Hoover Institution (Stanford, CA)-Scholars and experts challenged by Hoover to come up with ways to streamline Medicare during a two-day conference in August 2026 have now presented new policy proposals that could cut costs by tens or even hundreds of billions of dollars.

The August 17 and 18 conference, cohosted by the Hoover Institution's Healthcare Policy Working Group and its Fiscal Policy Initiative, budget analysts, health economists, practicing physicians, and congressional staff were brought together to examine options for reducing Medicare's growing impact on the federal budget.

The discussion focused on targeted Medicare budget options that would reduce federal deficits while maintaining quality of care and coverage for seniors. Medicare's draw on general revenue-meaning its funding that does not come from payroll taxes, premiums, or beneficiary cost sharing-now costs taxpayers roughly $600 billion a year and is projected by the Congressional Budget Office (CBO) to approach $1 trillion within the next decade.

Hoover scholars asked participants to come up with ways to make Medicare more cost-effective and efficient.

Participants responded with seven distinct proposals:

Reforming the 340B Drug Pricing Program

Anthony DiGiorgio, Associate Professor of Neurological Surgery, University of California, San Francisco

The federal 340B drug pricing program lets hospitals buy outpatient drugs at steep discounts and keep the difference when insurers pay full price. It requires no proof that the savings reach low-income patients. The program rewards costlier drugs, DiGiorgio argues, drives hospital acquisitions of independent physician practices, and pushes clinics into wealthier neighborhoods. The brief proposes ending 340B discounts for hospitals and replacing them with a patient-centered fund financed by drug manufacturers.

Ending Medicare's Hospital Markup: A Site-Neutral Path to Lower Costs for Seniors

Charlie Katebi, America First Policy Institute

Katebi finds that if Medicare paid hospital-owned outpatient facilities the same fees that it pays independent physician practices for the same services, taxpayers could save up to $157 billion in payments over the next decade.

Benchmark Reform in Medicare Advantage

Jeremy Nighohossian, Senior Fellow, Competitive Enterprise Institute

Medicare Advantage was built to let private plans compete with traditional Medicare without costing taxpayers more. Decades of corrections have made the payment system complex and may have increased costs above those of traditional fee-for-service Medicare. The brief proposes three simplifying reforms to remove distortions, restore market discipline, and save taxpayers money.

Modernizing Medicare Cost Sharing

Lisa M. Grabert, Research Professor, Marquette University College of Nursing

Traditional Medicare's cost-sharing structure has not changed since 1965. Beneficiaries face separate Part A and Part B deductibles, per-day hospital copays, no coinsurance on certain services, and no annual out-of-pocket cap. The brief lays out reform templates proposed by the Simpson-Bowles Commission, the Congressional Budget Office, and others; compares a decade of budget scores; and analyzes a pending Senate bill that would add an out-of-pocket spending cap without the offsetting cost-saving reforms. Grabert estimates her proposal could save $20 to $129 billion over the next 10 years, depending on how it is configured.

Reforming Medicare Supplemental Insurance

Anna Bonelli, Committee for a Responsible Federal Budget

Bonelli's proposal would limit first-dollar coverage from Medigap and other supplemental plans that Medicare recipients buy on top of traditional Medicare, and it would increase cost sharing for beneficiaries. It could reduce government outlays by $200 to $250 billion and enrollees' costs by $150 to $200 billion.

Reducing Premium Subsidies for High-Income Enrollees in Medicare Part B

Tom Church , Policy Fellow, Hoover Institution

General revenue now funds about half of Medicare. The brief proposes replacing Medicare Part B's five Income-Related Monthly Adjustment Amount premium tiers with a linear ramp that ends the taxpayer subsidy at $250,000 of income for single seniors and $500,000 for couples. The reform would raise up to $113 billion over 10 years, remove premium cliffs to smooth out marginal tax rates, and leave premiums unchanged for roughly 90% of Part B enrollees.

Many of the seven proposals could each save taxpayers more than $100 billion in Medicare outlays over the next decade, though the savings are not cumulative.

Reimagining Quality Management in Healthcare

Brian Miller , Visiting Fellow, Hoover Institution

Medicare comprises three primary models: fee-for-service Medicare, accountable care organizations, and Medicare Advantage plans. Each model has its own quality measurement system, and because the measures differ from one model to another, comparing performance across models is difficult.

Learn more about the Healthcare Policy Working Group here.

Learn more about Hoover's Fiscal Policy Initiative here.