State-Based Universal Health Care Act of 2025
- Sponsor
- Rep. Khanna, Ro [D-CA-17]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Jul 15, 2025
Bottom line
This bill creates a pathway for states to design and implement their own universal health care systems by consolidating federal health care funding and waiving federal regulations, aiming to achieve comprehensive coverage and affordability.
What it actually does
This bill authorizes states to apply for waivers from a wide range of federal health care laws and programs, including the Affordable Care Act, Medicare, Medicaid, CHIP, TRICARE, and federal employee health benefits, to establish their own comprehensive universal health care systems. States must demonstrate a plan to achieve 95% coverage within five years, ensure budget neutrality for the federal government, and administer their systems publicly while providing comprehensive, affordable benefits, including reproductive health care.
Proponents argue
Supporters argue this bill offers a flexible, state-led approach to achieving universal health care, allowing states to innovate and tailor systems to their unique populations while ensuring comprehensive benefits and affordability. They contend it streamlines federal funding, reduces administrative waste, and empowers states to overcome federal programmatic silos to achieve broader coverage.
Opponents contend
Critics might argue that this bill could lead to a patchwork of inconsistent health care systems across states, potentially undermining federal standards and protections. Concerns could be raised about the feasibility of states achieving budget neutrality while expanding coverage, the potential for states to reduce benefits or increase costs for certain populations, and the administrative complexity of coordinating waivers across numerous federal programs.
The bill is moderately detailed, requiring careful reading to understand the scope of waivers and state requirements. The estimated reading time of 35 minutes is appropriate for a thorough review.
Section 1(a) and 1(b)
Short Title and Purpose
This section formally names the act as the 'State-Based Universal Health Care Act of 2025' and states its purpose: to create a flexible framework for states to provide comprehensive universal health coverage to their residents.
Supporters argue
Supporters argue that clearly articulating the purpose upfront helps align all stakeholders towards the goal of universal health care through state innovation.
Critics contend
No specific opposition is typically raised against this foundational provision, though opponents of the bill's overall goal would oppose the stated purpose.
Section 2(a), inserting new Section 1335(a) into PPACA
State Application for Universal Health Care Waiver
This provision allows states to apply to the Secretary for a waiver from numerous federal health care requirements, including those from the ACA, Medicare, Medicaid, CHIP, FEHBP, TRICARE, and IRS tax credits, to implement a comprehensive state universal health care plan. Applications must include a plan to achieve 95% coverage within 5 years and a 10-fiscal-year budget plan that is budget-neutral for the federal government.
Section 2(a), new Section 1335(a)(3)
Federal Funding Passthrough and Savings Reinvestment
For states granted a waiver, the Secretary must provide the aggregate amount of federal health and administrative funds that would have been spent in that state under the waived federal programs (e.g., Medicare, Medicaid, ACA subsidies). This amount is adjusted for caseload growth and health care inflation. Any savings achieved by the state can be reinvested in health care services under the state plan.
Section 2(a), new Section 1335(b)(1)
Conditions for Waiver Approval
The Secretary must grant a waiver if the state plan meets several conditions: it must provide coverage at least as comprehensive and affordable as existing federal programs, cover all state residents (except those eligible for IHS or VA benefits), include mandatory Medicaid benefits (if waiving Medicaid), provide public education and enrollment facilitation, be publicly administered, allow for purchase of supplemental insurance for non-covered benefits, include robust complaint/appeal systems, and cover reproductive health care services (including abortion, contraception, and gender-affirming care).
Section 2(a), new Section 1335(e)
Periodic Review and Performance Requirements
States receiving a waiver must submit a report every five years, conducted by an independent, non-partisan entity, detailing how funds were spent, the number of uninsured residents, changes in affordability, achievement of the 95% coverage goal, and changes in quality and access. If a state fails to meet the 95% coverage target, it receives technical assistance and a 12-month grace period before potential waiver termination. States meeting the target must submit a plan to cover the remaining residents.
Section 2(a), new Section 1335(g)
Establishment of Independent Assessment Panel
Establishes an 11-member 'Independent Assessment Panel for Comprehensive Health Care' to review waiver applications and state reports, provide recommendations to the Secretary and states, and report annually to Congress. Members are appointed by the Secretary of HHS based on recommendations from congressional leaders, governors' associations, patient advocates, labor organizations (including nurses), primary care physicians, and rural health professionals.
Section 2(a), new Section 1335(h)
Protections and Guidance for American Indians and Alaska Natives
Requires the Secretary to issue guidance ensuring that the waiver provisions are applied consistently with the federal government's trust responsibility to Indians. This includes prohibiting enrollment fees, premiums, or cost-sharing for Indians, not requiring their enrollment in state plans, requiring good faith efforts by issuers to contract with Indian health care providers, and ensuring fair payment rates for these providers. States must also consult regularly with Indian health care programs and urban Indian organizations.
This provision allows states to waive Section 514 of the Employee Retirement Income Security Act of 1974 (ERISA). ERISA generally preempts state laws that 'relate to' employee benefit plans, including self-funded health plans. Waiving this section would allow states to apply their universal health care regulations to self-funded employer plans, which currently are largely exempt from state insurance mandates.
Section 2(a), new Section 1335(a)(2)(J)
Why it matters:While definitions and lists of waivable provisions are standard legislative practice, the far-reaching impact of waiving ERISA preemption is often overlooked by non-experts due to its technical phrasing.
Case for: Supporters argue that waiving ERISA preemption is essential for states to truly implement universal health care, as it allows them to include self-funded employer plans within their state systems, ensuring comprehensive coverage and financing. Without it, a significant portion of the population would remain outside the state system.
Case against: Opponents, particularly large employers and some business groups, would argue that waiving ERISA preemption undermines the uniformity and administrative simplicity that ERISA provides for multi-state employers, potentially increasing compliance costs and administrative burdens.
Estimated impact: Potentially massive, as it would bring a large segment of the privately insured population (those in self-funded employer plans) under state regulation, significantly altering the landscape of employer-sponsored health insurance in participating states.
Defines 'resident' for the purpose of state universal health care plans to include 'an alien lawfully residing in the State (including an alien who is granted deferred action or who is otherwise authorized to remain in the United States)'. This explicitly extends coverage eligibility beyond citizens and nationals to a broad category of non-citizens.
Section 2(a), new Section 1335(i)(2)(A)(ii)
Why it matters:While definitions are standard, the inclusion of specific immigration statuses has significant policy implications that might be overlooked if not carefully read, as it addresses a politically sensitive topic.
Case for: Proponents argue that universal health care means truly universal, covering all individuals who live and work in the state, regardless of immigration status, to ensure public health and humanitarian principles. They contend that excluding certain populations creates public health risks and moral dilemmas.
Case against: Opponents might argue that extending coverage to non-citizens, especially those with deferred action or other authorizations, could be a significant financial burden on state systems and could incentivize further immigration, leading to political controversy.
Estimated impact: Potentially significant, depending on the size of the eligible non-citizen population in a given state, affecting state budgets and the scope of coverage.