Will 2026 be the year high costs break the healthcare system?

Despite the Trump administration’s attempt to downplay affordability as a hoax, an overwhelming majority of Americans on both sides of the aisle agree that healthcare is unaffordable. With the expiration of enhanced subsidies for Affordable Care Act plans driving up premiums exorbitantly and more cuts to public insurance plans on the horizon, affordability is set to be the central healthcare issue in 2026. An increasing proportion of Americans want government actors to help people get health insurance and protect them from medical debt. 

With such a strong popular desire for action to reduce healthcare costs, how should policymakers respond? Here are some areas that health policy experts agree are ripe for change (and a few of my suggestions thrown in as well):

Site-neutral payments

Currently, hospital-owned outpatient departments get paid more than doctor’s offices for certain services, even if the care delivered is exactly the same. In separate op-eds, Zack Cooper, associate professor of public health and economics at Yale University, and Ezekiel Emanuel, professor of medical ethics and health policy at the University of Pennsylvania, call out this practice as being unnecessarily inefficient and recommend equalizing reimbursement rates across sites of care for services that can be safely delivered in lower-intensity settings. 

Paying different rates based on the site of care not only increases overall costs, it creates strong incentives for hospitals to buy up more doctor’s offices, likely contributing to the reduction of physicians in private practice over the past decade. That makes site-neutral payments not only an important short-term cost containment strategy, but potentially a longer-term driver of competition. After decades of seeing how differential payments have played out for taxpayers, there’s a lot of appetite for action; CMS has already identified candidates for site-neutral payments and has implemented this policy for drug administration. 

Value-based payment models

If we want to reduce healthcare spending, we have to align the incentives for providers and patients toward value rather than volume, argues former Office of Management and Budget director Peter Orzag in a New York Times op-ed. Both Orzag and Emanuel recommend payment models that use “bundles” or episode-based payments, to reward providers for avoiding unnecessary services. 

Along with bundles for specific types of services, we have to change the larger payment landscape to be oriented toward value; otherwise the incentives created by value-based models will continue to bump up against the fee-for-service default. More comprehensive types of payment structures, such as having predictable overall budgets for hospitals and other providers, been shown to help keep costs under control.

Provider price caps

The prices that hospitals and other providers charge to private insurers often depends on their market power, rather than the cost of delivering the care or the quality of care. Both Cooper and Emanuel suggest capping hospital prices as a percentage of what Medicare pays; Emanuel adds the idea of higher caps for areas with greater competition to encourage more competitive markets, while a proposal from Cooper’s 1% steps project includes price growth caps based on how well hospitals already keep down the cost of care. 

While we’re capping price growth, why not also cap out-of-pocket limits for private plans, or create a public option with a total out-of-pocket limit—including premiums, deductibles, copays, etc—capped at a certain percentage of patient income? 

Incremental but meaningful changes

There are many small changes that don’t alter the structure of the healthcare system but could still make a meaningful difference in cost. For example, Orzag recommends creating uniform malpractice standards to protect doctors who follow evidence-based guidelines and reduce unnecessary care that comes from “defensive medicine” and Cooper suggests reforms to improve incentives for kidney donation to reduce the cost of dialysis. 

When it comes to malpractice standards and overuse, research indicates that doctors’ perceptions or fears about malpractice drive defensive medicine more than the policies themselves, so we may be able to achieve the same effect of reducing overuse with messaging as opposed to policy changes. I would also add stronger financial assistance regulations for hospitals as an incremental but potentially powerful way to reduce out-of-pocket costs for low-income patients.

Start planning the next health system NOW

At the same time, if we want to transform our healthcare system to one that is universal, affordable, prevention-based, and high-quality, we have to build the foundation now. Structural changes like universal coverage, antitrust regulations for “too-big-to-fail” health systems and insurers, and global budgets have incredible potential to reduce cost in the long run, and with bipartisan buy-in they would be more likely to succeed. Cooper points to the idea floated in the fall of 2025 of a bipartisan commission to study cost containment policies; opportunities like this to find commonalities, as well as CMS pilot projects like AHEAD that test new models, can lay the groundwork for larger changes we need to bring costs down.

Too often, important transformative ideas like single-payer healthcare get dismissed out of hand because they seem too hard, when they should be a starting point for conversation. We need stakeholders on both sides of the aisle to talk frankly about how we expect people to pay for necessary health services, and then figure out how we build a system that can provide care at that price point.  

If you want to hear what policymakers and researchers are saying about healthcare affordability, we hope you will join us at the upcoming Lown conference on May 21, 2026 in Boston!