Aaron and Butler set forth a state-based plan for comprehensive health care reform in a summer 2008 edition of Health Affairs journal.  They argue that state health care programs are too diverse for a clear national health .  Instead, the argue, the federal government should make it easy for states to undertake reform measures.

To broaden health care coverage to more individuals at the state level and foster a more coordinated system of health insurance that will make future national health reform possible.  The plan proposes that states act as incubators for reform.  The purpose is for the problems that would otherwise arise with the implementation of national reform to remain isolated to the states where the reform is tested.

The plan outlines the steps for the federal government to facilitate reform at the state level.
First, the federal government will clearly define the standards of "adequate coverage" including the specific services covered, cost-sharing details and premium limits.  The focus of the first step is to set national standards by which states can measure their reforms.  Specifically, the plan argues that there should be a national statement of health care goals and values.
Second, states can propose experiments with various health insurance programs including insurance exchange, expanded subsidies, mandates, single-payer systems, etc.
Third, the plan argues that the federal government should express approval or disapproval of each state proposal.  The proposals, if sufficiently adventuresome, will test the bounds of federal authority.  Some plans might require a legislative waiver.  A consistent process of legislative review for state proposals will cover these concerns.

It is questionable whether or not new federal funding is necessary, but Aaron and Butler do not rule it out.  Understanding that states' legislative restraints require balanced budgets, federal dollars might be necessary to fund the initiation of new programs.  
More pertinently for the plan to succeed, Congress will need to craft a new process by which the federal government approves state plans.