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The Untapped Potential of Medicaid to Reduce Greenhouse Gas Emissions

Photo, cars on highway underneath plume of factory smoke

Vehicles move along the New Jersey Turnpike near Carteret, where a factory emits smoke. State Medicaid agencies can play a leading role in driving decarbonization efforts in the health care system. Photo: Kena Betancur/VIEWpress/Corbis via Getty Images

Vehicles move along the New Jersey Turnpike near Carteret, where a factory emits smoke. State Medicaid agencies can play a leading role in driving decarbonization efforts in the health care system. Photo: Kena Betancur/VIEWpress/Corbis via Getty Images

  • State Medicaid programs could play a stronger role in reducing greenhouse gas emissions by leveraging their purchasing and regulatory powers

  • Oregon’s Medicaid program is using a 1115 waiver to distribute devices like air conditioners and air filters to protect beneficiaries from climate-related risks

The escalating threat of climate change poses significant risks to public health, as acknowledged by the World Health Organization and the American Public Health Association. The health care sector itself accounts for about 8.5 percent of harmful greenhouse gas (GHG) emissions, largely attributed to hospital care, physician and clinical services, and prescription drugs. State Medicaid agencies can play a role in “mitigation” or “decarbonization” — that is, reducing these harmful emissions — by leveraging the agencies’ collective $800 billion purchasing power. In addition, Medicaid has a unique set of levers available, including payment structures, policy pathways, partnerships, and measurement.

But state Medicaid agencies face challenges in terms of aligning priorities and acting on climate change mitigation because of limited operating budgets and competing demands, like responding to urgent health issues like COVID-19 and opioid drug use. This blog post considers how Medicaid agencies can use their untapped potential to reduce harmful greenhouse gas emissions within these parameters.

States vs. Federal Government

As federal approaches to restricting GHG emissions falter, states and municipalities are taking on a more prominent role. For instance, the Supreme Court ruled in June 2022 in its West Virginia vs. the Environmental Protection Agency (EPA) decision that the EPA had limited capacity to enforce regulations aimed at reducing GHG emissions. But in the same year, Congress passed the Inflation Reduction Act (IRA), which provides funding for climate change initiatives at local and state levels. The IRA authorizes block grants to states that can be used to address goals related to reducing GHG emissions. This new stream of funding strengthens the role of states as leaders in decarbonization policy.

How Medicaid Can Act

State Medicaid programs have substantial purchasing power and regulatory capacities that could be used to foster the adoption of decarbonization measures. Tactics Medicaid programs can use to influence providers’ operations include Section 1115 waivers, innovative payment structures and quality measures, and multisector partnerships (e.g., with transportation or housing agencies). For example, in its 1115 waiver — used to test or pilot innovations in Medicaid — Oregon’s Medicaid program included various health-related social need (HRSN) services to protect beneficiaries from climate-related risks. This includes distributing devices to maintain healthy living conditions like air conditioners, air filtration devices, and generators. Addressing climate-related risks in Medicaid waivers represents a significant step forward in terms of climate change action. Approval from the Centers for Medicare and Medicaid Services indicates that support, or at least flexibility, for similar actions is feasible.

Because the health of Medicaid participants is often affected by climate change via the impact on HRSNs — for instance, when extreme weather impacts housing or food security — these priorities and efforts are aligned. Some states are responding to climate-related risks like heat waves, wildfires, hurricanes, and vector-borne illnesses (e.g., Lyme disease) by developing and implementing climate action plans to protect the health of residents from these risks. Many of these measures can simultaneously advance decarbonization. For example, state Medicaid agencies can protect Medicaid participants’ health from climate-related risks while contracting with appliance suppliers to supply approved and medically necessary home environment modifications (e.g., air conditioners, heaters, and air filtration devices) that produce low or no emissions.

Best Practices for Other States and Related Public Sectors

Our recently published research highlights how state Medicaid programs are initiating climate action and sharing information across states. Looking ahead, other state health policy areas —departments of aging, maternal and child health, developmental disabilities, and public health — can follow Medicaid’s lead and further the impact. Policy leaders can collaborate, learn from one another, and continue to expand adaptation and mitigation efforts widely.


State Medicaid agencies can play a leading role in driving decarbonization efforts in the health care system. As in Oregon, Medicaid programs are already taking bold and innovative action to address HRSNs and respond to climate-related risks. With Medicaid climate-related policies and initiatives in their early formative phases, now is the time to ensure state Medicaid agencies understand the possibilities for addressing decarbonization goals alongside climate change adaptation goals and other agency priorities. By working collaboratively and learning from successful initiatives, state Medicaid programs can become pioneers in reducing GHG emissions, paving the way for a more sustainable and resilient health care system.

Publication Details



Paul Shattuck, Senior Fellow, Mathematica


Paul Shattuck, Corrie Haley, and Emily Cross, “The Untapped Potential of Medicaid to Reduce Greenhouse Gas Emissions,” To the Point (blog), Commonwealth Fund, July 19, 2023.