July 17, 2026  – Medicaid managed care has grown from a small portion of the Medicaid program to its largest spending category, according to a new analysis from the Paragon Health Institute. The report shows that payments to managed care organizations (MCOs) now account for more than half of all Medicaid spending, reflecting a major shift in how states deliver healthcare services to low-income Americans.

The analysis tracks Medicaid spending from 1999 through 2024. During that period, the share of Medicaid dollars flowing to managed care plans increased from just 12% of total program spending to 54%. In 2024, managed care payments reached approximately $490 billion out of Medicaid’s total expenditures of $909 billion.

Researchers noted that the transition accelerated after passage of the Affordable Care Act in 2010 and expanded further after Medicaid expansion took effect in 2014. Today, managed care organizations administer healthcare benefits for the majority of Medicaid beneficiaries across the country.

The report raises questions, however, about whether the rapid expansion of managed care has delivered the improvements that policymakers originally expected.

When states began contracting with private health plans several decades ago, supporters argued that managed care organizations would better coordinate patient care, improve health outcomes, and reduce unnecessary spending. According to the report, evidence supporting those expectations remains mixed.

The authors point to previous evaluations, including findings from the Congressional Budget Office, which concluded there is no consistent evidence that Medicaid managed care has improved health outcomes.

In addition to concerns about performance, the report argues that oversight has not kept pace with the program’s growth. According to the analysis, many managed care filings submitted by health plans are incomplete, making it more difficult for regulators to monitor performance and financial accountability.

The analysis argues that stronger transparency and oversight are needed as these payments continue to grow. It also notes that recently enacted federal legislation, the One Big Beautiful Bill, placed new limits on state-directed payments by capping them at Medicare payment rates.

Looking ahead, the authors suggest that policymakers should continue evaluating the effectiveness of Medicaid managed care while strengthening accountability measures. As managed care now represents the majority of Medicaid spending, they argue that improving transparency, oversight, and program performance will remain important priorities for both federal and state officials.