While “affordability” has been a major theme of state and national politics this year, experts warned Oklahoma lawmakers that government policies are often the driving cause of higher prices in everything from housing to college to energy prices.

And they warned that government policies often make things worse, not better. If officials want to make life more affordable for Oklahomans, experts told state lawmakers during a legislative study that the key is to slash regulation or maintain current low levels of regulation.

“These are all, essentially, regulatory interventions—deregulatory interventions—to reduce costs that don’t require any public investment,” said Charles Gardner, senior research fellow at the Mercatus Center at George Mason University. “This is simply clearing out regulatory burden to allow the market to supply housing at lower cost.”

State Sen. Micheal Bergstrom, an Adair Republican who requested the legislative study on government’s role in higher prices, noted that inflation “is a hidden tax that is caused by state and local actions.”

While federal deficit spending and the Federal Reserve’s role in increasing the money supply are the chief drivers of inflation, Bergstrom noted state lawmakers and local city government officials often enact policies that make things worse.

“We do, however, control regulations and rules that decide how expensive it is to live, to work, to build here in Oklahoma,” Bergstrom said. “We have health-care regulation. We have barriers to higher education. We have, in many places, land-use regulations. And then, of course, we have here at state government how we run state programs through the various agencies. So, clearly, all of those can have an inflation impact. The question isn’t how Oklahoma fights inflation so much as it is which state-level barriers are driving up costs and which ones can we remove or reduce?”

Gardner noted that the dramatic increase in home prices and rentals has been driven in part by state and local government policies that restrict supply.

Since 2020, home prices nationwide have increased by 60 percent, while rent surged by 36 percent between 2019 and 2024.

Gardner noted the figures for Oklahoma are lower, but not dramatically so, with home prices having increased 55 percent and rent rising 28 percent. In Oklahoma City, home prices have increased 51 percent while in Tulsa they have risen 63 percent.

He told lawmakers they can stem the tide of rising housing costs with deregulatory action, including streamlining the permitting process, allowing more residential uses in commercial zones, and allowing smaller lot sizes, among other things.

Gardner said both Kansas and Texas have enacted legislation broadly legalizing home lots as small as 3,000 square feet in new subdivisions. The Texas law is estimated to have resulted in over 3,500 new housing units through June 2026. The state of Idaho has gone further, legalizing lots as small as 1,500 square feet in municipalities with more than 10,000 residents. That size is similar to the 1,400 square feet allowed in Houston, which has helped that city remain a leader in new home supply and affordability. Home prices in Houston have increased only 45 percent since 2020.

“You think Texas and Oklahoma aren’t known for having a shortage of land, but in fact this is land that’s served by public sewer and water, so the land is quite valuable,” Gardner said. “And reducing the amount of land you need for each house is a major factor in bringing down the cost of the homes themselves.”

He said allowing for smaller lots can result in construction of “more modest starter homes affordable to entry-level buyers.”

Andrew Gillen, a research fellow at the Cato Institute, noted that a commuter driving to a public two-year college faces an annual cost of $21,320 after accounting for tuition and fees, housing and food, books and supplies, transportation, and other related expenses.

The cost for a student attending a public four-year college while living on campus is $30,990 a year.

Lawmakers in states nationwide have adopted policies intended to make college more affordable for working-class students, but those policies have often instead fueled higher tuition costs, Gillen noted.

“The things that seem like they would make sense to increase college affordability actually just do not work because of the very strange economics of higher education,” Gillen said.

Typically, lawmakers respond to higher college tuition by increasing state appropriations to colleges. State funding in colleges in nearly all states, including Oklahoma, is either higher today or equal to the inflation-adjusted amount provided in 1980, he noted, meaning there has been no meaningful state “disinvestment.”

Yet, as state funding for colleges has increased, so has tuition.

Student financial aid has also increased over time, but Gillen noted colleges respond to more financial aid for students by raising tuition, in part because colleges can receive more federal funding as tuition rises.

Gillen suggested that states could disrupt that cycle of ever-increasing cost if policymakers switch from appropriations-based funding to financial-aid-based funding to students. While colleges respond to rising student aid by increasing tuition rates, the growth rate is less than what occurs when state appropriations to colleges are increased.

Gillen said only 10 percent to 20 percent of state-appropriation funding benefits students in the form of greater college affordability, but 20 percent to 40 percent of student aid results in improved affordability.

Robert Aery, executive director of the Hern Policy Institute, noted that a dramatic increase in government medical welfare spending has done nothing to make health care more affordable.

“Why is health care so complex? Because of government involvement,” Aery said.

From 2000 to 2024, the cost of health care in Oklahoma increased from $2,848 per capita to $9,102 per capita.

That has outpaced income growth in Oklahoma. Since 2000, personal income per capita has increased 162 percent, but health care per capita expenditures have increased by 220 percent.

During that time period, the state more than doubled the share of the population covered by the Medicaid welfare program. In 2000, the share of Oklahomans on Medicaid was 12.1 percent. By 2024, it had increased to 25.3 percent. Once Medicare is included, roughly 40 percent of Oklahomans are on some form of government medical program.

Yet in 2024, a survey by the federal Centers for Disease Control and Prevention found that 14.9 percent of Oklahomans had forgone medical care because of cost. That was the fifth-highest rate among the 50 states. The high rate of forgone care occurred even though more than 90 percent of Oklahomans had some form of health insurance.

Aery noted the man on the street might think a state is less likely to have people forgo care if the state has a higher share of people on medical welfare programs, but that is not the case.

“There’s statistically no significance in that correlation between a state’s share of their Medicaid population and their responses in foregone care,” Avery said.

Nationwide, officials have found that billions in improper Medicaid payments are made each year. Aery noted each improper Medicaid payment represents the displacement of a legitimate patient.

“If a doctor provides services, for example, that are excessive, we know that that took time away from a patient that was legitimate,” Aery said. “Or if a patient is ineligible but receives care, that puts them in line (in front) of someone who should’ve received eligible care.”

He urged state lawmakers to strengthen Oklahoma’s anti-fraud efforts in the Medicaid program.

Isaac Orr, vice president of research at Always On Energy Research, said Oklahoma’s light regulation approach to energy production is benefiting state consumers and urged lawmakers to continue down that path.

“Oklahoma is doing very well on these,” Orr said.

In other states, a range of government policies have artificially inflated energy costs, including renewable energy portfolio standards, net-metering, carbon taxes, and utility carbon-free pledges.

Oklahoma, in contrast, has largely avoided those policies and has some of the lowest electricity prices in America. Orr said Oklahoma’s residential prices are the ninth lowest in the nation.