In the United States, laws that define how our health system operates have evolved over our 250-year history. They’re built on allopathic medical pedagogy borrowed from our European roots and evolve around clinical innovations and technologies that improve outcomes and extend life.

Historically, federal agencies oversaw its evolution: the Departments of Health and Human Services (providers, insurers, drugs) Justice (antitrust), Federal Trade Commission i(interstate commerce, marketing practices) were primary actors with Agriculture (food supply) and Interior (natural resources) playing support roles. And the federal court system adjudicates challenges. But that’s changing: states are playing a bigger role. State attorneys general and Supreme Courts are pulled in more frequently.

Since the Supreme Court’s 2022 ruling in Dobbs v. Jackson Women’s Health Organization that overturned Roe v. Wade, healthcare issues have become more prominent in state lawmaking. That decision essentially delegated abortion rights to states to handle. And, in HR1 (One Big Beautiful Bill Act 2025), Congress cut federal Medicaid funding by almost $900 billion over 10 years essentially forcing states to find different ways to manage it. Today, Medicaid is 30.7% of the average state’s expenditures with half sourced from state general funds. OB3 will add fiscal pressure to every state.

In Campaign 2026, healthcare referenda will appear alongside candidates match-ups on many state ballots. Candidates in the 36 Gubernatorial/Territorial races and every Congressional race face questions about how they’ll “fix” healthcare. The combination of the public’s discontent with Congress and its dissatisfaction with the health system will prompt states to address a widening range of healthcare issues of consequence to their citizens. For some issues, Governors will issue Executive Orders, for others, referenda will appear on voter ballots and in others, legislation will be approved by their legislatures. The list is long…

• Expansion of price transparency (PT) requirements for hospitals, insurers and (likely) physician services: Increased stipulations to increase awareness and use of pricing tools beyond current regulations.
• Limitations on private equity ownership: States may require disclosures of private equity investments and many will seek modification of carried interest, clinical autonomy and governance structures.
• Scope of practice expansion: States are expanding clinical responsibilities for advanced practice nurses, pharmacists and others to enable access to primary and preventive health services.
• Prior authorization and payment integrity: States will require insurers to adopt business practices that reduce enrollee and provider challenges, financial shortfalls and disputes. In tandem, states will expand payment integrity alignment with evidence-based practices that reduce unnecessary care.
• Implementation of site neutral payment policies: Despite federal pushback, states will align with employers and insurers to expand site neutral payment policies opposed by hospitals.
• Re-calculation of community benefits and limitations on tax exemptions: Large, NFP systems will face state and federal regulatory pressure to forego/limit tax exemptions.
• Price controls on prescription drugs (above and beyond most favored nation stipulations): States will enact legislation creating Drug Price Control Commissions to limit drug price escalation. In some, importation and restrictive formulary strategies will be enacted/expanded.
• State constraints on PBM and GPO activity: States will advance business practice restrictions on PBMs and GPOs geared to consumer protections, greater transparency and increased competition.
• Relief of Stark, Physician Self-Referral Limitations: Some states will expand physician ownership arrangements and enable physicians to compete with hospitals and other providers.
• Integration of social services with local delivery systems: States will facilitate delivery systems in which public health and provider services are fully integrated and population health management improvement is optimized.

The bottom line:

Total state spending on for healthcare services increased 5.7% to $3.2 trillion in 2025 slightly more than the 38-year average of 5.6%. In fiscal 2025 federal funds to states rose 5.5% following three consecutive years of decreases from fiscal 2022 to fiscal 2024. Thus, states were forced to provide more funding for their healthcare programs even as the U.S. economy sputtered and, most recently, as affordability issues mounted for voters.

Healthcare’s future in the U.S. will continue to be framed by federal policies and the political system from which its laws originate, but its transformational changes will increasingly originate in states where affordability, funding and system effectiveness issues are tackled head-on.