State Health Equity and Access Act of 2025

This Act provides federal grants to states that choose to expand Medicaid coverage to all residents with incomes up to 138% of the federal poverty level, establish a state-based public health insurance option, and require hospitals and insurers to publicly disclose standard prices for common services. States that adopt these measures within three years will receive enhanced federal matching funds for their Medicaid programs, and any state that already meets these standards may receive a bonus grant for administrative innovation. The Act does not mandate participation; instead, it uses federal spending to incentivize voluntary state action, preserving each state's authority to design its own healthcare system within these federal guardrails. For states that participate, the Act prohibits denying coverage based on pre-existing conditions, imposing lifetime caps, or charging higher premiums based on health status. It also requires that any state public option be self-sustaining through premiums and federal contributions, with a transparent rate-setting process that includes public comment. The Secretary of Health and Human Services may withhold federal funds from non-compliant states, but only after a formal notice-and-comment process and a hearing, ensuring due process before any penalty is imposed. To advance equity, the Act directs HHS to collect and publish data on healthcare access and outcomes by race, income, and geography, and to provide technical assistance to states that request help in implementing reforms. It also creates a limited federal backstop: if fewer than twenty states participate within five years, the Secretary must report to Congress on alternative strategies, including a possible federal public option, but only after exhausting state-based approaches. This structure respects the Tenth Amendment by keeping primary authority with the states while using Congress's spending power to encourage progress.

This proposal stays within Article I, Section 8 by exercising Congress's spending power (Clause 1) to provide for the general welfare, and its commerce power (Clause 3) to regulate interstate health insurance markets, with necessary and proper implementation (Clause 18). It does not abridge any Bill of Rights or 14th Amendment right; instead, it imposes no mandates on individuals—only on states that voluntarily accept federal funds. The burden of justification is on the government: any state withholding funds must prove non-compliance through a due process hearing. It prefers decentralization by allowing states to design their own programs within broad federal standards, honoring the Tenth Amendment's reservation of powers to the states. Due process is satisfied via notice-and-comment rulemaking and formal hearings before any funding loss, protecting states' property interests.