Yale’s Health Care Affordability Lab Maps $450 Billion in Savings for Policymakers

‍1% Steps project identifies research with evidence-based fixes that don't  require a complete overhaul of the health care system

NEW  HAVEN, Conn. — September 28, 2026 — The Health Care Affordability Lab at Yale today identified 23 policies with potential annual  savings totaling approximately $450 billion, or roughly 8 percent of the $5.5  trillion the US spends on health care annually. Congress, state  legislatures, executive agencies, and participants in private markets could  act on these policies now, without waiting for the next big health care  reform fight.

Today's  launch of the 1% Steps project introduces ten additional  briefs aimed at bringing costs down. This project translates academic  research, including how much each reform could save, for policymakers and  advocates focused on cutting health care costs now. And time is running out:  A recent national survey found health costs per employee are  expected to increase 8%, the biggest jump since 2003.

"Americans  say affordability is their top concern and health care costs top their list.  Reducing health spending without sacrificing quality — we can do it,"  said Zack Cooper, Director of the Health Care Affordability Lab at Yale.  "None of these ideas alone will fix the American health care system, but  stacked together, these targeted reforms add up to substantial  savings."         

“The 1%  Steps project is unique. There is rigorous evidence tucked away in economic  journals with insights for lowering health care spending, but it’s not  readily accessible to policymakers who could use them to improve lives. Our  work translates academic evidence into policy proposals and shows discrete  reforms can add up to significant savings,” said Christina Ramsay, Director  of Policy Engagement and Analytics at the Lab.

“This  work is at the heart of the Health Care Affordability Lab’s mission to  produce and translate rigorous evidence for policymakers working to lower  health spending without compromising quality,” said Andrea Harris, Managing  Director of the Lab. “I am especially proud that this project draws on  scholarship from across academia to elevate policy-relevant research by  scholars nationwide. I look forward to welcoming additional researchers to  this project and publishing further briefs in the months ahead.”
 
Most political debate over health care goes straight to the big systemic  questions, such as single payer or market-based reform. Those debates are  important. The 1% Steps project focuses on what policymakers can do now while  those debates continue. 

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Ten Policies to Save Money Now

Below we break down the ten new briefs included in the 1% Steps project this year,  which could save Americans billions in health care spending.

1.  Make Medicare Advantage Pay Its Fair Share for Vets · up to ~$23 billion a  year Over 1  million veterans are enrolled at the VA and in a private Medicare Advantage  plan. Taxpayers end up paying for their care twice: once to the MA plan, and  again to the VA (even when the VA administers most or all of the care). The  solution? Let the VA bill those plans like any other insurer. Read here.

2.  One Baby, One Bundle (of Bills) · ~$1.4 billion a year Fee-for-service billing gives  health care providers more money for each service, even if their patient  doesn’t need it. Arkansas paid for perinatal care as a bundle and cut  commercial costs nearly 4 percent per birth, without any reduction in  quality. States can follow Arkansas’ lead in their own Medicaid programs and commercial markets. Read here.

3.  Everyone in the (Insurance) Pool · $44–58/month back per household Small-employer and individual  insurance plans are sold separately, which makes premiums more expensive. To  reduce costs (including federal subsidies for individual plans), have them  both get into the same pool. Small employers can give workers tax-free money  to shop for individual market coverage, reducing premiums for most  households. Based on a study in Oregon, households would be better off by  $44–58 a month, and government spending per household drops by at least 22 percent. Read here.

4.  Don't Trap Seniors in Nursing Homes · ~$1.5 billion a year Paying for seniors to stay in  nursing homes by the day ends up rewarding longer stays that may not be  medically necessary. Researchers estimate that shifting 10% of the payment  upfront would cut the average length of stay 17%. That means more patients get  home (which most say they'd prefer), and Medicaid saves about $1.5 billion a  year — with no worse health outcomes. Read here.

5.  No Flu for Kids, More Savings for You · up to $500 million per year of full  vaccination Children under five have among the highest flu-related ER  visit rates of any group besides the elderly. But more than 40% of kids went  unvaccinated in 2022-23. For the youngest children, part of that challenge is  location: 95% were vaccinated at a doctor’s office. If more states allow  pharmacies to vaccinate young children, access would be greatly expanded. For  every extra vaccination, researchers estimate $50 in avoided health costs. Read here.

6.  Right Care, Right Place · ~$1.6 billion for Medicare in a year Medicare fully covers the first  20 days at skilled nursing facilities. That means nursing homes have little  incentive to send patients home sooner, even if many could recover safely at  home. Expanding mandatory bundled payments that keep hospitals accountable  across a whole episode of care can nudge hospitals towards getting seniors  into the right care setting, including home. (And some hospitals are already  testing this out, with no drop in quality.) Read here.

7.  Ban Drug Companies’ Secret Side Deals · $3 - 12 billion per year Cheaper generic drugs are  supposed to enter the market once a brand name drug’s patents expire. But  brand name companies sometimes pay or incentivize generic companies to hold  cheaper medications off the market with deals that can make generic companies  more money.  It’s win-win for the companies, but all losing for  patients. Congress could ban this practice, including newer tactics where a  brand name company is quietly paid off to not launch its own competing generic. Read here. 

8.  Don’t Pay Double for the Same Care · $12-24 billion per year (Medicare +  commercial) Medicare  pays more for the same procedures in hospital outpatient departments than in  doctors’ offices. Those payment rates also spill into commercial insurance  and reward hospitals for buying up physician practices. A law in 2015 tried  to fix this, but it only applied to new “off-campus” facilities, reaching  less than 1% of Medicare hospital outpatient spending. Expand the rules to  pay for the procedure and not the place, and Medicare could save $12-24  billion in a year across Medicare and commercial plans. Read here.

9.  Make Long-Term Care Insurance Work for Families · ~$4 billion for Medicaid  per year Many  seniors rely on unpaid care from their families rather than nursing homes.  Long-term care insurance only pays for formal services, which reduces demand  for insurance by an estimated 7 percentage points. If family caregivers  actually got paid, it could increase the uptake of long-term care insurance  and ultimately save Medicaid billions. Read here.

10.  No More Stars in Medicare Advantage · ~$13-16 billion for Medicare per year The Medicare Advantage program  has a star quality rating system that monetarily rewards plans that score 4  stars or higher. While the stars program uses about 45 different performance  measures, evidence has signaled that high-scoring plans are not providing  higher-quality care. Eliminating the quality bonuses those plans receive  could save Medicare billions each year. Read here. 

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Webinar Discussion

Join  Lab Director Zack Cooper and several authors for an in-depth discussion on  how 1% Steps can reduce health care costs now–without reducing quality. They  will cover evidence-based reforms, including (1) combining the small-group  and individual insurance markets to lower household and federal spending,  (2), increasing childhood flu vaccination, and (3) reducing unnecessary  skilled nursing facility use.
 
Date: Friday, October 16, 2026
 
Time: 2:00 – 3:00 pm ET
 
Registration Link:  https://yale.zoom.us/webinar/register/WN_WVvPtHUyTY6D9Ca0ryLETQ

‍Questions:  healthcareaffordabilitylab@yale.edu
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Speakers: 

 
• Zack Cooper, PhD
        Yale University
 
• Michael Dickstein, PhD
        NYU Stern School of Business
 
• Rachel Werner, MD, PhD
        University of Pennsylvania
 
• Michael Anderson, PhD
        University of California, Berkeley

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‍A Note on the Numbers

The  evidence-based recommendations offered by the 1% Steps for Health Care Reform  project add up to roughly $450 billion in estimated savings. This total does  not represent a CBO-style estimate or account for interactive effects between  proposals. Original savings estimates were calculated by the authors and the  Health Care Affordability Lab at Yale. To allow for an aggregate savings  estimate, the Health Care Affordability Lab at Yale adjusted estimates to a  common base year of 2025.

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‍About the Health Care Affordability Lab

The  Health Care Affordability Lab at Yale produces new evidence to guide  policymakers and lower health care costs for individuals and the health care  system. We are powered by the Tobin Center for Economic Policy, The Yale School of Public Health, and the Department of Economics at Yale University.