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'Opportunity Through Uncertainty': A Healthcare Industry Outlook

Analysis  |  By Laura Beerman  
   February 03, 2025

Avalere spotlights top trends for 2025.

Healthcare's word for 2025 may very well be uncertainty.

"New market and policy dynamics in 2025 create a challenging healthcare environment, but also present stakeholders with new possibilities." This from Dr. Sarah Alwardt, president of healthcare consultancy Avalere.

The firm has released its 2025 Healthcare Industry Outlook, which includes three key trends:

·       Trend 1 —Succeeding Amid Financial Pressure: Recognizing New Stakeholder Behaviors. Look for Part D Medicare drug plans to shift costs significantly to enrollees.

·       Trend 2 — Finding Advantage in Ambiguity: Navigating Tech Advances and Policy Change. Under the tech portion, AI's ability to gain public trust and deliver results. Under the policy portion, coverage solutions to meet GLP-1 demand.

·       Trend 3 — Thriving in Complexity: Building Integrated Business Strategies. Plans face pressures to operate more efficiently.

This HealthLeaders feature spotlights key insights into each trend, with a focus on payer challenges and opportunities.

Trend 1 — Succeeding amid financial pressure: Recognizing new stakeholder behaviors

Remember those WTW findings from a few weeks back: that employers would address rising healthcare costs not with cuts but better benefit design? The same cannot be said for Medicare Part D Drug Plans.

"In response to financial pressure and market uncertainty . . . Part D plans shifted more of their cost-sharing tiers from copayments to coinsurance," notes the Avalere report, adding that this "could lead to unanticipated out-of-pocket spending increases."

Copayments are more predictable for consumers and generally defined by dollar amounts (e.g., $10 for popular generic drugs). Conversely, coinsurance is defined by a percentage (e.g., 10% cost share for a preferred drug) and is often more expensive.

The new cost-shifting from Part D plans to consumers is staggering. From 2023 to 2025, the percentage of drugs with coinsurance versus copays increased:

·       39% for ophthalmology drugs

·       34% for anticoagulant drugs

·       32% for select respiratory and diabetes drugs

For example, in 2023 26% of anti-asthmatic and bronchodilator drugs were subject to coinsurance; in 2025, that increased to 58%.

Medicare prescription drug cost control can feel like a zero-sum game: attempts to aid consumers on one side (e.g., price negotiations, caps on out-of-pocket spending), cost-shifting and the exorbitant price of drugs like GLP-1s on the other. But you know what they say: Squeeze the healthcare cost balloon in one place and it bulges in another.

Additional insights on Avalere's first 2025 trend — Succeeding Amid Financial Pressure — included additional government and provider cost-control efforts.

Trend 2 — Finding advantage in ambiguity: Navigating tech advances and policy change

Every healthcare sentence inevitably includes AI.

Artificial intelligence was the first focus of Avalere's 2025 tech-policy trend, with the company noting: "Demonstrating AI's advantages will be important for gaining public acceptance of uses that could save costs and optimize care."

To gain public acceptance, information about AI and the benefits from it must be consistent and trustworthy. This couldn't be more true or more timely given healthcare's latest headlines: 

·       AI development may cost far less than we've been told. Chinese AI startup DeepSeek announced its AI model cost just $5.6 million to develop — 20-40x cheaper than OpenAI's. While not healthcare specific, the industry implications are massive.

·       Consumers trust AI more than their health plans. Refer to the recent HealthLeaders feature on the personalization consumers need.

·       Health plans hold tremendous power over data and coverage. And stakeholders are not happy about it — including employers who are "operating in the dark" per PBGH president and CEO Elizabeth Mitchell.

Avalere's 2025 outlook adds to this — and puts health plans squarely in the driver's seat of AI-driven cost savings and care optimization.."

"For decades, health plans have amassed extensive healthcare data. Today, advancements in AI can help them transform these data into actionable information."

An area that needs this action is GLP-1s.

"With growing patient and policymaker interest . . . there is increasing pressure on public and private payers to cover products," notes Avalere.

GLP-1 coverage specifically for weight-loss varies and could either expand, shrink or both, depending on the payer. Avalere's outlook notes that the Biden administration proposed coverage by Part D and Medicaid plans, adding that payers and pharma "should closely monitor whether and how the Trump administration enacts this policy."

Given GLP-1 demand and price, cost-shifting and utilization management will likely accompany coverage expansion — another example of how healthcare's cost balloon gets squeezed.

Other insights related to Avalere's second 2025 trend — Finding Advantage In Ambiguity — included the need for predictable prescription drug costs across the supply chain and stakeholders, as well possible changes to vaccine policy and coverage with the new administration.

Trend 3 — Thriving in complexity: Building integrated business strategies

Despite their power, even health plans must adapt their strategy and operations to meet growing pressures. Avalere identifies these as:

·       more policy and regulatory scrutiny

·       higher healthcare service costs

·       greater technology use

 

In addition to cost, access and quality, Avalere noted that federal and state agencies will continue to look at the role of PBMs.

 

Noting again the tremendous demand for and cost of GLP-1s, the 2025 outlook report added: "Inflation, innovative treatments, pressure to improve quality, and other operational and regulatory dynamics will drive up the costs of healthcare administration and services for payers."

 

"Additionally, emerging technologies such as AI may offer increased efficiency, but need to be thoughtfully evaluated and implemented," says Avalere, calling out the risks and opportunities associated with AI, with a specific callout on its use for prior authorization.

Other insights related to Avalere's final 2025 trend — Thriving in Complexity: Building Integrated

Business Strategies — included oversight strategies for diagnostics, devices, and technology and topics related to prescription drug exclusivity, economics and outcomes.

In a final piece of advice for payers, Avalere notes: "Plans should evaluate product design, provider network performance, and care and utilization management programs to improve member outcomes and increase operational efficiencies."

Laura Beerman is a freelance writer for HealthLeaders.


KEY TAKEAWAYS

Healthcare consulting firm Avalere has released its 2025 Healthcare Industry Outlook

The predictions focus on mounting financial pressures, question marks in the tech and policy arenas, and the need for integration and efficiency.

Avalere president Dr. Sarah Alwardt notes that the climate is one of both uncertainty and opportunity.


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