The objective of this study was to examine state-level variations in income-related inequality in health and overall health achievement in the US. Data that were representative of the US and each state in 2001 were extracted from the Current Population Survey 2001. Income-related inequality in health and health achievement were measured by Health Concentration and Health Achievement Indices, respectively. Significant variations were found across states in income-related inequality in health and health achievement. In particular, states in the south and east regions, on average, experienced a higher degree of health inequality and lower health achievement. About 80% of the state-level variation in health achievement could be explained by demographics, economic structure and performance, and state and local government spending and burden. In contrast, medical care resource indicators were not found to contribute to health achievement in states. States with better health achievement were more urbanized, had lower proportions of minority groups, females and the elderly, fewer individuals below the poverty line, larger primary industry, and lower unemployment rates. Also, per capita state and local government spending, particularly the proportion spent on public health, was positively associated with better health achievement. Because of the direct implications of health level and distribution in resource allocation and social norms, states with a lower level of health achievement need to prioritize efforts in increasing and reallocating resources to diminish health inequality and to improve population health.