Health care policy in the United States is made through a layered process: Congress passes broad statutes, the President signs them, federal agencies like the Department of Health and Human Services and the Centers for Medicare & Medicaid Services translate those statutes into detailed regulations, states administer large portions of the resulting programs under federal conditions, and courts decide whether the laws and rules hold up when someone challenges them. No single actor controls the outcome, which is why changing any significant piece of the system takes years and why the rules that reach patients, providers, and insurers rarely look exactly like what Congress originally debated.
Who Actually Makes the Decisions
Congress writes the laws that create and fund the country’s largest health programs. The Medicare and Medicaid Act of 1965 is the clearest example, establishing Medicare for older adults and Medicaid for people with limited income after decades of debate.1National Archives. Medicare and Medicaid Act (1965) State legislatures license health professionals and facilities, regulate their own insurance markets, and set policies for their state Medicaid programs.
The President proposes priorities, signs or vetoes bills, and issues executive orders directing agencies to act. The operational work happens at HHS and CMS. HHS issues and enforces rules on food safety, health information privacy, hospital standards, and more.2HHS. Rulemaking Tool Kit CMS regulations govern how Medicare, Medicaid, and the marketplace operate day to day, directly affecting providers, insurers, and enrollees.3Centers for Medicare & Medicaid Services. CMS Rulemaking Governors direct state health departments and decide how to implement federal programs within their borders.
Outside government, professional associations, patient groups, insurers, drug companies, and hospital systems lobby throughout the process. The Lobbying Disclosure Act requires anyone who makes more than one lobbying contact and spends at least 20 percent of their time on lobbying over a three-month period to register with Congress within 45 days. Registered lobbyists file quarterly activity reports identifying the bills and agencies they contacted, plus semiannual reports disclosing political contributions of $200 or more.4Congress.gov. Lobbying Disclosure Act Guidance Think tanks and academic researchers feed studies into the debate, though those studies compete with political calculation and industry pressure for attention.
How a Health Care Bill Becomes Law
The Standard Path
A member of Congress introduces a bill in the House or the Senate. It goes to committee, where most bills die quietly. Survivors go through markup, floor debate, amendments, and a vote. If both chambers pass different versions, a conference committee reconciles them and each chamber votes on the final version before it goes to the President. In the Senate, overcoming a filibuster requires 60 votes. That threshold is why major health reform so often stalls, and why the biggest recent health laws have moved through a different route.
Budget Reconciliation
Budget reconciliation is an expedited procedure under the Congressional Budget Act that lets the Senate pass certain legislation with a simple majority. Debate is capped at 20 hours. The Affordable Care Act’s final changes moved through reconciliation. But the tool has limits. Under the Byrd Rule, provisions in a reconciliation bill must produce a change in federal spending or revenue and cannot increase the deficit beyond the years the bill covers.5Congress.gov. The Reconciliation Process: Frequently Asked Questions Purely regulatory provisions with no budgetary effect get struck. Waiving the Byrd Rule requires a three-fifths Senate vote, so non-budgetary provisions rarely survive.
CBO Scoring
Before Congress votes on most health legislation, the Congressional Budget Office estimates its fiscal impact. For mandatory spending or revenue provisions, CBO projects effects over a 10-year window; for discretionary programs, it uses five years. CBO also projects long-term effects across four consecutive 10-year periods starting in the 11th year after enactment.6Congressional Budget Office. Frequently Asked Questions About CBO’s Cost Estimates When the Joint Committee on Taxation handles tax provisions, CBO incorporates those estimates. Scores carry real weight: a bill projected to add hundreds of billions to the deficit faces a much harder political path than one scored as deficit-neutral. Scoring is where many ambitious proposals get reshaped or abandoned, because the numbers force trade-offs that rhetoric can avoid.
From Statute to Regulation
A signed law is the starting point, not the finish. The statutes behind Medicare, Medicaid, and marketplace insurance are written broadly. The detailed rules providers and patients actually deal with come from agency rulemaking.
Notice-and-Comment Rulemaking
Federal agencies follow the Administrative Procedure Act when they write regulations. The process has three steps. The agency publishes a proposed rule in the Federal Register with notice of the legal authority behind it. It opens a public comment period where anyone can submit written feedback. It then issues a final rule with a statement of basis and purpose. A final rule generally cannot take effect until at least 30 days after publication.7National Archives. Administrative Procedure Act
Comments matter. Agencies also use Requests for Information to gather public input before deciding whether to propose a rule at all. Under the APA, any person can petition an agency to create, change, or repeal a rule, and the agency must respond.7National Archives. Administrative Procedure Act
Advisory Committees
HHS uses dozens of advisory committees to bring expert and public perspectives into its decisions, from the Advisory Committee on Immunization Practices to the National Advisory Council on Aging.8HHS. HHS Advisory Committees and Task Forces Under federal law, these committees advise only; the final policy decision must be made by the responsible government official. Each committee files a charter before it can meet, and its creation must be published in the Federal Register along with a determination that the committee serves the public interest.9Office of the Law Revision Counsel. 5 USC Ch. 10 – Federal Advisory Committees
Where States Fit In and Where Federal Law Overrides Them
The federal government’s authority over health care comes primarily from the constitutional power to regulate interstate commerce and to spend for the general welfare. Those powers let Congress create national programs, set minimum standards, and attach conditions to federal funding. States retain broad authority over public health, professional licensing, and insurance regulation. The tension between these overlapping authorities defines much of American health policy.
Medicare, which covers people 65 and older, certain younger people with disabilities, and people with end-stage kidney disease, is run entirely at the federal level through CMS.10Social Security Administration. Medicare Information11Medicare.gov. Parts of Medicare Medicaid is different. It is a joint federal-state program covering over 77 million people, including children, pregnant women, seniors, and people with disabilities.12Centers for Medicare & Medicaid Services. Eligibility Policy Federal law sets baseline rules and required coverage groups, but each state runs its own program, so eligibility thresholds and covered services vary considerably.13HHS.gov. What’s the Difference Between Medicare and Medicaid?
States that want to try approaches outside the standard rules can apply for a Section 1115 demonstration waiver. The HHS Secretary can approve waivers for projects likely to promote Medicaid’s objectives.14Social Security Administration. Social Security Act 1115 Waivers must be budget-neutral to the federal government, calculated on a per-enrollee basis over the waiver period. Before submitting an application, a state must hold at least two public hearings with a 30-day comment period and consult with federally recognized tribes. States must maintain a publicly available, CMS-approved evaluation strategy and report regularly on the waiver’s effects on access, quality, and outcomes.
ERISA Preemption
One of the biggest constraints on state health policy is a federal law that has nothing to do with health on its face. The Employee Retirement Income Security Act broadly preempts state laws that “relate to” employer-sponsored benefit plans. Courts have read that language expansively, blocking states from mandating that employers offer coverage, taxing employer plans, regulating the benefits of self-insured plans, or imposing substantial indirect costs on those plans. ERISA has a savings clause preserving state insurance regulation, but a self-insured employer plan is not treated as an insurance company for that purpose, which means states cannot regulate it the way they regulate traditional insurers.15Office of the Law Revision Counsel. 29 U.S. Code 1144 – Other Laws The practical effect is that large self-insured employers operate in a space controlled almost entirely by federal law, regardless of what any state legislature wants.
The Affordable Care Act
The ACA extended federal reach further by creating insurance marketplaces where individuals buy subsidized coverage, banning insurers from denying coverage based on pre-existing conditions, requiring most plans to cover a set of essential health benefits, and extending Medicaid eligibility in states that chose to participate. Nearly 23 million people selected marketplace plans during the 2026 open enrollment period.16Centers for Medicare & Medicaid Services. Marketplace 2026 Open Enrollment Period Report – National Snapshot
How Courts Decide What Survives
Courts have moved from a minor role in health policy to a decisive one. Judicial rulings now regularly determine whether major programs expand, shrink, or get dismantled.
Standing
Before anyone can challenge a health policy in federal court, they must show standing. The constitutional minimum requires three things: an actual or threatened injury, a causal connection between that injury and the challenged action, and a likelihood that a court ruling would fix the problem. A generalized grievance shared by the entire public is not enough. The injury must be concrete and personal, even if many other people suffer the same harm.17Legal Information Institute. Standing Requirement: Overview These requirements filter out many policy challenges before they reach the merits.
Judicial Review of Agency Action
The standard courts apply to agency rules has shifted significantly. For 40 years under the Chevron doctrine, courts deferred to an agency’s reasonable interpretation of ambiguous statutes. In 2024, the Supreme Court overruled Chevron in Loper Bright Enterprises v. Raimondo, holding that courts must exercise their own independent judgment when deciding whether an agency has acted within its statutory authority. Courts can still consider an agency interpretation as informative, but they no longer give it automatic deference when the law is ambiguous.18Supreme Court of the United States. Loper Bright Enterprises v. Raimondo HHS and CMS interpret ambiguous provisions of Medicare, Medicaid, and ACA statutes constantly. Providers, insurers, and states challenging agency rules now operate in a more favorable legal environment than they did before 2024.
The major questions doctrine adds another check. It requires Congress to speak clearly when authorizing an agency to make decisions of vast economic and political significance. When the CDC imposed a nationwide eviction moratorium during the pandemic, the Supreme Court struck it down in part because Congress had not clearly granted that sweeping authority.
The Medicaid Expansion Case
The 2012 decision in National Federation of Independent Business v. Sebelius reshaped the federal-state relationship. The Supreme Court upheld the ACA’s individual mandate as a valid exercise of Congress’s taxing power but struck down the law’s Medicaid expansion mechanism as unconstitutionally coercive. The Court found that threatening states with the loss of all existing Medicaid funding if they refused to expand coverage amounted to “economic dragooning that leaves the States with no real option but to acquiesce.” The remedy prohibited the HHS Secretary from withdrawing existing Medicaid funds from non-compliant states, effectively making expansion voluntary.19Justia. National Federation of Independent Business v. Sebelius Some states expanded Medicaid and others did not, creating an eligibility patchwork that persists today.
How It Gets Paid For and Policed
Health care spending in the United States reached $4.5 trillion in 2022, growing 4.1 percent over the prior year. The federal government accounted for 33 percent, households 28 percent, private businesses 18 percent, and state and local governments 15 percent.20Centers for Medicare & Medicaid Services. National Health Expenditures 2022 Highlights Projections put total health spending near $5.9 trillion by 2026. Federal and state budget processes allocate the money through annual appropriations for discretionary programs and automatic formulas for entitlements like Medicare and Medicaid.
States also use provider assessment fees to draw additional federal Medicaid matching funds. Under a federal safe harbor threshold, assessments on hospitals can run up to 6 percent of net patient service revenues.21Congress.gov. Medicaid Provider Taxes Nearly every state uses some form of provider tax.
With trillions moving through federal programs, oversight matters. CMS uses Unified Program Integrity Contractors to analyze claims data and identify potential fraud, waste, and abuse. Contractors draw on state Medicaid agencies, law enforcement referrals, beneficiary complaints, and proactive data studies, and must complete initial screening of a lead within 45 calendar days.22Centers for Medicare & Medicaid Services. Medicaid Investigations and Audits When an investigation finds that billed services were not supported by medical records, the contractor adjusts payment, reports identified overpayments to the state Medicaid agency, and refers cases with sufficient evidence of fraud to law enforcement. CMS also audits managed care plans for overpayments in capitation payments and network provider billing.
What Pushes the Process From Outside
The formal machinery does not run in a vacuum. Public opinion constrains what lawmakers will propose, especially on access and cost. Economic pressure is constant: when health spending accounts for roughly a fifth of the national economy, every policy conversation eventually becomes a conversation about money. Scientific evidence and technological change inform choices by revealing health trends, treatment effectiveness, and population risk, but evidence competes with political incentives, and whichever party controls Congress or the White House often decides whether a given piece of research gets translated into law. Demographic shifts and social movements also push issues onto the agenda; the opioid crisis, mental health parity advocacy, and campaigns addressing health disparities have all reshaped priorities over the past two decades.
How Programs Get Revised After the Fact
Policy does not end at implementation. Agencies track whether programs meet their goals, measuring coverage rates, costs per enrollee, health outcomes, and access. Section 1115 waivers require states to keep evaluation strategies and report on how their experiments affect access and quality. CBO re-scores existing programs against updated projections. The Government Accountability Office and the HHS Office of Inspector General flag waste, performance gaps, and unintended consequences.
When evaluation shows a program is falling short or producing unexpected costs, the cycle restarts. Agencies revise regulations, Congress considers amendments, and stakeholders lobby for changes. The feedback loop is slow and often politically fraught, but it is how the system adapts. The programs Americans rely on today look substantially different from the versions originally enacted, shaped by decades of incremental revision driven by real-world evidence and changing political will.