Affordability Requires Looking at the Whole Healthcare System
Making healthcare more affordable for families, businesses, and the federal and state governments is an important goal. High-quality healthcare should support individuals in living their best lives, including thriving at work and supporting a vibrant, innovative economy. Unfortunately, the substantial need for healthcare and the high cost of healthcare services have strained too many families, businesses and government budgets. Thus, we are rightly having a national reckoning with healthcare affordability.
Achieving more affordable healthcare is complicated. It is shaped by how much care a population needs (i.e., their underlying health conditions), how care is delivered, how it is paid for, how coverage is structured and how different parts of the system interact. When Americans talk about healthcare affordability, the conversation often starts in the wrong place. Too often, it focuses on a single part of the system rather than the full set of forces driving costs. Focusing on any one piece in isolation can lead to policies that just shift costs rather than bring them down.
The American Hospital Association’s new report, “Making Health Care More Affordable,” takes a different approach. It starts from a simple premise: Improving affordability requires addressing the underlying drivers of cost across the system while preserving access to high-quality care in every community. It also stresses that there is no single “magic bullet” solution that will solve the affordability challenge. But there are clear areas where progress can be made.
Improving Overall Health
Many of the highest costs are tied to chronic conditions that can be better managed or even prevented. While much of what contributes to good health occurs outside of the healthcare system and is influenced by a wide range of societal and environmental factors, expanding access to preventive services and strengthening connections between patients and primary care providers can improve outcomes while reducing the need for more intensive care.
Improving How Care Is Delivered
Hospitals and health systems are investing in coordinated and value-based care models that reduce service duplication, improve quality and better align incentives. These approaches help ensure patients get the right care at the right time, which is essential to both better outcomes and lower costs.
Addressing Administrative Complexity
At the same time, affordability will remain out of reach without addressing the administrative complexity in the system. Providers, insurers and employers are engaged in countless transactions that add cost without improving care. Simplifying billing, standardizing processes and reducing unnecessary requirements can lower system-wide expenses that ultimately affect patients and purchasers.
Managing the Costs of Caring
The cost of actually providing care is another major component. Hospitals have had to manage massive increases in the cost of labor, supplies, drugs and medical devices for years. In 2024, the average launch price of a new drug was nearly as much as the price of a new home. This puts pressure on both patients and providers. Addressing these costs requires stronger accountability for manufacturers and a more competitive marketplace.
Holding Commercial Insurers Accountable
There is also a need for greater accountability in the commercial insurance market. Patients and employers are paying more each year in premiums and out-of-pocket costs, even as administrative barriers like prior authorization and claim denials continue to grow. Improving affordability means not only reducing costs but also ensuring that coverage actually works when people need care.
Advancing Innovation
Finally, continued innovation is essential. Advances in treatment, data and digital tools are helping providers manage complex conditions more effectively and avoid more costly interventions down the road. Supporting innovation that improves outcomes while reducing unnecessary utilization is a key part of any long-term strategy.
Taken together, these areas reflect a broader point: Affordability is a system-wide challenge that requires shared responsibility. Hospitals and health systems need to do their part by investing in new models of care, improving efficiency and reducing low-value services. But meaningful progress will require action from all stakeholders, including commercial insurers, drug manufacturers, policymakers, employers and individuals.
In addition, efforts to improve affordability cannot come at the expense of essential services. Hospitals must be available to provide around-the-clock care for patients and maintain the capacity to respond to emergencies and complex medical needs. Policies that focus narrowly on reducing one part of spending without accounting for these realities risk undermining the care that communities rely on.
The AHA’s report outlines a set of practical strategies to move the system forward. The next step is ensuring these ideas translate into coordinated action. We will continue to highlight our recommendations, what they mean for patients and employers, and how they can improve affordability in ways people experience directly.