Medicaid covers health-related services for millions of individuals with low incomes. Child welfare agencies use Medicaid for treatment portions of child welfare programs, targeted case management, and services for children in treatment or therapeutic foster homes.
In state fiscal year (SFY) 2022, child welfare agencies across the country reported spending a collective $1.2 billion in federal Medicaid funds for child welfare activities. This represents both a 5 percent decrease from SFY 2020 to SFY 2022, and a 5 percent increase over the past decade.
Child welfare agencies’ use of Medicaid funds, SFYs 2012-2022*
Source: SFY 2022 Child Welfare Financing Survey
Note: All dollar amounts have been inflated to 2022 levels.
*The figures presented in this graph reflect an analysis of 39 states with sufficient data across all six surveys conducted by Child Trends from 2012 to 2022 (surveys are conducted every two years). Therefore, the total amount of SFY 2022 Medicaid expenditures presented in this graph ($1.1 billion) differs from the total amount presented in the text ($1.2 billion).
During the COVID-19 pandemic, the federal government increased its reimbursement rate for states’ Medicaid expenditures. This temporary policy change contributed to the increase in Medicaid spending by child welfare agencies during the pandemic. On the other hand, in recent years, fewer children have entered foster care, which can help explain the reduced Medicaid expenditures since SFY 2020.
Child Trends and Child Welfare Financing
Medicaid funding is just one part of the typical budget for a child welfare agency. Child Trends conducts a biennial national survey of states (with support from Casey Family Programs and the Annie E. Casey Foundation) on all sources of funding. These data are used to create a national report, state-level factsheets, funding source factsheets, and other products that describe funding sources such as Title IV-E, Temporary Assistance for Needy Families (TANF), state/local funding, and more.
Child Trends researchers also help states map how their individual child welfare systems are financed. Child welfare leaders can use this information to promote best practices that improve outcomes for children and families. If you are interested in learning more about our work in this area, please contact Kristina Rosinsky.