bringing the federal share of total Medicaid costs to 63.2%. Federal spending on Medicaid decreased slightly that year, from $606.8 billion to $604.7 billion, a marked shift from the double-digit annual increases driven by temporary pandemic aid that the federal budget absorbed from fiscal 2020 through fiscal 2022.
The federal government covered the highest portion of state Medicaid costs in New Mexico (77.6%) and Kentucky (77.6%), followed by West Virginia (76.8%), Arkansas (76%), Louisiana (75.2%), and Mississippi (75.1%). The lowest shares were in Massachusetts (54.8%), Wyoming (55.4%), New Hampshire (55.7%), New York (56.1%), and Florida (56.5%).
Influence of federal policy changes
In recent years, changes in federal policy have significantly affected states’ financial responsibilities for Medicaid, with more still to come. Federal guidelines help determine who qualifies for coverage, how much of the bill the federal government pays, and what financing tools states can use to cover their share.
For instance, enhanced federal matching funds provided in response to the pandemic helped states manage a surge in Medicaid enrollment and utilization nationwide, but states’ costs rose again once that match ended. Similarly, the federal government provided extra dollars to help states pay for higher Medicaid enrollment and declining tax revenue during and after the 2007-09 Great Recession, but as that federal aid tapered off from December 2010 to June 2011, states’ share of Medicaid costs spiked.
The Affordable Care Act (ACA) also reshaped states’ Medicaid obligations. Since January 2014, the ACA has given states the option to expand their Medicaid programs with enhanced federal support. The law initially required states to expand Medicaid eligibility to all adults under age 65 with incomes up to 138% of the federal poverty level, a change that the U.S. Supreme Court later ruled was optional for states. For states that chose to expand their coverage to this broader population, the federal government agreed to reimburse 100% of the expansion costs through 2016, 95% in 2017, declining gradually to 90% from 2020 onward. As of the end of fiscal 2024, 40 states had expanded their programs in accordance with the ACA. The remaining 10 states are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming, and to date, none of them have adopted expansion.
States that have expanded Medicaid coverage have typically drawn from their general funds to cover their share of the bill, and some have been able to offset the added costs with related budget savings, such as reductions in behavioral health spending, or through new or increased provider taxes and fees.
In 2006, the federal government also began relieving states of prescription drug costs for “dual eligibles”—people who qualify for Medicaid and the federal Medicare program. In return, states must share some of their savings with the federal government through monthly “clawback” payments, which are included in this analysis as part of state Medicaid spending. Pew includes those payments as part of state Medicaid spending because they remain a state cost tied to Medicaid.
However, the amount of federal reimbursement that states receive is just one of several factors that influence the wide range in the share of states’ own revenue spent on Medicaid. Among the other drivers are state Medicaid policy decisions—the breadth of health care services covered, eligible populations, and provider payment rates—and each state’s personal income levels. States with lower per capita income have higher federal reimbursement rates, and vice versa. The variation across states also is a function of tax and other policy decisions that determine state revenue and factors outside of policymakers’ direct control, such as state economic performance, demographics, resident health status, and regional differences in health care costs and practices. (For more information, see “State Health Care Spending on Medicaid.”)
Medicaid changes enacted under H.R. 1, including new work and community engagement requirements and expanded eligibility checks for most adults enrolled as part of the ACA expansion, are likely to influence state budgets in stages as they go into effect over the next decade. The earliest changes took effect when the bill was signed into law. In the near term, states will need to pay for updates to eligibility systems, expanded administrative capacity, and implementation of new reporting rules. Over time, H.R. 1’s limits on provider taxes and state-directed payments will restrict two key financing tools that states use to fund Medicaid and draw down federal matching dollars. States with large populations of ACA expansion enrollees or heavy reliance on provider taxes are likely to face significant trade-offs between dipping into reserves, cutting services, or finding new revenue sources to absorb losses in federal Medicaid funding.
States have limited short-term options to manage major Medicaid cost shifts. Among the states that expanded Medicaid eligibility under the ACA, ten have laws that would require them to scale back expansion automatically if the federal share of spending declines. Some states have also taken proactive steps to manage cost uncertainties: California and Indiana, for example, have established Medicaid- or health care-specific reserve funds to help cover unexpected costs. And more states are following suit. Idaho created a Medicaid Budget Stabilization Fund during its 2024 legislative session, and in 2025, New Mexico lawmakers approved a bill to establish and seed a Medicaid Trust Fund.
Why Pew assesses state Medicaid spending
State Medicaid spending has a significant impact on state budgets. As the largest expense for most states after K-12 education, Medicaid’s allocation from each revenue dollar directly influences the resources available for other key public services, such as education, transportation, and public safety. The federal government requires states to, among other things, provide matching funds to help cover the costs of Medicaid benefits for eligible enrollees, regardless of revenue conditions. This relative lack of state control over costs distinguishes Medicaid from many other programs and can be difficult for policymakers to navigate, especially when costs spike during economic downturns.
Justin Theal is a senior officer and Riley Judd is a senior associate with The Pew Charitable Trusts’ Fiscal 50 project.
Notes, Sources & Methodology
State-funded Medicaid spending includes clawback payments to the federal Medicare trust fund authorized under Medicare Part D, which was part of the 2003 Medicare Modernization Act and went into effect in January 2006. These payments allow the federal government to recapture some of the savings that states realized after they were relieved of prescription drug costs for people who qualify for both Medicare and Medicaid.
Spending totals also include the use of local funds in at least half the states. For consistency, state revenue from localities is also included in own-source revenue.
Own-source revenue is derived from the U.S. Census Bureau’s “general revenue” category minus federal funds to states. It is broader than what most state budget officials define as “general fund” revenue and includes all state sources except state-owned liquor stores, utilities, and insurance trust funds.
Medicaid spending data is reported by federal fiscal year, which covers the 12 months ending Sept. 30, while revenue data and clawback payments reflect each state’s fiscal year, which ends June 30 for most states.
Because this indicator measures state-funded Medicaid spending relative to states’ own dollars, increases or decreases in the share are the combined effect of changes in spending and revenue.
The recessions depicted in Figure 3 spanned from January 2008 to June 2009 and from March to April 2020. The shading indicating these recessions is based on a state fiscal year running from July to June and is therefore slightly off for the four states with different fiscal years: New York (ends March 31), Texas (Aug. 31), and Alabama and Michigan (both Sept. 30). Additionally, because each annual data point represents the end—not the beginning—of the fiscal year, the shading appears at the left of the annual data point to show when the U.S. economy was in recession. For more details on recession timing, see the business cycle dating from the National Bureau of Economic Research.
Numerals are rounded to the nearest 0.1%. Because of rounding, the change in the share of a state’s own-source revenue spent on Medicaid may not always match the difference between the shares shown in individual years.
Washington, D.C., is not included in this analysis.
Pew’s analysis is based on state Medicaid spending data from the Centers for Medicare & Medicaid Services’ Form CMS-64 Quarterly Expense Reports: “Financial Management Report for FY 1997 Through FY 2001,” accessed May 16, 2012; “Financial Management Report for FY 2002 Through FY 2011,” accessed Aug. 13, 2013; “Financial Management Report for FY 2012 Through FY 2013,” accessed Jan. 31, 2015; “Financial Management Report for FY 2014,” provided to Pew by CMS on Aug. 12, 2016; “Financial Management Report for FY 2015,” accessed May 30, 2017; “Financial Management Report for FY 2016,” accessed Feb. 20, 2018; “Financial Management Report for FY 2017,” accessed June 7, 2019; and “Financial Management Report” for fiscal 2018-24, accessed June 8, 2026. Revised data for New York’s fiscal 2017 figure was provided to Pew by the New York State Division of the Budget on Sept. 11, 2019. Data on Medicare Part D clawback payments are from the National Association of State Budget Officers’ “State Expenditure Reports” for fiscal years 2018-21, accessed March 22, 2023, and from Federal Funds Information for States for fiscal 2022-24.
Data for states’ own-source revenue is from the U.S. Census Bureau’s Annual Survey of State Government Finances, accessed June 8, 2026, for all years except fiscal 2012 for New York. Data for New York in fiscal 2012 is from the Census Bureau’s Annual Survey of State and Local Government Finances, accessed May 14, 2018. Data for the dates and number of states that adopted the Medicaid expansion under the ACA is drawn from the Kaiser Family Foundation’s Status of State Action on the Medicaid Expansion Decision, accessed June 8, 2026.
For each state, Pew calculated the amount of state dollars spent on Medicaid by adding the state’s actual Medicaid expenditures submitted for federal reimbursement on Form CMS-64 for each year from fiscal 2010 to fiscal 2024 and its annual Medicare Part D clawback payments made to the federal government.
Pew calculated own-source revenue each year by subtracting federal dollars to the state from the Census Bureau’s general revenue figure, which includes all state sources except state-owned liquor stores, utilities, and insurance trust funds.
Next, Pew divided the amount of state dollars spent on Medicaid by the state’s own-source revenue for each year from fiscal years 2010-24.
Finally, Pew subtracted the average percentage of own-source state revenue spent on Medicaid during the 15 years ending in fiscal 2024 from the percentage spent in fiscal 2024 to show the percentage-point change in state-funded Medicaid spending ratios for each state—also expressed as the change in cents per state-generated dollar.
The 50-state share is the total amount of state Medicaid spending divided by the total amount of own-source revenue and so is an aggregate—rather than an average—for the states collectively.
