Nearly half of Americans now say they can’t afford quality healthcare. That was true before Affordable Care Act premium credits expired in 2025 and before Medicaid cuts take effect this year. Financial anxiety about healthcare costs has become a normal part of American life.
I’ve spent my career inside the healthcare system: as a physician, as a health system executive and now as the leader of an organization representing more than 440 medical groups and health systems across the country. Every stakeholder in healthcare has a story about who’s driving costs, and most of those stories have some truth in them. But pointing fingers hasn’t lowered a single premium.
What I want to show instead is what’s actually working, what medical groups are already doing to bend the cost curve and where the system is actively working against them.
The proof that redesign works
Twenty-five years ago, my father had hip replacement surgery and spent five days in the hospital recovering. My brother had the same surgery recently and went home the same day, saving thousands of dollars.
Same-day outpatient joint replacement didn’t happen by accident. It required care redesign, capital investment and clinical willingness to challenge the decades-old assumption that hospital admission was simply part of the procedure. Multiply that shift across the dozens of procedures that have moved, or are moving, to outpatient settings, and you’re looking at one of the largest quiet cost reductions in American medicine, driven entirely by providers, without a policy mandate forcing it.
Advanced practice providers (APPs) are another example of how providers are making care more affordable. Nurse practitioners and physician assistants now make up roughly 48% of the provider workforce across AMGA’s membership. Ten years ago, that number was a fraction of what it is today. This shift reflects a deliberate redesign of team-based care that expands access and lowers cost per visit without sacrificing quality.
Medical groups are doing this work because it’s the right thing to do for patients and because the economics of the old model no longer hold.
The payment system isn’t keeping up
The U.S. healthcare system is built on a payment foundation that has been chronically inadequate for decades. Medicare and Medicaid together cover roughly half of all patient visits in the United States. The Medicare physician fee schedule conversion factor is lower in real terms today than it was in 2010. Yet the cost of running a medical practice has risen approximately 20% over that same period.
Add to that the Medicaid cuts in The One Big Beautiful Bill Act (H.R. 1), signed into law last year—some of the most significant reductions to the program in decades. The Congressional Budget Office estimated it will reduce federal Medicaid spending by more than $900 billion between 2025 and 2034.
Here’s what a recent AMGA survey on the impact of Medicaid cuts found: 38% of respondents stated they are cutting patient services currently in anticipation of cuts; 68% state they are planning cuts in the future; 21% of respondents stated they would close or restructure facilities; and 64% anticipate employee layoffs or furloughs, including frontline clinicians.
When the payment foundation doesn’t cover the cost of care, something has to give, and too often, what gives is exactly the kind of investments that lower costs over time.
Layer the administrative burden of providing care on top of the payment cuts—prior authorization as one example. There are an estimated 53 million prior authorization requests in Medicare Advantage alone each year. Managing insurer requirements now consumes roughly 12 to 15 cents of every premium dollar, money that isn’t buying anyone better care. One health system executive told me about a single “stat” imaging denial that required an email chain with six administrators and two physician leaders just to get resolved. Multiply that by 53 million. The cost of administrative burdens like prior authorization do not support patient care or improve affordability.
What would actually move the needle
If policymakers and industry leaders want to see more of what my brother experienced (care that costs less because it was redesigned to cost less), the fastest lever isn’t a new mandate. It’s removing the friction that’s currently taxing the organizations already doing this work: stabilize Medicare physician payments so it reflects the actual cost of care, and rein in prior authorization and other administrative burdens that add cost without adding value.
Medical groups aren’t waiting for permission to make care more affordable. They’re already redesigning how care is delivered, expanding what their care teams can do, and moving procedures out of the highest-cost settings. The question isn’t whether providers will do their part. It’s whether the rest of the system and the payment policy that supports it will stop working against them while they do it.
Jerry Penso, M.D., is president and CEO of AMGA.