In 2025, Pessimistic Forecasts Surface Regarding Economy and Healthcare Systems
It's time to share some speculations for 2025. Regrettably, these forecasts aren't all sunshine and rainbows, particularly concerning the economic climate and public health. Let's first discuss prophecy. Predicting future events, especially in domains like economics, public health, and politics, can be a tricky endeavor due to their inherent complexity and unpredictability. Nevertheless, it can be an engaging exercise. Analyzing year after year what I've gotten right and wrong in my predictions is quite intriguing.
As a health economist writing on this platform, my expertise lies in healthcare and public health. However, considering the impact of politics and the economy on the healthcare sector, I also pay close attention to developments in the United States and global economy and political sphere. So, let's dive into that.
Initially, I believed Trump would secure a comfortable victory in the presidential election. Similarly, I predicted that although the economy wouldn't plunge into a recession in 2024, inflation wouldn't decline to 2% either but would instead gradually climb up by the year's end. While I erred slightly on the unemployment percentage, I did anticipate a decrease in job gains by the 4th quarter.
If Trump stays true to his promises, my forecast for 2025 includes a slowdown in economic growth, a gradual rise in unemployment, and an elevation in inflation. As tariffs take effect, inflation will continue to rise towards 4% annually by year's end. An added challenge could be the impact tariffs have on U.S. industries that heavily rely on imported raw materials and semi-finished products. I anticipate a stagnation in manufacturing and an increase in unemployment, possibly reaching 5.5% or even 6% by the year's end. Despite the absence of a technical recession, the economy's growth may decrease to a meager 1% by the year's end.
The deportation of undocumented workers could lead to an increase in nominal wages, which might initially appear beneficial. However, it could also exacerbate the problem of inflation, as companies pass on their increased labor costs to consumers. Austerity measures, such as diminished government investment, and stubbornly high interest rates may adversely affect the economy, as well. I expect the average 30-year mortgage rate to exceed 7% by year's end. Additionally, the high degree of uncertainty, both domestically and internationally, may further harm the economy's prospects.
In the healthcare sector, the shake-up under the next Trump administration could result in an increase in vaccine hesitancy, a slowdown in infectious disease drug development, and renewed advocacy for international price referencing for prescription drugs in Medicare.
The Food and Drug Administration approved 50 drugs in 2024, similar to the 55 drugs approved in 2023. Given the pipeline, there should be a robust number of approvals in 2025, with a continued predominance of cancer and orphan disease drugs and therapies.
However, a concerning trend with prescription drugs is their historically high launch prices. For over a decade, there has been a steep upward trend in the launch prices of newly marketed brand-name drugs. In 2023, the median annual list price for a newly approved drug was $300,000, according to a Reuters analysis of 47 medicines, up from $222,000 the previous year. Although the increase in price won't be as substantial in 2024, the upward trend will likely persist into the foreseeable future.
The failure to include pharmaceutical pricing reforms in the end-of-year continuing resolution in 2024, despite bipartisan support, may signify further political fracturing among lawmakers in 2025. The legislation that was cut from the continuing resolution included drug patent reform addressing the number of patents that pharmaceutical companies can claim regarding biologics; delinking of pharmacy benefit manager revenue from drug prices in Medicare; curbing incentives that can lead to the steering of patients toward more expensive medicines; and transparency requirements mandating PBM reporting to Medicare on drug pricing and other information.
There was a modest recovery in life expectancy in 2023, but the U.S. still lags behind all of its peers. For decades, the U.S. has struggled to effectively address its major public health issues, such as high deaths from fentanyl and other illicit drugs, worsening infant and maternal mortality, increasing traffic deaths, suicides, and gun fatalities, as well as sustained high levels of mortality attributed to obesity.
As the Make America Healthy Again movement led by RFK Jr. gains visibility, there will be proposed changes to nutrition. However, considering past experiences, these changes might primarily be symbolic.
Banning a food additive or restricting the use of certain pesticides will provide some benefits, but they are not core issues causing obesity and chronic disease in America. The fundamental problems lie in America's relatively poor diet, disproportionately large portion sizes, and lack of daily physical exercise.
Furthermore, RFK Jr. advocates for a change in eating habits and incorporating more physical activity into our daily routine, but as history shows, others have expressed similar sentiments in other administrations, and change has remained elusive. It would require an extraordinary transformation, coupled with businesses altering their practices, to overturn ingrained habits in America.
Essentially, a smaller portion of funds is being directed towards fighting diseases and their precursor conditions, triggering premature deaths. The proportion of public health spending in the total healthcare budget has constantly decreased over the past two decades, from 3.18% in 2002 to 2.40% in 2023. I don't foresee any signs of this trend reversing, especially given another term for Trump.
Furthermore, the continuing issues of no or insufficient coverage will intensify and widen existing disparities in the healthcare system.
Future developments, given our politically divided nation, don't bode well for advancements in healthcare and public health. To clarify, while profits will continue to be generated in the healthcare industry, this may not translate to improved public health outcomes.
In the context of Trump's potential policies, prescription drug patent reform might not be a priority, leading to continued high launch prices for new drugs.
The Food and Drug Administration (FDA) is expected to approve a significant number of cancer and orphan disease drugs in 2025, but the high cost of these medications could impact public health, as affordability remains a concern.
Tariffs imposed by the Trump administration could negatively impact the economy, potentially leading to an increase in the average 30-year mortgage rate by year's end.
The failure to include pharmaceutical pricing reforms in the end-of-year continuing resolution could signify political fracturing among lawmakers, making affordable healthcare a challenge in the future.
If Trump's promises lead to an increase in nominal wages, it could exacerbate inflation and further harm the economy, especially if companies pass on their increased labor costs to consumers.
