2025 Was Medicaid’s Year of Mayhem — But Here’s Why I’m Still Hopeful

State innovation amidst federal chaos is focused on what people need and making a great program better.

Author: Patti Boozang
Editor: Amanda Eisenberg

tl;dr

• 2025 was a turbulent year for Medicaid: Massive federal funding cuts and new policy hurdles created chaos for states, providers and the 80 million Americans who rely on Medicaid, with uncertainty at every turn.

• State innovation persisted through the storm: Despite federal headwinds, states implemented bold initiatives—like North Carolina’s record-breaking medical debt relief and California’s maternal health overhaul—that delivered real impact on access and affordability.

• Hope endures because of state innovation and problem-solving: From centering Medicaid enrollees in policymaking to expanding re-entry services for justice-involved individuals, to safeguarding public health, states proved that practical, people-first solutions can thrive, even in tough times.

The 80 Million Impact

If 2024 was the “year of unwinding,” 2025 was the “year of mayhem.”

The passage of H.R.1 dominated the 2025 health care policy story. The law strips nearly $1 trillion in funding from state Medicaid programs over ten years while imposing new policy requirements on states that dramatically increase program complexity and administrative costs. Worse, H.R.1 is estimated to push more than 10 million Americans into the ranks of the uninsured — a problem which will land squarely on the shoulders of families, health care providers and states. States are reeling from the budget and human impacts of this law: Mayhem doesn’t really begin to characterize it.

Federal administrative actions outside of H.R.1 are adding to the uncertainty and chaos. This year, CMS withdrew the 2023–24 Health‑Related Social Needs (HRSN) guidance which has been the basis for states to cover Medicaid health-related services like medically tailored meals. Future HRSN demonstration approvals and renewals are likely to face far stricter scrutiny. The administration has been otherwise tightlipped about its policy stance on Medicaid demonstrations, creating additional uncertainty among the 47 states that have demonstration waivers, which fund about half of state Medicaid program expenses.

The administration’s broad anti-immigrant policy platform is weakening the already fragile health care workforce, especially in personal care and home care, and eliminating affordable coverage options for lawfully residing noncitizens. Actions in Congress and the administration, with respect to ACA Marketplaces, are driving up coverage costs and will force even more Americans to forego health insurance. The administration’s confusing and specious policy on childhood and COVID-19 vaccines is just one frightening example of the federal government ceding its public health leadership role.

And yet, the state innovation engine kept humming, in Medicaid and beyond. Bold state initiatives in maternal health, medical debt relief, and re-entry services moved from concept to implementation. These are the kinds of real-world solutions that remind us: Smart people are working the problems, every day, in every state.

North Carolina’s Big Idea to Impact Health Care Access and Affordability

North Carolina’s Medical Debt Relief Program, launched as part of the state’s Healthcare Access and Stabilization Program (HASP), received CMS approval on July 26, 2024. HASP is North Carolina’s Medicaid state-directed payment initiative, which was designed to stabilize safety-net providers while improving access to care. Under the debt relief program, hospitals that commit to forgiving all unpaid medical debt dating back to Jan. 1, 2014, and providing scaled financial assistance for low- and middle-income residents will qualify for an enhanced level of Medicaid reimbursement. Initially projected to relieve up to $4 billion in debt for nearly 2 million people, the program exceeded expectations. By October, the program had wiped out $6.5 billion in medical debt, benefiting 2.5 million North Carolinians. This is a policy with immediate and tangible effects on health care affordability and access for people.

States Center People in Policymaking

Federal policy under CMS’ Ensuring Access to Medicaid Services final rule required states to establish Beneficiary Advisory Councils (BACs), composed of current and former Medicaid enrollees, their family members, and paid and unpaid caregivers, along with Medicaid Advisory Committees (MACs), comprising a broader array of stakeholders, including members drawn from the BAC. States have leaned in, ensuring that individuals with lived experiences are meaningfully involved in Medicaid program policy and other decision-making. State Health & Value Strategies, a state technical assistance program funded by the Robert Wood Johnson Foundation, offers a series of robust toolkits that have guided state implementation, including templates for governance, member recruitment, communications and reporting frameworks. By centering member voices in policymaking, this policy change marked a big leap toward programs that truly reflect the needs and experiences of the 80 million Americans Medicaid serves. Might CMS rescind the policy? Sure, but these councils are embedded and add value in many states, and I expect they will continue to thrive.

California’s Maternal Health Playbook

California’s Birthing Care Pathway is a comprehensive maternal health roadmap introduced through a public report in February. Designed to serve all pregnant and postpartum Medi‑Cal members from conception through 12 months postpartum, the Pathway integrates clinical care, behavioral health and social needs, and establishes coordinated workflows across providers, counties, managed care plans and community-based organizations. It also introduces modernized payment strategies and increased provider access — such as doulas and community health workers—to reduce maternal morbidity, mortality, and racial and ethnic disparities, especially among Black, American Indian/Alaska Native and Pacific Islander families. Supported by the California Health Care Foundation and the David & Lucile Packard Foundation, this multi-year initiative translates principles from CMS’ Transforming Maternal Health (TMaH) model into actionable state-level policies and operational design.

Reentry Services Move from Concept to Reality

At the end of 2025, 19 states have CMS approval for Section 1115 Medicaid re-entry waivers to begin providing Medicaid funded services up to 90 days before release — with nine additional states still pending approval. California launched its services in October 2024, followed by Washington State in July, with multiple other early-adopter states rolling out programs in prisons, jails and youth facilities. While nationwide coverage numbers are still coalescing, research from the CSG Justice Center indicates this system has the potential to serve nearly 2 million individuals annually, exiting incarceration. The two weeks post-release are among the deadliest periods — overdose and mortality rates spike sharply — and reentry programs bridge that care gap, reducing hospital use, overdose deaths, and recidivism by providing medications for opioid use disorder, case management, prescriptions at release and seamless linkage to community-based care.

States Reinvent Public Health Leadership

As federal leadership falters on vaccines and other public health priorities, states are stepping up. On the West Coast, California, Oregon, Washington, and Hawaii convened the West Coast Health Alliance, issuing unified, science-driven vaccine guidance for Covid‑19, flu and RSV, while improving data sharing and lab coordination across states. Similarly, the Northeast Public Health Collaborative — spanning states like Massachusetts and New York alongside major cities and Puerto Rico — has launched joint efforts in disease surveillance, lab capacity, emergency prep, and vaccines. This hybrid of regional coordination and trust-based local action is redefining state-level public health innovation.

Nevada Leverages Statewide Purchasing Power

Nevada’s Health Authority (NVHA) launched on July 1 consolidating Medicaid, the Silver State Health Insurance Exchange, the Public Employees’ Benefit Program and related agencies into a unified executive branch department. NVHA’s vision centers on leveraging statewide purchasing power to lower health care costs, streamline eligibility, expand provider networks, and drive data-informed, value-based procurement strategies across public health programs. In pursuit of these goals, NVHA is developing a comprehensive statewide purchasing strategy for all public health care programs and the individual marketplace — signaling a commitment to disciplined, consolidated procurement and market analysis as foundational reforms that will improve health care access and affordability not just for Medicaid enrollees, but for all Nevadans.

The Bottom Line

This smattering of great innovations is not exhaustive. There’s so much more bold thinking and innovation happening in states. That’s why I’m hopeful. Medicaid’s story in 2025 wasn’t just about cuts and constraints. It was also about innovation, collaboration and implementation muscle: Governors, state legislators, Medicaid directors, agency staff, providers, researchers, community partners, advocates and their partners translating good policy into services that matter to people: being respected and listened to, being able to afford and access health care, having their debt burdens lightened, their families being safer at home, in the community and in the health care system.

That’s the ethos we’re fostering at The 80 Million: a community of problem‑solvers sharing what works, pushing for better and keeping the promise of Medicaid real for the families counting on it. We’ll be here to help keep it going in 2026.

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