Most states expect Medicaid shortfalls in 2026 as federal cuts loom

A new analysis from KFF indicates that nearly two-thirds of states expect a Medicaid budget shortfall in 2026.

The analysis shows total Medicaid spending increased 8.6% in 2025 despite a 7.6% drop in enrollment. Costs are projected to rise 7.9% in 2026, even as enrollment is expected to remain steady.

KFF cites provider rate increases and higher costs for long-term care as key drivers. Some states also cover GLP-1 drugs for weight loss. These medications generally have a list price of more than $1,000 for a one-month dose, making them expensive to cover. State Medicaid programs are not required to cover these drugs for weight loss, though coverage is mandatory for conditions such as diabetes or heart disease.

The federal government is also cutting $911 billion from Medicaid spending st