The "Medicaid Improvement and State Flexibility Act of 2025" amends the Social Security Act, enabling states to approve and implement experimental Medicaid projects with specific conditions, including the use of electronic benefit transfer (EBT) cards for primary care and a state-determined catastrophic insurance program. It ensures federal expenditures remain equal to or less than what they would have been without the project and prohibits the use of funds for abortions.
Mark Green
Representative
TN-7
The "Medicaid Improvement and State Flexibility Act of 2025" amends the Social Security Act, granting states more authority to approve and implement experimental Medicaid projects. These projects involve enrolling participants in state-designed plans with EBT cards for healthcare, catastrophic insurance coverage, and potential cash payments. The bill ensures federal expenditures do not exceed existing levels and prohibits the use of project funds for abortions, except in specific cases. It also treats the state as the approving authority for these projects, rather than the Secretary of Health and Human Services.
Medicaid Gets a Makeover: States Can Now Test EBT Cards and Cash-Back Programs
The "Medicaid Improvement and State Flexibility Act of 2025" throws a major curveball at how Medicaid works. Instead of the usual federal rules, this bill lets states design their own experimental Medicaid programs, with a few big twists.
EBT Cards and Cash Back?
The core idea is to give participating Medicaid enrollees an Electronic Benefits Transfer (EBT) card loaded with funds specifically for primary care and medications. The state gets to decide how much money goes on the card. Here's the kicker: if you don't use all the money by the end of the year, you get the remaining balance as a cash payment. Think of it like a health spending account with a year-end bonus. For example, a single mom working part-time might get $500 on her EBT card for the year. If she only uses $300 for doctor visits and prescriptions, she gets $200 cash back at the end of the year. Section 2.
Catastrophic Coverage on the Side
But what happens if you need more than just primary care? The bill also requires states to enroll participants in a "catastrophic insurance" plan. This is where things get a bit murky. The state gets to define what "catastrophic" means, which could lead to very different levels of coverage depending on where you live. A construction worker with a back injury, for example, might find that their EBT card covers basic checkups, but the catastrophic plan's definition determines whether more extensive (and expensive) treatments are covered. Section 2.
The Fine Print: Cost Control and Abortion Restrictions
There are two major conditions attached to these state experiments. First, the federal government's spending on these projects can't be more than what they'd spend without them. This means states have a strong incentive to keep costs down. Second, the bill explicitly prohibits using project funds for abortions, except in cases of life endangerment, rape, or incest. This restriction directly impacts reproductive healthcare access for those enrolled in these programs. Section 2.
Shifting Power to the States
Perhaps the biggest change is that the state, not the Secretary of Health and Human Services, gets the final say on approving or renewing these experimental projects. This represents a significant shift in power from the federal government to state governments in managing Medicaid. It will be interesting to see how the different states handle the administrative tasks like managing the EBT system.
Potential Challenges
While the bill aims to give states more flexibility and potentially incentivize preventative care, there are some real concerns:
- Access to Care: If the EBT card amount is too low, people might delay or skip necessary care.
- Varying Coverage: "Catastrophic insurance" could mean very different things in different states, leading to unequal access to care.
- Administrative Burden: States will need to set up and manage the EBT system and the catastrophic insurance enrollment, which could be a significant undertaking.
- Reproductive Health: The abortion restriction limits healthcare options for women.
- Potential for Discrimination: With states defining "catastrophic insurance," there's a risk of discriminatory coverage decisions.