What Does the State Innovation Model Experiment Tell Us About States' Capacity to Implement Complex Health Reforms?

Policy Points To make progress implementing payment and delivery system reforms, state governments need to make genuine stakeholder engagement routine business, develop reforms that build on past successes, and ensure health reform is a top priority for bureaucrats and political leaders. To support state-led reform initiatives, the federal government needs to provide financial support directly to state governments; build bureaucratic capability in supporting state officials with policy design and implementation; develop more flexible, outcome-focused funding programs; reform its own programs, particularly Medicare; and commit to a long-term strategy for progressing payment and delivery system reforms.

For decades, Americans have debated whether the states need federal government support to reform health care. The Affordable Care Act has allowed the federal government to trial innovative ways of accelerating state-led reform initiatives through the State Innovation Model (SIM), which was run by the Centers for Medicare and Medicaid Services Innovation Center between 2013 and 2019. This study assesses states' progress implementing health reforms under SIM and examines how well the federal government supported them.

Detailed case studies were conducted in six states: Arkansas, Connecticut, Oregon, New York, Tennessee, and Washington. Data was collected from SIM evaluation and annual reports and through semistructured interviews with 39 expert informants, mostly state or federal officials involved in SIM. Preliminary findings were tested and refined through an online forum with health policy experts, facilitated by the Milbank Memorial Fund.

States that made the most progress implementing reforms had a strong track record and managed to sustain stakeholder, bureaucratic, and political support for their reform agenda. There was a clear correlation between past reform success and success under SIM, which raises questions about the value of federal government support beyond providing funding. State officials said the federal government could better support states, particularly those with less reform experience, by providing tailored advice that helped state officials overcome problems designing and implementing reforms. State officials also said the federal government could better support them by reforming their own programs, particularly Medicare, and committing to a long-term strategy for health system reform.

States can make some progress reforming health care on their own, but real progress requires long-term cooperation between state and federal governments. Federal initiatives like SIM that foster cooperation between governments should be continued but refined so they provide better support to states.