Abstract
Challenged by relentless increases in health care spending, state governments have been forced to experiment with health care system reform. Medicaid has been expanded by Congress, forcing states to provide a broader array of health benefits to more recipients. As states consider reform, federal limitations mandated by Medicaid and by the Employee Retirement Income Security Act (ERISA) of 1974 on state activity pose significant obstacles. ERISA sharply limits a state's ability to raise revenue to fund these health programs. Several states have responded to these limitations by seeking waivers. Despite these obstacles, 8 states already have enacted comprehensive health reform measures, and virtually every state is considering legislative reform.
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