Think Tank Launches Push to Reshape State Healthcare After Federal Overhaul

WASHINGTON – January 05, 2026 – A conservative think tank is launching a major new initiative aimed at reshaping state healthcare systems, building on the foundation of sweeping federal reforms enacted by the Trump administration last year. The Paragon Health Institute, a research organization led by a former White House health policy advisor, announced its State Health Reform Initiative today, signaling a new front in the ideological battle over the future of American healthcare, with a primary focus on the nation's Medicaid program.

Led by Paragon's Niklas Kleinworth, the initiative aims to guide states in implementing what it calls “evidence-based, free-market policies.” The effort will focus on strengthening Medicaid integrity, holding managed care insurers accountable, and removing regulatory barriers to care. The announcement positions the group to be a key player in translating the principles of 2025's controversial federal healthcare legislation into concrete policy at the state level.

“In 2025, Congress and the Trump administration implemented historic reforms to federal health care programs, and it is vital that states seize the reform mantle and successfully implement them,” said Paragon President Brian Blase in a statement. He emphasized Paragon's eagerness to support state reforms that “expand choice and competition and hold government programs accountable.”

A Blueprint for State-Level Reform

Paragon Health Institute, founded by Blase in late 2021 after his tenure as a Special Assistant to the President for Economic Policy, frames its mission around market-based principles. The organization, which states it does not accept industry funding, is supported by donations from foundations and individuals. Financial disclosures and watchdog reports indicate significant funding from conservative and libertarian-aligned organizations, including the Stand Together network, the 85 Fund, and the Lynde and Harry Bradley Foundation, aligning the institute's work with a broader conservative policy agenda.

The new state-level initiative is built on four strategic pillars:

• Strengthening Medicaid integrity by ending self-attestation for eligibility and improving verification to combat waste, fraud, and abuse.
• Refocusing Medicaid on populations it defines as the “truly vulnerable”—children, pregnant women, the poor, and the elderly—while encouraging work requirements for able-bodied adults.
• Holding Medicaid managed care insurers accountable through more stringent reporting and transparency requirements.
• Removing barriers to care by expanding healthcare supply and promoting alternative coverage options.

This blueprint is detailed in a recent paper co-authored by Kleinworth and Blase, “Preserve and Improve Medicaid,” which serves as an intellectual playbook for the initiative. The approach champions states as “laboratories of democracy,” capable of innovating solutions that reduce costs and improve access by cutting regulations and fostering competition.

Building on a Federal Overhaul

The initiative is explicitly timed to capitalize on what its leaders call a “critical opportunity” created by the “One Big Beautiful Bill Act” (OBBBA). Signed into law on July 4, 2025, the massive budget reconciliation bill enacted some of the most significant changes to federal health policy in over a decade.

The OBBBA introduced new administrative hurdles and work requirements for Medicaid recipients, restricted states' ability to use provider taxes to finance their programs, and imposed new verification requirements for individuals receiving subsidies on the Affordable Care Act (ACA) marketplaces. Crucially, the law passed without extending the enhanced ACA subsidies that expired at the end of 2025, a move projected to sharply increase costs for millions.

According to the Congressional Budget Office (CBO), the OBBBA is projected to reduce federal healthcare spending by over $1 trillion over the next decade but also increase the number of uninsured Americans by 10 million by 2034. The CBO attributed approximately 7.5 million of those coverage losses directly to the law's changes to Medicaid.

Paragon's initiative seeks to help states navigate and build upon this new federal landscape. “Recent federal reforms...present critical opportunities for state lawmakers to implement much-needed improvements to their health systems,” Kleinworth stated, framing the initiative as a support system for states looking to adopt these changes.

Medicaid in the Crosshairs

The central target of Paragon’s reform effort is Medicaid, a program that has long been a focus for fiscal conservatives. The push for greater program integrity is grounded in legitimate concerns over financial leakage. The Government Accountability Office (GAO) has repeatedly flagged Medicaid as a high-risk program, with the Department of Health and Human Services estimating improper payments—a figure that includes both fraud and unintentional errors—totaled nearly $81 billion in fiscal year 2022.

State auditors have consistently identified hundreds of issues annually, from overpayments for services to payments to non-enrolled providers, with a high percentage of these findings being repeat problems. Paragon argues that the program's financing structure, which involves an open-ended federal match for state spending, creates “perverse incentives” that have fueled over $1 trillion in improper payments over the last decade.

However, the proposed solutions, such as stricter eligibility verification and work requirements, are deeply controversial. Opponents of the OBBBA, including the American Medical Association (AMA), warned that such measures would lead to massive coverage losses. The AMA estimated the federal bill would cause 11.8 million people to lose their health insurance. Analysts at the Georgetown University Center for Children and Families described the OBBBA's nearly $1 trillion in Medicaid and CHIP cuts as the largest in history.

A Battle of Visions for Healthcare's Future

The launch of the State Health Reform Initiative solidifies the next chapter in the national debate over healthcare. While Paragon and its allies see an opportunity to instill fiscal discipline and market principles into a bloated system, patient advocates and opposing policy groups see a threat to the nation's social safety net.

Critics argue that the push to “refocus” Medicaid on the “truly vulnerable” is a thinly veiled effort to shrink the program and restrict access for millions of low-income adults who gained coverage under the ACA. They point to the CBO's stark projections as evidence that such policies, while saving federal dollars, shift costs onto individuals and states or, more often, leave people without any coverage at all.

The American Hospital Association has previously challenged Paragon's research, particularly its claims about widespread fraud in the ACA Marketplace, arguing its methodology was flawed and its policy recommendations would result in millions losing coverage. The debate highlights a fundamental disagreement not just over policy mechanics, but over the primary goal of the healthcare system: whether it is to provide the broadest possible coverage or to ensure maximum fiscal efficiency, even if it means fewer people are covered. With Paragon's initiative now taking this fight to all 50 states, this ideological conflict is set to intensify in-tensify in statehouses across the country.