Wonk Data Drop: Comparing State Medicaid Spending for Children in Foster Care
By Brett Greenfield, PhD and Robin Ghertner, MPP
Wonk Data Drop
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Wonk Data Drop: Comparing State Medicaid Spending for Children in Foster Care
What decisionmakers need to know about trends in Medicaid spending for children in foster care, as they prepare for Medicaid funding cuts.
*This article was updated on 8/13/2025 for clarity.
By Brett Greenfield, PhD and Robin Ghertner, MPP
BLUF:
On average, states with more kids in foster care spend more on Medicaid per child, though there are exceptions.
The amount of Medicaid dollars states spend on children in foster care varies dramatically.
In 2021 the average Medicaid spending relative to the number of children in foster care was at least $27.4 million.
This ranged from $2.1 million (DC) and $144 million (California). They probably spent much more, as our analysis is likely an undercount given children in foster care tend to use more services than their counterparts.
Cuts to Medicaid may result in expenditures on foster care children going up.
State leaders need to plan for potential increases in foster care Medicaid expenditures absent any other funding or policy change. Foster care may also take up a larger share of state spending.
Medicaid’s Role in Serving Children in Foster Care
The U.S. Congressional Budget Office estimates that the “One Big Beautiful Bill Act” will cut $1 trillion in Medicaid funds over 10 years.
Foster care systems rely on Medicaid to pay for health services to children in care. Medicaid also addresses conditions faced by children and caregivers that could lead to children’s removal (Center for Health Care Strategies, 2020).
A majority of children who enter foster care are already receiving Medicaid services prior to entry (Greenfield, 2024).
OBBBA’s Impact on Medicaid for Children in Foster Care
Though the effect of the new law is to reduce Medicaid spending, based on what we know about how Medicaid financing works for children in foster care, states may not actually spend less on Medicaid for this population.
The reality is, we don’t fully know how foster care systems will be affected by the cuts, because Medicaid has a complex relationship with foster care.
There are viable scenarios in which spending for this population actually goes up.
Our Analysis: The Relationship Between Foster Care and Medicaid Spending
We dove into state trends in foster care caseloads and Medicaid expenditures on children to highlight how fluctuations in one relate to the other.
We used data from a couple different sources for 2021, the most recent year of complete data.
There is no reliable source of data on national Medicaid spending on children in foster care. Surveys and claims data cannot capture this population.
To approximate the relationship between spending and foster care caseloads, we did two analyses.
First, we compared Medicaid spending for all enrolled children (not just those in foster care) to the number of children served by foster care systems.
Second, we estimated the total expenditures on children in foster care using the estimate of per child Medicaid spending. We provide an estimate of total spending, and then create a standardized index of that total based on each state’s foster care caseload to make state spending more comparable.
These estimates are a lower bound, because kids in foster care use more Medicaid services than those not in foster care.
Some research suggests that state Medicaid spending doubles for children in foster care compared to those not in care (Kaferly et al, 2023).
This is for many reasons – for example, states are required to conduct health screenings for all children in foster care, driving increased services that address the effects of the circumstances that led to their need for foster care placement.
We don’t double our estimates in the charts, but we think it’s a good way to approximate how much states are actually spending.
Children going into foster care may also be more likely to have poor health, particularly chronic conditions. And Medicaid has to cover services for this population by law.
What Our Analysis Found
Generally speaking, states with more children enrolled in foster care spend more on Medicaid per child.
However, the relationship isn’t straightforward, and most states don’t conform exactly to this trend.
Figure 1 shows per child Medicaid spending and foster care caseloads for 2021. Notable takeaways:
Annual Medicaid spending for states, per enrolled child ranged from $572 (Florida) to $5,825 (Alaska) in 2021.
Our estimated percent of Medicaid spending that goes to children in foster care ranged from 0.58% (New Jersey) to 4% (North Dakota) of total Medicaid spending
States served between 2.6 and 20 children in foster care for every 1,000 children in the population.
On average, states with more kids in foster care spend more on Medicaid per child.
For example, Alaska and Vermont had both higher Medicaid spending and higher foster care caseloads than most states.
In these two states, Medicaid spent over $4,000 per enrolled child, and they had over 12 kids in foster care per 1,000 children.
But there are plenty of exceptions.
For example, Delaware spent the third most on Medicaid, but has one of the lowest foster care caseloads.
Montana is in the middle of states on Medicaid spending, and has the second highest foster care rate.
Because children in foster care have to be covered by Medicaid, changes to Medicaid – whether to overall eligibility and enrollment or in the services that Medicaid covers – will not likely translate into lower expenditures on this population.
State Medicaid Spending for Children in Foster Care Varies Dramatically
Though we can’t easily get precise estimates of Medicaid spending on children in foster care, we can get rough approximations.
Figure 2 shows estimates of state spending on children in foster care. Keep in mind, these are lower bounds on the estimates.
We use the actual spending for all children (not just those in foster care), but as we said before, states are spending more on children in foster care so the actual spend is likely much higher.
We create a standardized index of total spending based on each state’s foster care caseload rate. States differ in their Medicaid spending, their total population of children, as well as the number of kids in foster care. This index helps us compare what states likely spend on children in foster care.
For example, from Figure 2 we see that Medicaid spent over $17m on kids in foster care in Alaska, compared to less than $15m in Alabama. Alaska had a much higher foster care caseload rate, and as a result the difference in our standardized index is much greater - 99 for Alaska and 13 for Alabama.
These are rough estimates – the Wonk technical term is “back of the envelope” – and meant to be illustrative, not exact.
The trend is our focus. It’s important for grounding discussions among decisionmakers about Medicaid and foster care in a rapidly evolving policy and fiscal environment. Notable takeaways:
In 2021, the total amount of state Medicaid spending on children in foster care was on average $27.4 million.
But our estimates of Medicaid spending on children in foster care vary dramatically across states.
This ranged from $2.1 million (DC) to $144 million (California).
This is a lower bound, because we know that children in foster care utilize more Medicaid-funded services on average than those not in foster care. Medicaid likely spends much more than these estimates
If we take into account our best guess for how much more is spent on Medicaid services for children in foster care, states would spend from around $4.2 million (DC) to $288 million (California).
The middle state – Iowa – would spend around $33.7 million on children in foster care.
The standardized spending on children in foster care also varies substantially.
States' standardized spend index - the total spend adjusted by the foster care rate – less and was between 4 (Florida) and 99 (Alaska). States with a lower index spent less Medicaid dollars on kids in foster care than those with a higher index.
These estimates allow direct comparisons across states because they are adjusted by the size of the foster care population.
States with lower Federal Medical Assistance Percentage (FMAP) rates will likely carry a greater burden of Medicaid cuts.
The previous estimates showed total Medicaid spending, combining the federal and state shares.
But because states have different FMAP rates, the relative burden of spending on children in foster care isn’t the same for every state.
Figure 3 breaks down the state and federal share of our estimates of Medicaid spending on children in foster care.
For states with the highest FMAP rates (e.g. New Mexico and Alabama), the state burden is relatively lower.
We estimate that New Mexico, for example, spent less than $2 million on children in foster care, and the federal government spent over $7.6 million.
California - with one of the lower FMAP rates - spent over $63 million receiving over $81 million from the federal government.
Texas - in the middle in terms of FMAP rates - received a larger federal share, nearly $86 million.
As federal funding for Medicaid goes down, the states with higher FMAP rates are likely to see foster care take up a greater total proportion of their spending.
States may also see higher foster care expenditures following Medicaid cuts. Medicaid covers a variety of services that prevent involvement in foster care, such as behavioral health services for children and caregivers.
Changes to Medicaid financing will limit states ability to bolster access to these and other services, particularly in areas with already limited provider capacity that also disproportionately rely on Medicaid funding (like rural communities).
States may also limit optional Medicaid benefits, which they did during and after the Great Recession (Schubel et al., 2025).
This can have spillover effects for foster care systems. If families cannot get services, children may be more likely to enter foster care (Gross et al., 2025; Puls et al., 2021). Once there, they may require more services from Medicaid.
State leaders need to plan for increases in foster care Medicaid expenditures. When federal funds are squeezed, foster care may take up a larger share of state spending.
At the federal level, these insights about complexity across states are important for assessing the impact of current and future policy decisions around foster care and Medicaid.
This also underscores that changes to Medicaid can have significant effects on this population, even if those changes are not specific to children in foster care
References
Center for Health Care Strategies. (2020). How can Medicaid-funded services support children, youth, and families involved with child protection? Casey Family Programs. https://www.casey.org/medicaid-funded-services/
Greenfield, B. (2024). Timing of Medicaid Enrollment for Children Engaged with Child Welfare Services in Two States. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. https://aspe.hhs.gov/sites/default/files/documents/ab3a421123cfbaca8804e8d3a60d8d0b/Medicaid-Enrollment-Child-Welfare.pdf
Gross, M., Keating, B., Miller, R., Radel, L., & Abbott, Marissa. (2025). Prevalence and Characteristics of Children Entering Foster Care to Receive Behavioral Health or Disability Services. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. https://aspe.hhs.gov/reports/custody-relinquishment-prevalence
Kaferly, J., Orsi, R., Alishahi, M., Hosokawa, P., Sevick, C., & Gritz, R. M. (2023). Primary Care and Behavioral Health Services Use Differ Among Medicaid-Enrolled Children by Initial Foster Care Entry Status. International Journal on Child Maltreatment: Research, Policy and Practice, 6(2), 255–285. https://doi.org/10.1007/s42448-022-00142-9
Puls, H. T., Hall, M., Anderst, J. D., Gurley, T., Perrin, J., & Chung, P. J. (2021). State Spending on Public Benefit Programs and Child Maltreatment. Pediatrics, 148(5), e2021050685. https://doi.org/10.1542/peds.2021-050685
Schubel, J., Barkoff, A., Kaye, H. S., Cohen, M. A., & Tavares, J. (n.d.). History Repeats? Faced With Medicaid Cuts, States Reduced Support For Older Adults And Disabled People. Health Affairs Forefront. https://doi.org/10.1377/forefront.20250414.154091