Medicaid Enrollment, Spending, and Policy Changes
- Medicaid enrollment is decreasing after teh end of pandemic-era continuous coverage, but overall spending continues to climb, driven by rising healthcare costs.
- Medicaid enrollment decreased by 7.6% in Fiscal Year (FY) 2025 as states completed the process of ending continuous coverage implemented during the COVID-19 pandemic.
- Despite the enrollment decline, total Medicaid spending increased by 8.6% in FY 2025 and is forecast to grow by 7.9% in FY 2026.
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State Medicaid Spending Rises Despite Enrollment Declines, GLP-1 Coverage Shifts
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Medicaid enrollment is decreasing after teh end of pandemic-era continuous coverage, but overall spending continues to climb, driven by rising healthcare costs. States are also re-evaluating coverage of GLP-1 drugs for obesity.
Medicaid Enrollment and Spending Trends
Medicaid enrollment decreased by 7.6% in Fiscal Year (FY) 2025 as states completed the process of ending continuous coverage implemented during the COVID-19 pandemic. Enrollment is projected to remain relatively stable in FY 2026,according to the 25th annual Medicaid Budget Survey by KFF.
Despite the enrollment decline, total Medicaid spending increased by 8.6% in FY 2025 and is forecast to grow by 7.9% in FY 2026. Key factors driving these cost increases include provider rate hikes, increased healthcare needs among enrollees, and rising expenses for long-term care, pharmacy benefits, and behavioral health services.
| Fiscal Year | Enrollment Change | Spending Change |
|---|---|---|
| FY 2025 | -7.6% | +8.6% |
| FY 2026 (Projected) | Flat | +7.9% |
GLP-1 Drug coverage for Obesity: A shifting Landscape
many states are also addressing prescription drug costs, especially regarding glucagon-like peptide-1 (GLP-1) drugs. Interest in expanding Medicaid coverage to include GLP-1s for obesity treatment is waning, and some states are planning to restrict existing coverage.
As of October 1, 2025, sixteen state Medicaid programs cover GLP-1s for obesity treatment. Its significant to note that coverage for obesity is optional for states under Medicaid guidelines,while coverage is mandated for conditions like diabetes and cardiovascular disease.