States solve better – they take spending pressure off the Feds, avoids politics, and improve healthcare quality

Partly due to the ACA, health care cost spending growth has slowed in recent years. Before 2014, there were five years of historically low growth, and 2011 was the first time in a decade that spending on health care grew more slowly than the U.S. economy. Health care costs are still projected to grow faster than the overall economy, however, and health care spending already puts tremendous pressure on state and federal budgets and limits spending on other important services. More needs to be done to sustain this slowdown in growth. The current political environment makes it unlikely that reforms to control system-wide health care costs will be achieved at the federal level in the near future. States, however, are well-positioned to take the lead on implementing cost control and quality improvement reforms. Indeed, many states are already innovating and seeing positive results. There are several advantages to implementing reforms at the state level. State-level reforms can be tailored to work best for each state, depending on its size and demographics and the structure of its insurance markets. States also have considerable authority over the regulation of health insurance and the provision of health care within their borders. States control their own insurance markets: They run their Medicaid and CHIP programs and state employee plans, and certain states run the exchanges for individual health insurance. States also control the rate review process, scope-of-practice regulations, physician licensing, antitrust laws, and provider and insurer regulations. Lastly, states and governors have considerable convening power to bring together diverse stakeholders, making reform efforts more politically feasible. The innovations that some states are implementing to reduce costs while maintaining or improving quality can and should be replicated by other states. Following is a comprehensive summary of options that states can choose from to improve the quality and sustainability of their health care systems. Generally, these options relate to implementing new payment models, increasing accountability and transparency, collecting more data, increasing the use of high-value services and practices, and removing barriers to effective practices. (More detail on each of these options and examples and successful strategies from pioneering states can be found in a recent report from the Center for American Progress.)