Aspen Economic Strategy Group Reports related to Affordability
Policymakers across the political spectrum – and at the federal, state, and local levels – are increasingly focused on improving “affordability” for Americans.
The Aspen Economic Strategy Group has released a series of reports that speak directly to this challenge. Below, we highlight five AESG reports that offer evidence-based insights into how policy can strengthen household economic security by tackling high and rising prices, particularly in housing, energy, and health care.
1. Making Rental Housing More Affordable and Homeownership More Attainable
THE ISSUE:
In recent years, the cost burden of housing on American households has reached historically unprecedented levels. Among renters, 50 percent of households spent at least 30 percent of their income on rent, up from 41 percent in 2001. High house prices and elevated interest rates have also pushed homeownership later and later in life: the median age of first-time first-time homebuyers has increased from 29 in 1980 to 38 in 2024.
RECENT POLICY ACTION:
In recent weeks, the White House has proposed policy solutions aimed at making homeownership more attainable, including banning institutional investors from buying single-family homes as well as allowing individuals to tap into retirement savings in their 401(k) for the down payment on their home. At the local level, New York City Mayor Zohran Mamdani proposed improving the affordability of rental housing in the city by immediately freezing rent on all rent-stabilized apartments.
AESG WORK ON HOUSING AFFORDABILITY:
In an AESG paper “Improving Housing Affordability,” Ben Keys and Vincent Reina propose a policy agenda to make homeownership more attainable and reduce rental costs. Their expert view is that the housing affordability problem is fundamentally driven by a lack of adequate and affordable housing supply. They note: “given current supply constraints, policies that support and solely stimulate demand can exacerbate housing affordability issues.”
They propose that policymakers should make it easier to build new housing supply through comprehensive zoning reform and expanding financing opportunities for builders. Local zoning regulations, including minimum lot sizes and minimum parking requirements, have inhibited development and should be reviewed and reformed. They further propose that federal housing agencies make it easier to finance new construction, in particular expand multifamily financing through a loan system similar to what is currently in place for single-family lending.
Finally, Keys and Reina propose the establishment of a comprehensive housing safety net for renters who face a temporary drop in income – a topic previously taken up in detail by Ingrid Gould Ellen, Katherine M. O’Regan, and Amy Ganz in “A Renter Safety Net: A Call for Federal Emergency Rental Assistance.”
They propose the creation of a Federal Emergency Rental Assistance Program to provide one-time, short-term financial help to low-income renters who experience negative financial shocks. This program would offer temporary federal aid to cover rent, utilities, and other essential housing costs for renters earning below 80 percent of the area median income and see a temporary drop in income. Providing such temporary assistance when a financial shock occurs, they argue, significantly lowers the risk of subsequent evictions and delivers large social benefits at a relatively modest cost.
2. Reigning in Energy Costs
THE ISSUE:
The US is set for an acceleration in power demand, after years of flat consumption, driven primarily by growth in data centers including power-intensive AI hyperscalers. Such a development, without an accompanying increase in power supply, will likely result in reduced reliability and higher electricity prices – an outcome PJM, the country’s largest power grid operator, is already facing.
RECENT POLICY ACTION:
The White House Energy Dominance Council and a bipartisan group of 13 governors released a statement of principles on January 16 aimed at addressing the looming rise in electricity prices. The principles encourage PJM to hold a 15-year electricity auction for large technology companies, creating revenue certainty that will speed the build out of new power sources. The statement also prods PJM to speed up the regulatory approval process through which these new power sources can connect to the grid.
AESG WORK ON ENERGY STRATEGY:
In “An Energy Strategy for National Renewal,” Joseph Majkut offers policy proposals to meet America’s growing energy needs. First, expanding nuclear power is essential to providing large amounts of baseload power. The Department of Energy could facilitate the large capital investments necessary to build new nuclear capacity by purchasing power from such projects in advance. Second, the federal government should also invest in expanding high-voltage interstate transmission lines that transfer power across states and regions – both through greater funding and enhanced federal authority to site such projects. Such an investment in our energy infrastructure, particularly in areas that host data centers, will stabilize the power grid and reduce electricity costs.
3. Reducing Healthcare Prices
THE ISSUE:
Over the past several decades, healthcare costs have risen faster than the overall cost of living. KFF estimates that the average inflation-adjusted premium for a family health insurance plan has more than quadrupled from 1999 to 2022, and real out-of-pocket spending has risen by 30 percent.
RECENT POLICY ACTION:
On January 16, the White House announced The Great Healthcare Plan. Included in this plan are proposals to establish “Most-Favored-Nation” deals, under which prescription drug prices in America would match the lowest international price; to end the rebates Pharmacy Benefit Managers (PBMs) receive; and to require greater public price transparency by health care providers and insurance companies. In addition, the 2026 appropriations package that passed the House of Representatives on January 26 includes several provisions increasing transparency in PBM operations, including one mandating PMBs split drug rebates with health insurers.
AESG WORK ON HEALTH CARE COSTS:
In “Why Drug Pricing Reform Is Complicated: A Primer and Policy Guide to Pharmaceutical Prices in the US,” Craig Garthwaite and Amanda Starc lay out the complex and opaque system that determines pharmaceutical prices. They emphasize that a fundamental tradeoff lies at the core of drug pricing in the US: high prices today provide firms with the incentive to make the large, fixed, and sunk investments necessary to bring future new drugs to market.
However, they point out that specific market failures and other features of the pharmaceutical value chain raise prices without delivering additional value. The authors recommend a series of reforms that emphasize bolstering competition and transparency: by speeding up the approval process for new generic drugs, improving transparency between insurers and pharmacy benefit managers in the rebates PBMs receive from drug manufacturers, and limiting vertical integration between insurance plan sponsors, PBMs, and pharmacies.
More broadly, in “Coverage Isn’t Care: An Abundance Agenda for Medicaid”, Garthwaite and co-author Timothy Layton outline an “abundance agenda” for healthcare, using Medicaid as a first step. Garthwaite and Layton call for reforms to the US healthcare system that would increase the supply of low-costs providers that can provide basic care. They propose targeted regulatory reforms to relax restrictions on foreign-trained doctors, expand the ability of nurse practitioners and physician assistants to practice independently, and allow for AI-augmented care to efficiently scale medical expertise. These changes would first operate within a designated ‘Medicaid tier’ of care where regulatory reform would be used to deliver such high-quality, low-cost care to Medicaid enrollees.