Next week, President Trump will deliver his State of the Union address to a nation that has made its feelings clear: The economy is not working how it should.

Recent polling reflects deep frustration nationwide with costs of living and with the federal government in general, and it’s likely then that President Trump will use his speech to show the American people how he plans to bring down costs.

The Urban Institute has been tracking rising costs in its American Affordability Tracker, which provides timely data on affordability at the national, state, and congressional district levels. Addressing this affordability crisis will require a broad set of strategies from every level of government.

Below, we examine recent federal proposals and actions across housing, health care, and wealth building and explore if the evidence supports those efforts. We also offer additional, evidence-based solutions all policymakers should consider.

Bringing down housing costs

The problem

The United States has a known housing shortage, and that shortage coupled with increased demand has driven up rents and sales prices (by 50 and 80 percent since 2017), pricing out millions from the primary wealth-building vehicle in the US.

The proposal

The Trump administration has proposed banning large institutional investors from purchasing homes, and a January executive order directs federal agencies to restrict sales to large institutional investors.

Urban analysis shows this policy is unlikely to substantively increase housing supply or paths to homeownership, as these investors make up only a small share of the single-family rental market, and the homes they do buy are, in general, unlikely to be purchased by owner-occupants otherwise.

However, the order also directs federal programs to promote sales to owner-occupants through “first look” policies, which give owner-occupants and nonprofits an exclusive window to bid on foreclosed properties. Existing federal first look programs could—and should—be expanded and strengthened through the order.

Other evidence-based solutions

While there is no silver bullet, a comprehensive approach using all the levers available to federal, state, and local policymakers can make housing more affordable now and in the long term. To address housing affordability, Urban research recommends the following:

• As federal lawmakers consider promising strategies proposed in the House and Senate, state and local policymakers can accelerate new construction and preserve existing affordable housing by removing regulatory and land-use barriers, partnering with local developers, and enabling more factory-built housing, which is less costly and faster to build.
• Policymakers at all levels can make homeownership more affordable for first-time buyers through well-targeted down payment assistance and low- or no-cost financing, while investing in long-term solutions to build more housing and keep prices down.
• Policymakers at all levels can increase access to financing for housing construction and rehabilitation. In addition to strengthening federal programs, state funds to leverage private capital and city partnerships with local developers and lenders are also key to unlocking affordability.

Reducing health care expenses

The problem

Health care costs are high and increasing across the board, even for people who get insurance from their employers, with prescription drug prices one of the many drivers of these costs.

Further, millions are projected to lose Medicaid coverage because of new work requirements and other eligibility restrictions mandated by the One Big Beautiful Bill Act. The law is expected to reduce federal health care spending by $1 trillion, reduce payments to health care providers by about $1 trillion over the next 10 years, and shift billions of dollars of costs onto states.

Separately, the cost of Marketplace premium payments has skyrocketed in recent months because of the double whammy of insurers raising premiums by 26 percent on average and the expiration of enhanced premium tax credits (PTCs). Enrollees are facing monthly payments 114 percent higher in 2026 than in 2025. Urban research estimates the expired enhanced PTCs alone could cause 4.8 million people to lose health care coverage in 2026.

The proposal

President Trump has outlined several ideas for addressing health care costs. His Great Healthcare Plan calls to end kickbacks to pharmacy benefit managers, to increase transparency of provider prices and insurance company practices, and to fund cost-sharing reductions, the latter of which Urban research has shown would negatively affect affordability. He proposes the creation of TrumpRx, a federal government website intended to provide access to lower drug prices. And he has expressed support for new health savings accounts as an alternative to the enhanced subsidies, but Urban research shows they would not improve affordability and often disproportionately benefit higher-income households.

The administration has also proposed new Marketplace regulations to reduce health insurance premiums by increasing deductibles and other cost sharing, eliminating benefit options, and otherwise weakening insurance standards. The rule would impose new administrative burdens on people seeking to enroll, which could reduce Marketplace enrollment by up to 2 million people.

Other evidence-based solutions

To ensure health care remains accessible and affordable, Urban research supports the following recommendations:

• Federal policymakers can restore the expired enhanced PTCs. A recent compromise proposal to combine a limited restoration with new PTC reductions would cause millions of people to pay higher premiums.
• Federal policymakers can reduce administrative burdens and improve plan choices instead of pursuing its proposed Marketplace rule.
• Federal and state policymakers can mitigate health insurance coverage losses from newly introduced Medicaid work requirements and more frequent redeterminations by capitalizing on available data systems. This can ensure people who are meeting or exempt from the work requirements aren’t wrongfully denied coverage. Further, policymakers can define exemption characteristics broadly, limit the number of months people must demonstrate compliance with work requirements, and streamline Medicaid renewal processes. Federal policymakers could also reconsider the previously enacted Medicaid cuts.
• Federal and state policymakers can build on the recently passed Consolidated Appropriations Act by delinking pharmacy benefit manager compensation from drug prices, requiring that rebates reduce patients’ costs, extending these rules to Marketplace plans and Medicaid managed care, and limiting the gap between what plans pay and pharmacies receive. These steps could bring down inflated drug markups, lower out-of-pocket costs for consumers, and reduce annual prescription drug spending by 15 percent annually.

Increasing household income and wealth

The problem

Although most of the conversation around affordability focuses on rising prices in isolation, workers’ earnings haven’t kept up with key costs either. Between 2017 and 2025, median weekly earnings grew by 38 percent, less than child care (40 percent), health care (41 percent), rents (50 percent), and home sale prices (80 percent). Young people see today’s affordability crisis as a barrier to their long-term wealth-building plans, including higher education and homeownership (link added 2/26/2026).

The proposal

To address these challenges, the administration has touted income and wealth-oriented proposals, including those capping credit card interest rates at 10 percent and Trump accounts.

The appeal of a credit card cap is straightforward—credit cards are widely used, and many families pay thousands of dollars each year in interest alone. A recent study suggests a 10 percent cap could save people in the US roughly $100 billion a year, with the 46 percent of households who carry a balance month to month seeing the greatest benefit. However, interest rate caps can shrink the supply of credit, which could push borrowers toward products with fewer safeguards and higher costs.

Trump accounts, enacted as part of the One Big Beautiful Bill Act, offer a path to build wealth for the next generation. Seeded with $1,000, these tax-advantaged accounts will be given to all children born in the US between 2025 and 2028, with the holders able to use the money for a home, education, or small business development when they turn 18. Though these accounts can expand wealth-building opportunities, their current design—opt-in and without progressive deposits—could ultimately limit participation from the low-income families who need them most.

Other evidence-based solutions

To bolster household finances, Urban research recommends the following:

• Federal policymakers increase the Supplemental Security Income asset limit to ensure eligible people of retirement age or with a disability can meet their daily needs. The asset limit (currently $2,000 for individuals and $3,000 for couples) hasn’t been increased for decades, meaning many older adults for whom monthly benefits would make a difference are ineligible.
• State and local policymakers adequately invest in early life wealth-building programs, like child development accounts and baby bonds, through progressive deposits for families with low incomes and allow for penalty-free emergency withdrawals. Federal policymakers can ensure new Trump accounts help as many children build wealth as possible by instituting automatic enrollment.
• State and local policymakers increase minimum wages and require employers to pay no less than the full federal minimum wage to tipped employees. Although employers may pass the cost of higher minimum wages onto customers, most notably in the restaurant industry, research finds these price increases are typically under 1 percent in other sectors.
• State policymakers expand workers’ rights to collectively bargain, as research shows the decline in unionization in recent decades has cost workers $3,250 in annual income.

As affordability remains at the top of the president’s agenda, policymakers at all levels and across both parties should pursue evidence-based solutions that provide Americans with immediate and long-term relief. To inform these efforts, the Urban Institute will continue compiling policy solutions to create an affordable future for all.