Ensuring State Health Care Affordability Strategies Work for All

Half of adults in the United States report having trouble affording health care, and the problem continues to grow. In addition, there are many disparities in the affordability of care by income, disability status, geography, race and ethnicity. Adults with low incomes have higher rates of medical debt and have the greatest proportion of their potential wage growth consumed by increasing health care costs. State-based surveys frequently show that affordability challenges are greater in households with at least one member with a disability, and there is evidence of greater affordability burdens in rural areas as well. Disparities are also evident by race and ethnicity, with Black and Hispanic adults more likely to report difficulty affording care and greater medical debt. Longstanding and persistent discriminatory policies and practices have contributed to inequities in health care access and affordability, as well as health status and outcomes.

As the problem of health care affordability worsens, states are increasingly implementing strategies to achieve more affordable health care. In doing so, states should consider the impact of their policies on all population groups to ensure that everyone has a fair opportunity to attain their highest level of health. This post describes ways states can safeguard and promote health equity for those who bear the greatest burden of high and rising health care costs alongside their efforts to make health care more affordable. The post identifies four overarching approaches states can take.

States can leverage data sources, such as all-payer claims databases, Behavioral Risk Factor Surveillance System (BRFSS) or other federal survey data, and non-federal state-specific surveys such as the Consumer Healthcare Experience State Survey (CHESS), to guide their decisions about actions that can support their equity and affordability goals.

1. Incorporating health equity into health care cost growth target programs

Eight states are using health care cost growth targets to set public expectations for future health care spending. States monitor and enforce their targets through public reporting of annual cost growth, performance improvement plans, and financial penalties. States can take steps to incorporate health equity considerations into their cost growth target reporting and accountability strategies. 

• Allow higher spending growth when it promotes health equity: Acknowledging that not all cost growth is bad, states may justify higher payer or provider organization spending growth that promotes health for all. For example, investments in safety-net providers, primary care, or spending to improve the availability of language services for patients with non-English language preferences, could all help close health disparities. States can develop criteria to guide their assessments of whether excess spending promotes health equity.   
• Monitor for adverse consequences: States can assess key metrics of equity, quality, and access pre- and post-cost growth implementation to ensure that actions to slow spending are not inadvertently exacerbating inequities. This can be responsive to concerns that a focus on slowing cost growth could result in potential underutilization or inappropriate reductions in access to medically necessary care, especially for subpopulations for which access barriers are longstanding and persist, and cost-shifting to consumers to suppress utilization and spending. Measures can be stratified by income, insurance status, zip code, race, and ethnicity to better understand the impact on various subpopulations. The greatest challenge in this approach is isolating the impact of the affordability strategy, as other forces may contribute to harmful reductions in service access. For example, some hospitals have reported proactively cutting community services in anticipation of lost revenue as a result of HR 1 (The One Big Beautiful Bill Act).

2. Integrating equity considerations into strategies to lower health care prices

Provider prices and price increases — especially in the commercial market — are driving much of the overall health care cost growth across states and nationally. Two examples of integrating equity into health care price strategies follow below.

• Assess the impact of proposed market transactions: States can review market transactions (e.g., mergers, acquisitions, affiliations) to assess the impact on communities and individuals that have been economically and socially disadvantaged, reject proposed transactions that risk perpetuating inequities, and/or incorporate conditions on a transaction. States can require entities to describe how a proposed transaction would impact or benefit the public in the domains of health care affordability, equity, access, and quality, particularly for communities that have been marginalized.  
• Exclude safety-net and rural hospitals from provider price or price growth caps: States are pursuing strategies to cap prices or limit how much prices can grow from one year to the next. Promoting equity and affordability using provider pricing strategies can mean exempting providers that serve individuals with lower incomes and/or those in rural areas as subjecting those providers to pricing constraints may adversely affect health equity if they erode access to or quality of care, or workforce stability. Complementary actions, such as setting price floors for certain provider types like primary care providers, can also ensure investment in areas associated with better outcomes, more equitable care, and lower costs. 

3. Making equity central to consumer affordability strategies

States can tailor approaches to lower individual out-of-pocket medical costs and medical debt to offer relief for those experiencing a disproportionate burden of high health care costs.

• Lower amounts consumers pay out-of-pocket: State laws can establish that costs for certain medications or devices are not subject to any deductible and set a maximum copayment or coinsurance amount for a specific drug quantity (e.g., 30-day supply). States can also use their purchasing power to eliminate cost sharing for certain treatments and services, including medications and primary care-related services, in their state-run marketplaces. States have incorporated equity into these strategies by focusing specifically on lowering costs for treating conditions that are more prevalent among populations that experience persistent systemic and structural barriers to health care.
• Address medical debt: States can prohibit medical debt collectors or creditors from garnishing wages, seizing property, reporting medical debt to a consumer reporting agency, and limiting the amount of interest that is charged on the debt. Partnerships with organizations like Undue Medical Debt can offer immediate relief for individuals with or at risk of incurring medical debt. States can pursue alternative strategies as well, such as using financial incentives to persuade industry stakeholders to participate in initiatives that address medical debt. For example, states can make enhanced payments to hospitals that agree to eliminate past debt for individuals with low and moderate incomes and implement processes to protect those individuals from incurring additional debt. Such processes can include automatically qualifying individuals for charity care if they are already enrolled in a public benefit program, such as WIC and SNAP, if they are experiencing homelessness, or if anyone in their household is enrolled in Medicaid.

4. Advancing health equity through Medicaid payments

Insufficient Medicaid reimbursement rates can challenge provider finances, leading them to curtail low-margin community-based service offerings. States can prioritize funding for Medicaid to support provider participation in the program and prevent these adverse impacts to equity.

• Ensure Medicaid reimbursement rates are adequate: By setting and regularly updating Medicaid reimbursement rates to appropriately cover the cost of care for Medicaid enrollees, states can avoid harmful and spiraling impacts to access and affordability for Medicaid and commercially insured individuals alike. This is especially important for primary care providers. Nationally in 2024, Medicaid reimbursement rates for primary care services were 66% of Medicare rates, a drop from 67% in 2019. During the period 2019-2024, Medicare primary care rates increased by 13.4%, more than the 11.2% average national increase in Medicaid primary care fees. However, increasing Medicaid reimbursement rates may be more challenging for states following passage of HR 1 (The One Big Beautiful Bill Act) and its associated reductions to Medicaid funding.

Health care affordability continues to be a widespread, growing, and pernicious problem in the United States. While many feel the impact of rising health care costs, not all experience the burden equally. There are various strategies states can pursue to support residents facing the highest cost burdens in a targeted manner, such as thoughtfully incorporating equity considerations into cost containment efforts; assessing transactions by considering their potential impact on health disparities; prioritizing the elimination of medical debt; and ensuring Medicaid payments are adequate.