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State Medicaid Budgets Will Decline by $665 Billion Under New Federal Law, Report Finds

The One Big Beautiful Bill Act cuts federal Medicaid funding, leading to 7.6 million fewer enrollees and $665 billion in state budget reductions by 2034, RAND Health projects.

  • Late last month, RAND Health projected Medicaid budgets will decline by $665 billion over the next decade after analyzing state and federal data.
  • New federal rules and financing limits restrict provider taxes and add work requirements, reducing enrollment and cutting federal Medicaid payments to states.
  • Federal savings of $714 billion from 2025–2034 accompany 7.6 million fewer Medicaid enrollees by 2034, the RAND analysis projects.
  • California and New York face the biggest budget hits, losing $112 billion and $63 billion respectively, while Arizona, Iowa and Nevada will see Medicaid cuts exceeding 15%.
  • Overall, state budgets outside Medicaid will shrink by $86 billion, as some states spend more while others save from enrollment changes, with Tennessee, Mississippi, Oklahoma, and Kentucky seeing over 2% general-fund savings.
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Idaho Capital SunIdaho Capital Sun
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State Medicaid budgets will decline by $665 billion under new federal law, report finds

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Kansas Reflector broke the news in on Sunday, March 8, 2026.
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