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Illustration: Aïda Amer/Axios

With legislation in Congress likely to be blocked by partisan division and interest group opposition, much of the real action in health care this year will be in the states.

The big picture: States don’t have the money or purchasing power the federal government does, but their decisions nevertheless affect millions of people, and they could signal the future of federal reform.

What to watch: Colorado and Washington are implementing public insurance options that could be a model for Democrats at the federal level.

  • Both plans would be privately administered, and would pay providers 160% of Medicare rates, or more.
  • It’s not yet clear whether they’d be open to very many people with employer-based coverage, or how many providers will accept this coverage.
  • Pennsylvania and New Jersey are taking over their Affordable Care Act marketplaces from the federal government.
  • California is embarking on an ambitious state-financed coverage expansion.

State interest in Massachusetts-like cost controls may grow, as could interest in using Medicaid to pay for non-medical services for high cost patients, as North Carolina is doing.

The other side: Idaho and other red states are promoting short-term insurance plans as an alternative to the Affordable Care Act.

  • Georgia is seeking ACA waiver plan to ditch the state’s marketplace, with consumers enrolling through insurers and web brokers, and a subsidy scheme allowing healthier consumers to choose skimpier plans that do not meet all ACA standards. 
  • Tennessee is seeking a form of per capita cap within Medicaid, with broad flexibility and favorable terms for the state.
  • Red states’ efforts to implement work requirements for Medicaid appear to be faltering in the face of adverse court decisions and opposition. But the Trump administration is still approving them.

Go deeper

Former D.C. Guard alleges Army Generals lied about Jan. 6 response

Members of the National Guard and Capitol police keep a small group of pro-Trump demonstrators away from the Capitol following the insurrection on Jan. 6. Photo: Spencer Platt/Getty Images

A former D.C. National Guard official has alleged that top Army generals "lied" to Congress in their testimony on the U.S. Capitol riot, Politico first reported Monday.

The big picture: Col. Earl Matthews, who was serving on Jan. 6, alleges in a memo that the official version on the military response is "worthy of the best Stalinist or North Korea propagandist" and that the Pentagon inspector general's November report on it features "myriad inaccuracies, false or misleading statements, or examples of faulty analysis."

Toyota to build $1.3 billion U.S. battery plant in North Carolina

The all-electric Toyota bZ4X, the company's first battery-electric vehicle, at the Los Angeles Auto Show in Los Angeles, California on Nov. 17. Photo: Frederic J. Brown/AFP via Getty Images

Toyota announced Monday it's investing $1.3 billion to construct an electric vehicle battery "megasite" near Greensboro, North Carolina, set to open in 2025.

Why it matters: Toyota's Prius hybrid won environmental plaudits when it launched in 1997, but it has since lost ground to electric vehicle world leader Tesla, per Axios' Joann Muller. This battery plant will be the first to produce automotive batteries for Toyota in North America.

6 hours ago - Politics & Policy

Congress hunts for shortcut to pass defense funding, debt limit combo

Senate Majority Leader Chuck Schumer returned to his office Monday. Photo: Anna Moneymaker/Getty Images

The scramble in Congress to pass the National Defense Authorization Act is being complicated by an effort to tie it to a needed hike in the federal debt limit.

Why it matters: The House and Senate are rapidly coming up against a series of deadlines they must address before the end of the year — or risk disrupting crucial military funding and upending the economy. Congressional leaders are now hoping they can knock out both "must-pass" priorities in one, complex swoop.