Analysis: At Least 37 States Have Medicaid State Directed Payments for Hospital Services That Could Be Reduced by the 2025 Reconciliation Law Limits States with the Biggest Potential Reductions in Medicaid Payments to Hospitals Include California, Illinois, Kentucky, Texas, North Carolina, Louisiana, Arizona and Michigan Published: Aug 14, 2026

https://www.kff.org/medicaid/analysis-at-least-37-states-have-medicaid-state-directed-payments-for-hospital-services-that-could-be-reduced-by-the-2025-reconciliation-law-limits/ An estimated $60 billion in federal Medicaid spending in 37 states (including the District of Columbia) would likely exceed new federal limits on state directed payments for hospital services once fully implemented, a new KFF analysis finds. States with the biggest potential reductions in Medicaid payments to hospitals include California, Illinois, Kentucky, Texas, North Carolina, Louisiana, Arizona and Michigan.