Medicaid Improvement and State Flexibility Act of 2025
Medicaid Improvement and State Flexibility Act of 2025 would change how certain Medicaid waivers (1115 waivers) are approved and implemented. Specifically, it creates a new category of experimental, pilot, or demonstration projects that, if a state describes and approves them, may be approved or renewed by the state itself rather than the federal Secretary. These projects would require participants to opt in for a one-year period and would involve: (1) an electronic benefits transfer (EBT) card funded by the state for purchasing primary care and medications; (2) a cash payment to the participant equal to any funds left on the EBT card at year’s end; and (3) enrollment in a state-determined catastrophic insurance program to cover services beyond those on the card. The framework is designed to be budget-neutral with respect to federal Medicaid expenditures and would prohibit federal funding for abortion or abortion-covered health plans within these waivers, with limited life-or-rape/incest exceptions. The bill also shifts certain approval/renewal authority from the federal level to the states for these specific projects. In short, if enacted, the bill would expand state control over a new class of Medicaid waivers, fund participant engagement through EBT and cash-out options plus catastrophic coverage, and impose abortion-related funding restrictions within those waivers, all while insisting on budget neutrality with respect to federal costs.
Key Points
- 1Creates a new category of 1115 waivers (for experimental/pilot/demonstration projects) that a state may approve or renew if described and governed by specific provisions.
- 2Eligible projects allow enrolled individuals to opt in for a one-year participation and receive:
- 3- An EBT card funded by the state to buy primary care services and medications.
- 4- A cash payment equal to any remaining funds on the EBT card at year-end.
- 5- Enrollment in a state-determined catastrophic insurance program to cover additional or excess services.
- 6Requires budget neutrality: federal expenditures under title XIX for the project period must be equal to or less than what they would have been if the project were not in place.
- 7Abortion restrictions: no expenditures under these waivers may pay for abortions or for health coverage that includes abortion, with exceptions only to save the life of the mother or in cases of rape or incest.
- 8State-based approval/renewal: for these specific projects, the state—not the federal Secretary—would have the authority to approve or renew the waiver, shifting implementation control to the states.
- 9Exemption from certain federal requirements: the described state-approved projects are treated differently in the statute’s other subsections, removing them from some federal-triggered provisions during approval/renewal.