2025 Not-So-Rosy Predictions On Economy and Healthcare

It’s time to give some predictions for 2025. Spoiler alert, they are not particularly good predictions, for the economy or public health. But before I get to that, a few words about prognostication. Crystal ball gazing is a dubious exercise, especially in areas such as the economy, public health, and politics that are highly confounding. Despite this, it can be a good exercise. And it’s interesting to analyze each year what I predicted correctly and what I got wrong.

As a health economist writes on the Forbes forum, the so-called swimming lanes are for health and public health. But because of the influence that politics and economics have on the health care sector I also closely follow the development of the United States and the world economy and politics. We’ll start there.

I thought Trump would win the presidential election easily. Also, as in my forecasts for 2022 and 2023, I predicted that the economy will not collapse in 2024 but inflation will not drop to 2% either and will rise gradually by the end of the year. While the unemployment rate was down a few points, I predicted a decline in wages in the fourth quarter.

If Trump makes good on his promises, my economic outlook for 2025 includes subdued growth, modestly rising unemployment and rising inflation. As the rates continue, inflation will continue to rise to 4% annually by the end of the year. More difficult would be the impact of tariffs on US industries that rely on imported raw materials and finished products. I foresee a fall in productivity and an increase in unemployment, to 5.5% or maybe even 6% by the end of the year. The economy will not technically collapse, but its growth could drop to a 1% contraction in the fourth quarter.

Deportation of undocumented workers can lead to nominal wage increases. Higher wages are automatically better. But they can also exacerbate the problem of inflation, as companies pass on higher labor costs to consumers. Monetary policy measures, including reduced government investment, can affect the economy, as well as stubbornly high interest rates. I expect the 30-year mortgage rate to rise above 7% by the end of the year. And what is perhaps more dangerous than the economic outlook is the high level of uncertainty, both domestically and internationally.

A shake-up within the health care center of the federal government under the next Trump administration could result in increased vaccine reluctance, reduced infectious disease drug development, and renewed activity. of specifying international prices for prescription drugs in Medicare.

There were 50 new FDA approvals in 2024, compared to 55 in 2023. Considering what’s going on, next year’s numbers are likely to be continued strength as drugs and medicines for cancer and orphans continue to develop.

The biggest issue with prescription drugs, however, may be their historically high prices. For almost more than ten years, there have been very high levels of the price of newly sold drugs. The annual price of the newly approved drug was $300,000 in 2023, according to a Reuters analysis of 47 drugs, up from $222,000 a year earlier. Although the figures for 2024 have been analyzed in detail, the price increase will not be steep, the upward trend will continue into the foreseeable future.

The failure to include drug price reforms in the 2024 continuing resolution, despite apparent bipartisan support, could be a sign of another political meltdown among lawmakers in 2025. limiting the number of patents pharmaceutical companies can apply for on biologics; reduced revenue for drug benefit managers from Medicare drug prices, reducing incentives that may lead PBMs to steer patients to more expensive drugs; and transparency requirements that require PBMs to report to Medicare drug prices and other information.

The modest change in life expectancy by 2023 is good news, but the US still lags far behind all of its peers. For decades the US has failed to address its major public health issues which are the primary causes of slow life expectancy growth. These include the unusually high death toll from fentanyl and other illegal drugs, worsening infant and maternal mortality and increasing traffic fatalities, suicides and gun deaths, as well as high mortality rates caused by obesity.

When the Make America Healthy Again movement under RFK Jr. gains visibility, there will be proposed changes in nutrition, but based on past experiences, they may be largely symbolic.

Restricting a food ingredient here or there or the use of certain toxins will not get us where we want to go. While welcome policy measures, they are not the primary causes of obesity and chronic disease in America. The main problems are related to poor nutrition in America and disproportionately large portion sizes, as well as a lack of daily exercise.

Additionally, when RFK Jr. talks about the need to change what we eat and incorporate more physical activity into our daily lives, this is nothing new. Others before him in other administrations have done so, to no avail. It will require unprecedented change to change not only the entrenched practices, but also the business practices of the food and beverage industry.

More importantly, in general, fewer resources are allocated to disease prevention and the prevention of premature mortality. The share of public health in total health spending has declined over the past two decades, from 3.18% in 2002 to 2.40% in 2023. I see no signs of change, especially -mainly because of Trump’s second term.

In addition, the persistent problems of not having insurance will worsen and exacerbate existing inequities in the health care system.

Further, a politically divided country is not the way to bring about positive change in health care and public health. Of course, money will still be made in the health care sector, but this will not benefit the public.