State Medicaid Budgets to Decline by Hundreds of Billions over the Next Decade; Impacts Vary Widely Across States

For Release

ThursdayFebruary 26, 2026

State Medicaid budgets are projected to experience reductions of $664 billion between 2025 and 2034 due to provisions in the One Big Beautiful Bill Act (OBBBA), according to a new study by nonprofit, non-partisan RAND.

The analysis, which provides state-specific estimates of budget impact and enrollment changes associated with key Medicaid provisions, also finds that state general funds will decline by $87 billion, while federal savings will total $714 billion over the same time. These findings are broadly consistent with Congressional Budget Office estimates of the federal budgetary impacts of these provisions.

“The effects of the law on Medicaid budgets and enrollment are substantial, but will vary widely across states, and in some cases may be at least partially offset by savings to the state general fund,” said Preethi Rao, a senior economist at RAND and lead author of the study. “Some states will see significant reductions in Medicaid funding and enrollment, while others may experience relatively limited changes depending on how their programs are structured and financed.”