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.
Paul
PS: In the last 6 weeks. I’ve met with Boards in Indiana, Tennessee, North Carolina, Alaska, Missouri, Texas and South Carolina. Each is investing more in state-focused advocacy acknowledging the list of issues they’re addressing in their state is expanding exponentially. My sense is state-focused efforts will need more attention in 2026, 2028 and beyond. Federal issues are not going away, but state advocacy will require more resources.
Sections in today’s Report
- Quotables
- Economy
- Hospitals
- Insurers
- Physicians
- Prescription Drugs
- Public Health
Quotables
Emanuel on long-term care: “If the U.S. health care system is dysfunctional, then the long-term care situation is a complete and utter disaster. With only the very poor or very rich having any way of paying for long-term care, that leaves the families of the broad middle class struggling financially and emotionally to keep mom and dad safe.”
FTC Advisory on Medicare Fraud: “Medicare losses due to fraud, errors, and abuse cost taxpayers about $60 billion every year. Providers might double bill Medicare for a single treatment, charge for things like a back brace you didn’t get (or need); a company might offer you a fake Medicare drug plan; or a scammer might ask you to confirm your Medicare number — which they then use to commit hospice fraud.
Medicare fraud, abuse, and unintentional errors can also contribute to medical identity theft, losing your benefits, and paying higher medical costs.”
Medicare fraud affects everyone, so here’s what to know and do | Consumer Advice
CB Report: Longevity market growth: “As longevity tech matures, two key challenges are top of mind for the sector.
Regulatory pathways remain unclear. Because the FDA doesn’t recognize aging as a disease, many therapeutic companies pursue specific disease indications while their platforms also target underlying aging biology. Clinical trials beginning in late 2025 will provide early safety and efficacy signals, but the path to broader aging-related claims remains undefined. How regulators respond to these therapies will shape commercial strategies across the sector.
Meanwhile, the breadth of longevity tech continues to expand. What began with cellular rejuvenation and senolytics now encompasses hormone optimization, preventive screening clinics, and biological age testing. As adjacent sectors such as sleep and cognitive health adopt longevity positioning, the boundaries will blur further. Stakeholders will need clearer frameworks to distinguish technologies directly targeting aging biology from those supporting healthspan indirectly.”
The longevity tech market map – CB Insights Research
Private Equity Regulation in NFL, Healthcare: “Like football, US health care is big business. Like football, health care enjoys insatiable demand. Yet, unlike football, where guardrails for private equity have proven not only possible but substantive, health care’s response remains in infancy. To move health care beyond limited transparency and a few state efforts to curb acquisitions, policy makers nationwide could take a page from the NFL playbook.”
Guardrails For Private Equity: What Health Care Can Learn From The NFL | Health Affairs
Economy
MSN on car sales: “The U.S. auto industry faces sobering new math: Some one million prospective buyers have defected from the new-car market since the start of the decade—and they aren’t expected back soon.
Until recently, auto executives, analysts and economists believed that U.S. new-car sales were on a steady climb back to volumes last seen before the pandemic closed factories and scrambled global supply chains.
That’s no longer the case. General Motors, Ford Motor, Toyota and other automakers have said they are planning for sales of new cars to shrink or stagnate this year after consumers—stung by persistent inflation, rising fuel prices and high interest rates—are balking at prices that have risen to around $50,000 on average.
Americans were buying around 17 million cars and trucks a year before 2020; industry analysts don’t expect the market to return to that level until the end of the decade or later. They now forecast total annual sales of about 16 million vehicles or fewer this year and that outlook has grown even dimmer as the conflict in Iran keeps gas prices high.”
One million new-car buyers are gone and they’re not coming back soon
Hospitals
Paragon Institute on Hospital costs: “The AHA continues to argue that Medicare and Medicaid underpay hospitals, but that argument ignores the enormous volume of supplemental subsidies hospitals receive outside standard payment systems. State-directed payments alone exceeded $150 billion in 2025 and increasingly push effective Medicaid reimbursement rates above Medicare levels in many states. Hospitals also benefit from disproportionate share hospital payments, 340B revenues, tax advantages, uncompensated care pools, and numerous additional subsidy streams.
The current system overwhelmingly favors large and politically connected hospital systems while contributing to consolidation and rising prices across the health sector. Rural hospitals are routinely invoked as political cover to protect expensive subsidies that disproportionately benefit wealthy urban systems.”
Study: climate-related risks in hospital community needs assessments: “Nonprofit hospitals conduct a community health needs assessment every three years to maintain federal tax-exempt status. Federal rules do not require these assessments to consider climate-related health risks, despite evidence that climate change affects health and health care delivery. This study examined the extent to which hospitals address climate-related health in community health needs assessments. We reviewed a nationally representative sample of 566 community health needs assessments (2021–24) from 3,468 US hospitals. Climate-related content was scored on an eighteen-point rubric including climate hazards and health risks (for example, extreme heat and flooding). The assessments’ climate-related content was limited (mean score, 2.51 of 18). Hospitals serving more climate-vulnerable communities, especially those with greater socioeconomic disadvantage, were less likely to identify climate-related health risks. Scores in the Northeast and West were nearly twice those in the South and Midwest, although they were still low. Federal requirements should better align community health needs assessments with emerging public health risks, including climate change, to improve health system resilience.”
Insurers
CDC Report: Insurance coverage in 2025: A Centers for Disease Control and Prevention report released Thursday shows 8.3% of Americans, or 28 million people, lacked health insurance in 2025. In comparison, 8.2% of residents lacked coverage in 2024. Highlights:
- An estimated 61.8% of people, or 208.4 million, received coverage from private employer plans or through the health insurance exchanges, compared with 61.4% of Americans the previous year.
- A record 6.3% of people were enrolled in marketplace plans in 2025.
- That percentage dwindled 5.2% to 23.1 million at the end of the 2026open enrollment period, according to preliminary data released by the Centers for Medicare and Medicaid Services in March.
- Nearly 38.7% of Americans, or 130.5 million people, received coverage through public health plans, including Medicare, Medicaid, Children’s Health Insurance Program and military policies, down from 39.1% in 2024.
- About 1.75 million fewer kids were enrolled in Medicaid this January than at the start of the Trump administration
CDC https://www.cdc.gov/nchs/nhis/early-release/health-insurance-coverage.html
McKinsey on provider sponsored health plans: “PLHPs have the potential to improve care coordination and affordability for members through closer alignment between care delivery and coverage. They have a big opportunity to increase their presence in the commercial market, the most financially attractive segment for payers. According to McKinsey analysis, they could capture more than $20 billion in additional revenue, equivalent to roughly 30 percent of PLHPs’ current total revenue pool, more than $700 million in operating margin, and 5.5 million more members if they aggressively pursue the opportunity…
Strategic expansion into commercial insurance could generate meaningful growth for PLHPs. Those that combine product innovation, pricing precision, and differentiated go-to-market execution can translate their clinical integration into true competitive advantage. It’s a propitious moment. Employers are seeking affordable, quality-driven solutions, which PLHPs are well positioned to deliver while improving care coordination, access, and affordability for members. The next generation of leading PLHPs will be those that act now to build sustainable commercial capabilities, balancing financial performance with their mission to improve care for the communities they serve.”
Provider-led health plans in commercial insurance | McKinsey
KFF: Marketplace coverage changes:
- “Based on reports to date of sign-ups and premium payments, average monthly effectuated ACA Marketplace enrollment could fall to about 17.5 million people in 2026 and could be as low as 16.5 million people, down from 22.3 million people in 2025.
- A disproportionately large share of the drop in sign-ups (27%) is among people with incomes just above the “subsidy cliff” (between 400%-500% FPL), despite this group making up just 3% of plan selections in 2025.
- Premium payments from enrollees increased by an average of 58% from $113 to $178 per month. This is lower than the 114% increase KFF projected if everyone had stayed in the same plan because many people bought down to higher-deductible plans and because those just past the subsidy cliff with the steepest increases dropped ACA coverage at higher rates. Additionally, the 114% increase was among people receiving a tax credit whereas the 58% increase is among all consumers, including the most number who did not receive a tax credit in 2025.
- Average ACA Marketplace deductibles increased by 37% (or $1,027 per person) to a record high of $3,786 in 2026…”
What We Know So Far About 2026 ACA Marketplace Enrollment, Premiums, and Deductibles | KFF
JD Power: Insurer enrollee satisfaction: ”Despite significant investment by health plans in new digital tools and improved customer engagement, member satisfaction with commercial health plans has remained virtually unchanged for the past three years. According to the JD Power 2026 U.S. Commercial Member Health Plan Study,SM released today, the average overall satisfaction score for commercial health plans is 562 (on a 1,000-point scale), down one point from 2025 and three points from 2024. The findings reflect members’ eagerness for quick claims resolutions, preventive wellness plans and reasonable in- and out-of-network costs. But as premiums and deductibles continue to rise, members have begun to say their relationship with their health plan has become more transactional.” Highlights:
- The national average satisfaction score for commercial health plans is down one point from a year ago
- Only 30% of commercial health plan members say their health plan is a trusted partner in their health and wellness
- Member satisfaction drops significantly when monthly premiums and deductible costs rise
2026 U.S. Commercial Member Health Plan Study | JD Power
Axios on insurer positioning strategy : “Health insurers facing growing criticism over rising premiums are trying to shift the narrative by portraying hospitals and drugmakers as the real culprits behind health care’s affordability crisis.
State of play: Insurers and employer-backed advocacy groups such as Better Solutions for Healthcare and its Hospital Watch initiative are running ads pointing out hospitals’ outsized presence in some markets, with messages like “hospital monopolies put profits over patients.”
Within the industry, there is some disagreement over how best to push back. Some have expressed doubts about whether the upbeat tone of the group’s ads resonates with an increasingly frustrated public.
The big picture: Insurers were the first industry group called before Congress to testify earlier this year as House Republicans held a series of hearings on health care costs.”
Axios Vitals May 26, 2026
Final rule: No Surprises Act independent dispute resolution process: CMS along with other agencies released final rule that streamlines communication between payers, providers and certified IDR entities and clarifies timelines and processes. It improves the functionality of the IDR process by finalizing various changes, including allowing up to 50 items and services to be batched in the same payment dispute. The final rule also increases access to the IDR process by reducing the administrative fees associated with it. The AHA supported many of these changes in comments on the proposed rule. AHA members will receive a Regulatory Advisory with additional details on the final rule.
Final Rule https://www.cms.gov/files/document/federal-independent-dispute-resolution-operations-final-rule
Physicians
ACP on Private Equity Regulation: “Developing evidence-based policies to address growing private equity investment and consolidation in health care is challenging due to data constraints, limits on government intervention in markets, and political barriers to regulation. Although prior regulatory efforts have not fully prevented consolidation or financialization, evolving market dynamics, increased transaction scale, the growth of nonreportable transactions, strengthened federal competition policy, and improved empirical evidence on ownership effects now provide stronger justification and clearer targets for enforcement and policy refinement. Private equity’s acquisition of health care facilities and physician practices remains substantial, raising serious concerns for patients and frontline physicians. ACP calls on lawmakers and regulators to enforce existing laws more strictly, increase funding and oversight for regulatory agencies, and establish policies that protect physicians and patients from the adverse effects of growing corporate interests. ACP proposes a framework that emphasizes the need for enhanced patient and physician protections, socially responsible investing, closing regulatory loopholes, increased transparency, and research into how private equity ownership affects health care.”
Prescription Drugs
AARP Report: Drug prices: “U.S. list prices for 25 top brand-name drugs have climbed an average of 81% since launch, while prices for those same medicines fell an average of 13% in 19 other high-income countries….
AARP also found an early sign that Medicare price negotiation may be putting pressure on some list prices. Six of the 25 drugs saw one-time U.S. list price cuts between 2024 and 2026, averaging 40%. All six have had their prices negotiated by Medicare.
The AARP analysis, which tracked prices from each drug’s launch through April 1, 2026, covers 25 brand-name drugs without generic or biosimilar competition that had the highest total Medicare Part D spending in 2024. Together, the drugs accounted for more than $100 billion in Medicare prescription drug spending and were used by nearly 15 million beneficiaries.
Across the 25 drugs, U.S. lifetime list price changes ranged from a 46% decrease to an 873% increase. Outside the U.S., the trend moved in the opposite direction. List prices for 24 of the 25 medicines fell after launch, driving an average decrease of 13% across the comparison countries. “
Drug Prices AARP Medicare Part D Inflation Reduction Act Donald Trump drug costs Pharma
Utah Pilot: AI in prescription refills “In January, the state of Utah launched the pilot with artificial intelligence platform Doctronic. The state allowed the company to use its AI chatbot to manage prescription renewals for 192 drugs used to treat chronic conditions such as diabetes, depression and high blood pressure. The 12-month pilot is being widely watched within the industry, and there have been questions raised about its safety, legality and the broader use of AI in healthcare.
In April, the Utah Medical Licensing Board called for the pilot to be suspended, saying it would put the state’s citizens at risk. The AI chatbot recommended a prescription renewal in 72% of cases, according to five months of data recently released by Doctronic.
Of the 28% of cases in which the AI tool escalated the request to a physician and did not recommend a renewal, 69% of physician reviews agreed that was the appropriate decision. Among the 72% of cases that received a renewal recommendation, physicians agreed 91% of the time. In the other 9% of cases, physicians wanted more information.”
How Utah’s AI refill pilot is performing so farhttps://www.modernhealthcare.com/health-tech/mh-doctronic-utah-ai-prescribing-pilot/
Public Health
International Benchmarking: From the 2026 release from the OECD data from 38 member countries addressing coverage/access, affordability, equity, and delivery:
- The US as the highest spender, far exceeding Switzerland ($7,927 per capita), without commensurate outcome gains.
- Life expectancy lags top-performing peers, and avoidable mortality is second highest, indicating inefficiencies in preventive care, chronic disease management, and timely access despite high aggregate spend.
- Uninsurance (~8%) concentrates in historically marginalized racial/ethnic groups and non-expansion Medicaid states, with policy changes expected to worsen coverage losses by 2034.
- Primary care supply and physician pipeline are substantially below OECD averages, driven by limited residency slots, underinvestment, tuition burden, and burnout, impairing access and longitudinal care.
- Maternal mortality is highest (19/100,000 live births) with extreme racial inequity (50/100,000 in Black women), exceeding rates reported across all comparator countries
New international report: despite spending most on health care, U.S. has among the lowest life expectancies and the fewest primary care doctors per capita among peer nations. News release. The Commonwealth Fund. May 28, 2026. Accessed May 28, 2026.
Study: association between extreme heat and health costs: “We used 2016–23 health insurance claims from a large, national insurer and national temperature and humidity data to conduct a regression analysis on the relationship between extreme heat exposure and ED, inpatient, and outpatient use and cost in the commercial insurance, Medicaid, and Medicare Advantage (MA) populations. One additional day with a heat index of 100°F or hotter within a week was associated with increased ED use and cost across nearly all coverage populations and age groups. Extreme heat was associated with significant increases in inpatient use for children with commercial coverage (1.4%), members ages 18–64 with Medicaid coverage (0.47%), and MA members (0.5%) but was not associated with statistically significant increases in inpatient cost for any population group. It was not associated with increases in outpatient use or cost in any population group. MA members had the highest annual cost due to extreme heat. These findings provide evidence to inform population health management strategies, seasonal preparedness planning, and policy interventions to mitigate heat-related morbidity and health care costs.”
