Medicaid is in the middle of its biggest shakeup in years. Over 25 million people have lost coverage since spring 2023, when states began checking whether enrollees still qualify after a three-year pause during the pandemic. At the same time, the program’s costs hit $931.7 billion in 2024, political battles over work requirements and funding are intensifying, and new federal rules are changing how coverage works for children. Here’s what’s actually happening and what it means for people on Medicaid.
The Post-Pandemic Coverage Purge
During COVID-19, Congress passed a rule that prevented states from dropping anyone from Medicaid, even if their income changed or they moved. That protection expired in March 2023, and states began a massive process called “unwinding,” essentially re-checking every single enrollee’s eligibility.
The numbers are staggering. Between April 2023 and June 2024, states processed 94.3 million renewals. Of those, 55.1 million people kept their coverage. But 20.7 million people, about 22% of everyone reviewed, had their coverage terminated. Enrollment dropped by an estimated 7.9%, landing at roughly 84.5 million people.
The most troubling part: the vast majority of people who lost coverage weren’t actually found ineligible. Only 6.5 million people were determined to no longer qualify based on income or other factors. The other 14.3 million, nearly 69% of all terminations, lost coverage for purely paperwork reasons. They didn’t return a form on time, didn’t respond to a renewal notice, or didn’t provide all the information their state requested. Many of these people may still qualify but simply fell through the administrative cracks.
Why So Many People Lost Coverage Over Paperwork
Procedural disenrollment happens when someone doesn’t respond to their state’s renewal request within the required timeframe. That sounds straightforward, but three years without renewals created enormous problems. People moved and never updated their addresses with Medicaid. Renewal notices went to old apartments. Some people didn’t recognize the paperwork or understand what was being asked. Others couldn’t navigate the required submission process, whether online, by mail, or by phone.
Federal officials at CMS flagged high procedural termination rates as a warning sign that something was going wrong, not just that people had moved on. States responded unevenly. Some paused disenrollments to work through backlogs or held procedural cases as “pending” while they resolved issues. Others pushed through terminations quickly. At any given time during the unwinding, about 20% of renewals were classified as pending, meaning they weren’t completed in the month they were due.
The result was a patchwork: your odds of keeping coverage depended heavily on which state you lived in and whether that state invested in outreach, extended deadlines, or tried to contact people before cutting them off.
New Protections for Children
One direct response to the unwinding chaos was a new federal rule for kids. Starting January 1, 2024, every state is now required to provide 12 months of continuous eligibility for children under 19 enrolled in Medicaid or the Children’s Health Insurance Program (CHIP). This means that once a child is enrolled, they stay covered for a full year regardless of changes in family income or circumstances during that period.
Congress mandated this through the Consolidated Appropriations Act of 2023, and CMS finalized the regulation in late 2024. Before this rule, children could be dropped mid-year if a parent’s income ticked above the threshold or if a family missed a mid-year check. The new requirement prevents those gaps, which pediatricians and child health advocates had long argued disrupted vaccinations, ongoing treatments, and preventive care.
The Fight Over What Medicaid Should Cover
Beyond who qualifies, there’s an ongoing battle over what Medicaid should pay for. In 2022, CMS opened the door for states to use Medicaid dollars to address what it called “health-related social needs,” things like housing instability, homelessness, and lack of access to nutritious food. Several states applied for and received federal approval to run pilot programs covering rent assistance, home modifications, or medically tailored meals.
That direction shifted in March 2025 when the Trump administration rescinded the guidance encouraging these programs. CMS said existing approvals would remain in place, but future requests would be evaluated individually rather than under a broad policy encouraging expansion. This creates uncertainty for states that were planning or developing social-needs programs, and signals a philosophical pullback from the idea that Medicaid should address the root causes of poor health rather than just treating illness after it arrives.
Where Medicaid Expansion Stands
Forty-one states, including Washington, D.C., have now adopted the Affordable Care Act’s Medicaid expansion, which extends coverage to adults earning up to 138% of the federal poverty level. Ten states still have not expanded. Most of the holdout states are in the South, where uninsured rates tend to be highest.
In non-expansion states, many low-income adults fall into a “coverage gap.” They earn too much for their state’s traditional Medicaid program but too little to qualify for subsidized insurance on the ACA marketplace. This leaves millions of adults with no affordable coverage option at all. Legislative efforts to expand in the remaining states have stalled repeatedly, though ballot initiatives have succeeded in several states where legislatures refused to act.
Rising Costs and Budget Pressure
Medicaid spending grew 6.6% in 2024, reaching $931.7 billion. That accounts for 18% of all health spending in the United States. National health expenditures overall are projected to grow at 5.8% annually through 2033, outpacing GDP growth of 4.3%, which means health care will consume a growing share of the economy, rising from 17.6% of GDP in 2023 to a projected 20.3% by 2033.
This cost trajectory is fueling proposals at both the federal and state level to find savings. Some proposals focus on shifting more Medicaid enrollees into managed care plans. Others push for per-capita caps on federal Medicaid funding to states, which would fundamentally change how the program is financed. Currently, the federal government matches state Medicaid spending with no ceiling. Capping that match would shift financial risk to states, which would likely respond by tightening eligibility, reducing benefits, or cutting provider payments.
Coordinating Care for Dual Enrollees
About 12 million Americans are enrolled in both Medicaid and Medicare simultaneously, typically low-income seniors and people with disabilities. These “dual eligibles” often have complex health needs and account for a disproportionate share of spending in both programs. But because Medicare and Medicaid are run by different agencies with different rules, their care is often fragmented. A hospital stay might be covered by Medicare while the home health aide helping with recovery is paid by Medicaid, and the two systems don’t always communicate.
States have been testing models to better integrate care for this population. These include special Medicare Advantage plans designed for dual enrollees, programs that bundle all medical and long-term care services for elderly patients, and demonstration projects that align Medicare and Medicaid benefits under a single plan. A 2018 federal law permanently authorized these specialized Medicare plans and required unified appeals processes, making it easier for dual enrollees to resolve coverage disputes without navigating two separate bureaucracies.
What This Means Going Forward
Medicaid right now is caught between competing forces. Enrollment is still settling after the unwinding, with millions of potentially eligible people still unenrolled. Costs are climbing faster than the economy is growing. The federal government is pulling back from broader social-needs spending while states are required to maintain new protections for children. And proposals to fundamentally restructure Medicaid’s funding could reshape the program for decades.
If you or someone in your family lost Medicaid coverage during the unwinding, it’s worth reapplying. Many of the 14.3 million people dropped for procedural reasons may still be eligible. You can apply through your state’s Medicaid agency or through HealthCare.gov, which can check your eligibility and route you to the right program.