Background: Diabetic foot infections (DFIs) are a major cause of hospitalization, limb loss, and mortality among patients with diabetic foot ulcers (DFUs). This study evaluated the risk of developing DFIs among patients with newly diagnosed DFUs across insurance categories. Methods: Adults ≥18 years with a new DFU diagnosis were identified in the PearlDiver insurance claims database (2010–2020) using validated ICD-9/10 codes. Insurance status at the index DFU was categorized as Medicaid, Medicare, commercial, or self-pay. Propensity score matching (1:3) based on age, sex, Charlson Comorbidity Index, and major comorbidities was used to compare Medicaid vs. non-Medicaid patients. Results: Among 258,122 patients with new DFUs, 20,638 (8.0%) were Medicaid beneficiaries. Medicaid patients were younger (50.1 ± 10.2 vs. 60.6 ± 12.1 years, p < 0.001) but had similar comorbidity burden compared with commercially insured and Medicare patients. In matched analysis post-matching, Medicaid insurance was independently associated with higher odds of DFI-related hospitalization within 12 months (aOR 1.18, 95% CI 1.14–1.24) and major amputation at 3 years (aOR 1.72, 95% CI 1.39–2.13). Higher CCI, chronic kidney disease, congestive heart failure, COPD, and peripheral vascular disease also predicted adverse outcomes. Conclusions: Medicaid insurance was independently associated with increased risks of DFI and major amputation among patients with newly diagnosed DFUs. These findings highlight infection as a potentially modifiable pathway driving limb loss and emphasize the need to improve early ulcer evaluation and infection management for Medicaid beneficiaries.