It’s 2025!
It’s time to make some predictions for 2025. Spoiler alert: these are not particularly positive expectations for the economy or public health. But before I get into that, first a few words about predicting. Crystal ball gazing is invariably a dubious activity, especially in areas such as economics, public health and politics, which are so sensitive to confounding factors. Nevertheless, it can be a useful exercise. And it’s interesting to analyze from year to year what I predicted correctly and what I got wrong.
As a health economist writing on the Forbes platform, my so-called swim lanes are healthcare and public health. But given the impact that politics and economics have on the healthcare sector, I also closely monitor developments in the United States and the global economy and politics. We start there.
I thought Trump would win the presidential election quite easily. Furthermore, as in my 2022 and 2023 forecasts, I predicted that the economy would not enter a recession in 2024, but that inflation would also not fall to 2% and slowly rise again by the end of the year. Although I differed by a few decimal places on the unemployment rate, I did predict slowing job growth in the fourth quarter.
If Trump delivers on his promises, my economic outlook for 2025 includes reduced growth, modestly rising unemployment and higher inflation. As the rates take effect, inflation will continue to rise towards 4% annually by the end of the year. A potentially more problematic feature could be the impact that tariffs have on U.S. industries that rely on imported raw materials and intermediate products. I foresee a stagnation in production and a rise in unemployment, which will reach 5.5% or perhaps even 6% by the end of the year. Technically, the economy won’t be in a recession, but growth could slow to a sluggish 1% by the fourth quarter.
The deportation of undocumented workers could lead to rising nominal wages. Higher wages are good in themselves. But they can also exacerbate the inflation problem as companies pass on higher labor costs to consumers. Austerity measures, including reduced public investment, could take a toll on the economy, along with persistently high interest rates. I expect the average 30-year mortgage rate to rise to over 7% by the end of the year. And perhaps even more damaging to the economy’s prospects is the high level of uncertainty, both at home and abroad.
The health care shake-up in the federal government under the next Trump administration could lead to increased vaccine hesitancy, a slowdown in the development of infectious disease drugs and a renewed push for international price references for prescription drugs in Medicare.
The Novel of the Food and Drug Administration approvals In 2024, there were 50, similar to 55 in 2023. Given what’s in the pipeline, next year’s numbers are likely to be just as robust, with continued dominance of drugs and therapies against cancer and orphan diseases.
The bigger story with prescription drugs, however, may be the historically high launch price. There has been a sharp increase for more than ten years procedure in the launch prices of newly introduced branded medicines. The average annual list price for a newly approved drug reached $300,000 in 2023, according to a Reuters analysis of 47 drugs, up from $222,000 a year earlier. Although price increases will no longer be as steep once the 2024 figures are fully analyzed, the upward trend is likely to continue for the foreseeable future.
The not recording it Pharmaceutical price reforms in the 2024 year-end continuing resolution, despite apparent bipartisan support, could signal further political rifts among lawmakers in 2025. The legislation stripped from the continuing resolution included drug patent reform aimed at reducing the number of patents that pharmaceutical companies can claim regarding biological drugs; decoupling pharmacy benefit manager revenues from drug prices in Medicare, limiting incentives that could lead PBMs to steer patients toward more expensive drugs; and transparency requirements that mandate PBM reporting to Medicare on drug prices and other information.
A modest recovery in life expectancy in 2023 is welcome news, but the US still lags far behind all its peers. For decades, the US has failed to effectively address the key public health issues that are the main cause of slow growth in life expectancy. These include extraordinarily high rates of deaths from fentanyl and other illicit drugs, worsening infant and maternal mortality rates, and increasing numbers of traffic, suicide, and firearm fatalities, as well as persistently high death rates attributed to obesity.
As the Make America Healthy Again movement under RFK Jr. gains visibility, changes on the nutritional front will be proposed. But judging from past experience, this could prove to be largely symbolic.
Banning a food additive here or there or the use of certain pesticides will not get us where we want to go. While welcome policies, they are not core issues underlying obesity and chronic disease in America. The fundamental problems have to do with America’s relatively poor diet and disproportionately large portion sizes, as well as a general lack of daily exercise.
Although RFK Jr. talks about the need to change what we eat and introduce more physical activity into our daily routine, this is not new. Others before him in other governments have done the same, to no avail. It would take an unlikely revolution to change deeply ingrained habits, as well as business practices, of the food and beverage industry.
More importantly, fewer resources are allocated overall to disease prevention and preventive causes of premature deaths. The share of public health of total health care spending has been declining for two decades, from 3.18% in 2002 to 2.40% in 2023. I see no signs of a reversal on the horizon, especially in light of a second Trump term.
Furthermore, the ongoing problems of un- and under-insurance will exacerbate and exacerbate pre-existing inequalities in the health care system.
Going forward, a politically polarized country is not a recipe for positive change in healthcare and public health. Sure, there will still be money to be made in healthcare, but it won’t necessarily benefit public health.