State policy makers are under increasing pressure to address the prohibitive cost of health care given the lack of action at the federal level. In 2020, the United States spent more on health care than any other country in the world—$4.1 trillion, representing 19.7% of the nation's gross domestic product. States are trying to better understand their role in health care spending and to think creatively about strategies for addressing health care cost growth. One way they are doing this is through the development and use of state-based all-payer claims databases (APCDs). APCDs are health data organizations that hold transactional information from public (Medicare and Medicaid) and private health insurers (commercial plans and some self-insured employers). APCDs transform this data into useful information on health care costs and trends. This article describes states' use of APCDs and recent efforts that have provided benefits and challenges for states interested in this unique opportunity to inform health policy. Although challenges exist, there is new funding for state APCD improvements in the No Surprises Act, and potential new federal interest will help states enhance their APCD capacity so they can better understand their markets, educate consumers, and create actionable market information.

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