Lexology February 24, 2025
Sheppard Mullin Richter & Hampton LLP

As budget negotiations heat up in Washington, Medicaid has emerged as a key target for cost-cutting measures. With policymakers looking to trim federal spending while maintaining commitments to Social Security and Medicare, Medicaid is one of the few major programs left on the table. Proposals floating around Capitol Hill include everything from block grants and per capita caps to stricter eligibility requirements and reductions in federal matching rates. These potential changes could fundamentally alter the structure of Medicaid, shifting more financial responsibility to states and reshaping access to care for millions of Americans.

Waivers: A Policy Battleground

One of the most immediate levers for Medicaid reform lies in the use of Section 1115 waivers, which allow states to test innovative...

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