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From Health Affairs:

Cutting Health Cost Growth By Shared State-Federal Savings



Bethesda, MD -- A new commentary, being released today as a Web First by Health Affairs, discusses the concept of "cooperative federalism" in light of the Affordable Care Act. It proposes an optional shared savings program between the states and the federal government as a response to concerns that there may be increased federal control over implementation of the health reform laws at the state level because state decisions will determine the level of federal spending. For example, state decisions regarding Medicaid benefits, payment levels, and the use of managed care, and state exchange policies on rate review, qualifying health plans, and defining essential health benefits, would all directly affect health costs. In this proposed program, the federal government would share with the states any federal savings relative to expected expenditures on state-administered health programs; it would not operate through waivers; and the details of the program would develop through open rule making.

Promoting Cooperative Federalism Through State Shared Savings


By Alan Weil


The author is the executive director of the National Academy for State Health Policy in Washington, D.C.


The commentary will also appear in the August issue of Health Affairs.


In the author's opinion, relations between state governments and Washington have been in a state of "uneasy truce" in which the federal government has been accommodating by never exercising its full authority, and the states have put to maximum use the flexibility offered, particularly in tailoring the Medicaid program to their needs. However, this truce, the author claims, has been threatened by the expanded scope of federal control in the Affordable Care Act and fears that the federal government will show heavy handedness as implementation of the law proceeds. Proposing a new shared savings program, the author says, "In this program, the federal government would share with the states any savings in comparison to what the federal government expects it would have paid for programs that have federal financial participation." The author would tie shared savings to performance standards and suggests that the shared savings program be based on a predetermined formula, not negotiated one state at a time. This program, concludes the author, "offers a path forward that would align states and the federal government in their quest for better performance while limiting the risk to program beneficiaries."

About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.