States can now opt out of Medicare, Medicaid—but at what cost?

What it does

This bill creates a new federal waiver process allowing states to opt out of major federal health programs (Medicare, Medicaid, ACA exchanges, TRICARE, federal employee health benefits) and instead implement their own universal health care plans, provided they cover at least 95% of residents with benefits at least as comprehensive as what federal programs would provide. The federal government would pass through to the state the funding it would have spent on those programs, adjusted for inflation and caseload growth, and states could keep any savings they achieve.

Why we flagged it

The bill's core function is to shift health care authority from federal to state level by creating a waiver mechanism that allows states to replace federal programs with state-designed universal systems. It is fundamentally a devolution of federal health care responsibility, not a new federal program.

What the text implies

• States with lower tax bases or political opposition to universal care may decline waivers, creating a two-tier system where some residents have federal protections and others depend on state-only systems with potentially lower standards.
• The bill's requirement that states achieve 95% coverage in 5 years with a 12-month grace period before waiver termination may be insufficient time for states to build new administrative infrastructure, potentially triggering waiver revocation and coverage disruption.

The full analysis lists 5 implications of this text.

Who stands to gain

State governments (receive federal funding pass-through); Health care providers in states with universal systems (potentially higher negotiated rates); Uninsured populations in participating states (gain coverage)