Nearly three-quarters of Americans say the high cost of health care has become a very big problem for the country. RAND senior economist Christine Eibner has spent her career looking for ways to make one key driver of costs—health insurance—more affordable.
Her research has helped distinguish promising approaches to health insurance reform and cost containment from less promising ones. One of her recent studies helped the federal government avoid billions of dollars in unexpected Medicare expenses. She holds the Paul O’Neill Alcoa Chair in Policy Analysis at RAND.
Eibner’s work provides an evidence-based counterpoint to the partisanship that has often dominated debates over health care. “We at RAND have the ability to really look at the data and try to understand: Did this work? Is it going to work? Why or why not?” she said. “Contributing that empirical edge to policy questions has always been really motivating for me.”
Q: The percentage of Americans who lack health insurance has fallen to record lows in recent years. How do you see the trend lines moving in the next year or two?
A: We’re starting to see the numbers creep up. Tax credits that were enacted during the pandemic to help people get insurance expired at the end of 2025. More than 2.5 million fewer people enrolled in marketplace plans for 2026, and that decline will likely continue as people start to get their bills and have to pay their premiums.
In addition to that, work requirements for Medicaid are now going into effect. Congress enacted those and other federal funding changes last year as part of the One Big Beautiful Bill Act. We recently estimated that there will be about 7.6 million fewer people enrolled in Medicaid by 2034 due to those changes.
What is that going to mean at the federal and state level?
It will unequivocally reduce federal spending on health care.
For states, the impacts are going to be much more complicated. We estimated that state Medicaid funds will see around $665 billion in total federal spending reductions by 2034. Some of that will be offset because states won’t be funding care for people on Medicaid who don’t meet the new work requirements. The law also provides $50 billion distributed over a five-year period for states to strengthen rural health systems. But, for many states, that’s not going to compensate for the loss of federal funding.
You’ve looked at a number of ways that states are trying to control health care costs. Do any stand out to you as especially promising?
I can tell you one that’s not very promising. We’ve seen several states try to set benchmark limits for how much health care costs can grow from one year to the next. They can then publicize any payers or providers that fail to stay below those limits. So there’s a name-and-shame aspect to it, but some states can also require improvement plans or even penalize payers or providers that don’t meet those benchmarks.
We analyzed the impact those benchmarks have had on insurance premiums and hospital prices. We found no evidence of sustained reductions in any of those outcomes. Most states just have limited ability to enforce their benchmarks. And even among those that do, few ever actually used it to confront payers and providers.
So where would you look to start cutting health care costs?
The American health insurance system is really confusing and really complicated. And that complexity creates administrative costs. There are cost-sharing arrangements, network requirements, billing rules, eligibility determinations—just a whole bunch of administrative things that are required. I think there’s hope that if we could reduce all of that administrative complexity, we could save money without harming quality.
But a key trade-off there would be choice. The reason we have so much complexity is that we have a lot of different choices. And if you start to rein in that complexity, you might also end up with fewer choices.
You asked a question nearly ten years ago that’s worth asking again: Do Americans expect too much from health insurance?
I think so. Traditionally, insurance was meant to protect people from catastrophic financial risk. But we’ve come to expect that health insurance is also going to pay for things that are minor and predictable, like the everyday care of going to a doctor for a checkup.
Bundling those things together increases costs. And insurers then adopt strategies to contain costs, which can create issues for consumers. They limit the primary care providers you can see to only those in their network, for example. Maybe if primary care was just covered separately, people wouldn’t have to deal with a network, and they might have more choice.
But there’s a counterargument here, of course. If you don’t have the preventative and routine care bundled in, people might forego that care. That would worsen health outcomes in the end. That’s the thing about all these ideas for reforming the health care system. There are always going to be trade-offs like that.
– Doug Irving (writing), Published courtesy of RAND
