After the Patient Protection and Affordable Care Act is fully implemented, Medicaid will be the largest single health care payer in the United States. Each U.S. state controls the size and scope of the medicine benefit beyond the federally mandated minimum; however, regulations that require balanced budgets and prohibit deficit spending limit each state's control. In a recessionary environment with reduced revenue, state Medicaid programs operate under a fixed or shrinking budget. Thus, the state Medicaid experience of providing high-quality care under explicit financial limits can inform Medicare and private payers of measures that control per-capita costs without adversely affecting health outcomes. The academic medicine community must play an expanded role in filling evidence gaps in order to continuously improve health policy making among U.S. states. The Drug Effectiveness Review Project and the Medicaid Evidence-based Decisions Project are two multistate Medicaid collaborations that leverage academic health center researchers' comparative effectiveness research (CER) projects to answer policy-relevant research questions. The authors of this article highlight how academic medicine can support states' health policies through CER and how CER-driven benefit-design choices can help states meet their cost and quality needs.