Changes in Medicaid policies and their effects on utilization and expenditures for the aged were reported from a descriptive study of 8 states from 1978 to 1982. States exercised greater discretionary authority by adopting cost containment policies that reduced the number eligible, the availability of services, and reimbursement rates, resulting in reductions in utilization and expenditures. States with greater fiscal crisis adopted more stringent cost containment policies than those with fewer fiscal problems.