What Town Hall Sees in 2025
9 Key Healthcare Shifts: From MAHA to Consumer Accountability to Pharmacy Reform and Beyond
By Andy Slavitt & Andie Steinberg
Introduction
Every five to seven years, healthcare experiences a year of significant transformation. 2025 will be one of those years.
Since the advent of Medicare in 1965, transformative changes—ranging from episode-based DRGs and Children’s Health Insurance to Medicare Part D, Health Savings Accounts, Medicare Advantage, the ACA, and the birth of ACOs—have fundamentally reshaped how care is delivered. These shifts have also created innovative pathways to invest in our healthcare infrastructure and improve the nation’s health and future.
At Town Hall Ventures, as we vet upcoming changes, the question for us is whether these developments will improve health outcomes, access, efficiency, and fairness—especially for underserved populations—or merely serve as cosmetic shifts, benefiting a few while leaving core challenges unaddressed.
2025 has the potential to drive transformative change and opportunity on a scale we haven’t seen in a decade or more. While it will take several years to know if the potential for progress delivers the improvements we need, we are at a unique moment of opportunity driven by a new activist Administration and technology that is primed to power that change.
Seismic change in healthcare is often driven by government action, and Town Hall’s senior policy team spent the last few months meeting with members of the incoming Trump transition and health officials, new Congressional leaders, and state officials to gather insights and share ideas. We hosted two live invitation-only sessions for you to hear from some of the new policy leaders directly. From these conversations, we’re developing a clear sense of the significant changes we expect in 2025 and beyond—shifts that will shape consumer incentives, the chronic disease burden, drug pricing, and the cost and margins of care for years to come.
Technology will play a central role in this transformation. While the healthcare system has historically underutilized new technologies, two key factors may disrupt that pattern this time around: (1) the potential of generative AI to transform or replace processes affecting patients, providers, and other stakeholders in a way that is both personalized and at scale, and (2) the government’s growing focus on accelerating AI adoption under the new Administration.
Below we lay out 9 themes from these conversations and our own analyses. Some represent critical new areas for investment, while others offer fresh perspectives on familiar ideas. Notably, many of the changes we expect challenge the typical advantages of incumbency. Startups and founders will find fertile ground for innovation, while payors and providers will need to embrace new solutions, driving greater adoption, partnerships, and M&A activity.
These aren’t just predictions—they’re opportunities for you to evaluate your position in the face of these changes. As the country puts a renewed focus on chronic disease, are you ready to meet the demands of advancing chronic disease prevention, managing high blood pressure, or improving cancer and kidney care outcomes? Can you demonstrate you’re reducing illness, keeping people healthy, and doing so efficiently? These questions are just some at the heart of what lies ahead.
1. Health Outcomes, Not Healthcare
We expect the theme of Trump 2.0 to center on MAHA— Make America Healthy Again. This has been made clear to us in a number of first-hand conversations with leadership as well as polling data the new Administration has commissioned.
What This Might Look Like:
Payment models & contracting approaches with a focus on chronic disease reduction. We could see models that reward both providers for reducing disease burden, and patients via tangible benefits for meeting health milestones (see our theme 2 for more).
An emphasis on prevention, including non-pharmaceutical and non-invasive approaches, centering many of the environmental factors that are causing illness, such as nutrition.
Adjusting quality bonus measures to directly tie payment to improved patient outcomes by re-orienting incentive systems like Stars towards improved health outcomes rather than administrative compliance or equity measures currently in place.
Implications:
We should expect a strong need for investment in new data collection and analysis, outcomes measurement, consumer engagement, and quality efforts, as well as adoption of the most successful disease management and prevention programs like Strive Health in kidney disease and Thyme Care in cancer care.
2. Consumers, Incentives, and Prevention
Core to the new Administration’s philosophy is empowering individuals to improve their health through evidence-based digital capabilities, price and quality transparency, consumer-focused design, and reward systems. Policies will likely align financial incentives with preventive care, encourage leveraging technology to enhance patient education and engagement, and embrace new AI-approaches to care navigation through patient-centric solutions.
What This Might Look Like:
Increased adoption of AI-driven digital health tools accelerated by incentive models, quality payments, and rewards.
New CMMI models focused on consumer incentives and rewards.
Medicaid waivers incentivizing preventive health measures, behavioral changes, and care plan adherence.
State-level initiatives integrating preventive care in schools and community settings, targeting pediatric and family wellness.
Implications:
Few organizations have the consumer trust or service capabilities to succeed alone—partnerships will be key. Generative AI unlocks efficient scalability previously unavailable, making this a prime area for new business models and company creation.
3. Medicare Advantage (MA) Positioned for Expansion
Starting in 2026, we should see policies that ease regulatory measures and financial margin pressures, support growth opportunities, and help providers deliver more integrated, patient-centered care for an aging population.
What This Might Look Like:
With one more year of V28 implementation, risk scoring revisions are likely to follow, restoring several key Hierarchical Condition Categories (HCCs) and balancing some of the needed changes in V28 with improvement to areas with adverse consequences.
Adjusting quality measures and Stars scores to be outcomes-oriented, directly tying payment to improved patient outcomes, and rewarding plans that achieve chronic disease reduction & better health results for their members. This approach would drive innovation in care delivery and improve accountability for clinical improvements. MA plans, which focus explicitly on chronic disease management like Zing Health, should be well-positioned.
Anticipated rate increases after years of negative updates could help MA plans recover financially and reinvest in care quality improvements.
Implications:
In 2026 and beyond, we anticipate that changes could collectively add approximately 200-400 basis points of margin for Medicare Advantage stakeholders even after potential offsets from reconciliation efforts, with variation depending on geography and risk mix.
4. Pharmacy in the Spotlight
The rising cost of drugs remains a key focus for policymakers. The Inflation Reduction Act (IRA) introduces major Medicare Part D changes in the coming years, and the expanding indications of GLP-1s raises questions about Medicare coverage. The new Administration will add another angle: the view that drug costs are a trade issue. International benchmarks could become an important tool to align U.S. pricing with global standards.
What This Might Look Like:
Revisiting the 2020 Most Favored Nations (MFN) pricing model, linking reimbursements for drugs to the lowest international prices, phased in over time. This could be implemented at CMMI or in conjunction with the IRA negotiation processes.
FDA leadership under Dr. Marty Makary, in collaboration with CMS, may emphasize price transparency alongside clinical outcomes during drug approvals, potentially driving more outcomes-based contracts in the pharmaceutical industry.
Increased transparency and oversight of the 340B program could ensure discounts directly benefit intended recipients, with clearer requirements for covered entities to demonstrate patient impact and refined eligibility criteria for participants.
Shifts in the pharmacy benefit management (PBM) system toward more transparency and challenging traditional rebate and fee approaches.
A potential re-examination of Part D drug caps and resulting premium shifts.
Implications:
Expect continued shifts in both cost and coverage decisions with a resulting impact on formularies and contracting, as well as overall medical costs.
5. CMMI 2.0
The Center for Medicare and Medicaid Innovation (CMMI) has launched over 50 models since its inception, testing and scaling innovative payment and care delivery approaches to improve quality and reduce costs. These models, focused on ACOs, bundled payments, and targeted initiatives, have had a number of important successes. However, some models face scrutiny for burdensome requirements and unpredictable outcomes, leading to limited enthusiasm among physicians. Others face scrutiny for generating insufficient government savings.
We believe the Administration, including the new Division of Government Efficiency (DOGE), will conclude that CMMI remains a vital policymaking tool in the quest to save billions in government spending, as well as in its potential to reshape care delivery and payment systems. The focus will likely shift toward refining underperforming models, addressing participation barriers, and launching high-impact initiatives aligned with cost-containment goals.
What This Might Look Like:
Models tying reimbursement and patient rewards to preventive care and chronic care management, aligning incentives with behavior change and long-term savings.
Enhanced price and quality transparency, including episode-based bundled payments (e.g., joint replacements, cardiac surgeries) with total cost, quality, and out-of-pocket comparisons. Mandatory bundles for market-dominant systems could improve efficiency and care quality, with readmission penalties included.
Reintroducing the “Geo Model” to enhance care coordination for disadvantaged populations, particularly in rural areas. Hopscotch, which focuses on delivering value-based care to underserved rural populations, could play a pivotal role in scaling such models effectively.
Identifying and phasing out models that fail to achieve cost savings or improve care quality, reallocating resources to more impactful initiatives.
Transitioning from retroactive adjustments to prospective payments to reduce financial uncertainty and encourage greater participation in CMMI models.
Implications:
Models should attract more participants as they become more appealing to those who can deliver savings like Curana Health in senior care residential settings and Empassion in end of life care. New models should be seen as a potential opportunity to invest in new capabilities that may later be broadly scaled.
6. GenAI Seeps in Everywhere
Extensive conversations with the new Administration suggest that one of CMS’s biggest opportunities lies in using generative AI to scale care delivery and beneficiary interactions in a way that is both efficient and deeply personalized. The new Administration recognizes AI’s potential to accelerate progress across key policy goals—whether improving access, reducing costs, or enhancing quality. The sky is the limit, and we expect the Administration to engage with leading healthcare AI companies to implement the most impactful solutions at scale.
What This Might Look Like:
Initially focused on clinical workflows, AI will evolve to empower consumers directly, enabling personalized health tools, data-driven decision-making, and better engagement with preventive care and treatment plans.
Accelerating AI adoption through grants and state waivers, focusing on high-value administrative and clinical workflows to improve efficiency and care delivery.
Leveraging AI tools to strengthen CMS oversight by detecting fraud, waste, and abuse, monitoring MCO compliance, streamlining prior authorizations, and improving provider directory accuracy.
Mandating reporting on AI’s performance in pilot programs to establish best practices and regulatory guardrails for safe and effective implementation.
Implications:
Healthcare companies should prioritize building a secure AI environment—such as those offered by Qualified Health—to ensure safe adoption. By systematically evaluating clinical, administrative, and patient-facing processes, high-impact opportunities for leveraging AI will emerge. AI integrations will no longer be optional—they have become essential. Investment in upfront AI will establish a new best-in-class margin standard that startups and incumbents alike will be measured against. Partnering with AI innovators focused on enhancing productivity, access, and personalization will be critical to achieving both competitive advantage and meaningful improvements in patient outcomes and experiences.
7. The Chase for Duals
Dual-eligible populations—those covered by both Medicare and Medicaid—represent over 12 million individuals, accounting for some of the highest-need, highest-cost patients in the healthcare system. These individuals often experience fragmented care due to poor coordination between Medicare and Medicaid programs, with overlapping services like post-acute care contributing to inefficiencies and waste. Duals are a significant driver of cost to the healthcare system and, when managed properly, represent a coveted population to serve, particularly for plans with established Medicaid populations.
To address these challenges, federal and state efforts have increasingly focused on integrating Dual Eligible Special Needs Plans (D-SNPs), consolidating Medicare and Medicaid benefits under a single organization to streamline care. While current rulemaking encourages D-SNP integration, it stops short of mandating it, leaving room for further policy innovation to improve coordination. Additionally, individuals with disabilities—a key segment of the dual-eligible population—are often the last group to transition into managed care, creating an untapped opportunity to improve outcomes for this medically vulnerable demographic.
What This Might Look Like:
Rapidly integrate dual-eligibles into fully-integrated models with Medicare and Medicaid providers and services. Organizations like Cityblock are essential partners for organizations aiming to serve dual-eligibles.
As the aging low-income population grows and nursing homes struggle to meet demand, scale national programs like PACE, where Habitat Health and Welbe Health deliver comprehensive care capabilities. Additionally, innovative models like New York’s FIDA-IDD provide specialized, holistic care for high-need populations, offering a roadmap for addressing the unique challenges of dual-eligible individuals.
Support holistic, value-based models that include coverage of relevant non-medical costs (e.g., respite and caregiving) for dementia that companies like Brigade Health are providing.
Accelerate effective integration by limiting Lookalike MA plans that mimic D-SNPs but lack true service integration, or implement opt-out enrollment based on provider relationships or coverage areas.
State-led efforts to unify D-SNP plans under single parent organizations to streamline and enhance care for dual-eligible populations.
Implications:
Medicare Advantage providers will need to access full Medicaid and LTSS capabilities, while Medicaid providers will need Stars and risk adjustment, even as they work to provide a seamless integrated experience to dual-eligibles. Partnerships and acquisitions will likely be favored.
8. ICHRA will be a Long, Slow Development
Individual Coverage Health Reimbursement Arrangements (ICHRAs), first introduced under Trump 1.0, allow employers to offer tax-advantaged reimbursements for employees to purchase individual coverage tailored to their needs. This approach could empower employees with greater choice and flexibility, while helping employers manage exposure to rising healthcare costs. We believe this shift will be gradual, with adoption progressing steadily over time as market dynamics and regulatory support evolve.
The looming expiration of ACA enhanced subsidies at the end of 2025 adds uncertainty to Marketplace growth prospects. While ACA repeal is unlikely, reforms may cap subsidies at certain income levels (e.g., 400% of the federal poverty line) and change benefit flexibility, allowing cheaper plans with reduced benefits and higher deductibles.
These broader Marketplace changes are critical to ICHRA’s success, as they directly affect the affordability and stability of individual coverage options. If subsidies expire or are reduced, healthier individuals may opt out due to higher costs, leaving a sicker, high-risk population in the insurance pool. This adverse selection could drive premiums higher, reduce coverage accessibility, and strain the healthcare system with more uncompensated care costs for payors and hospitals.
What This Might Look Like:
Small groups and targeted segments of large employers may adopt ICHRA, but this evolution is likely to remain slow unless external incentives or regulatory changes accelerate uptake.
The Administration or Congress could expand ICHRA’s role by addressing barriers to adoption or positioning it as a platform to complement or replace certain ACA functions.
Implications:
Investments in ICHRA capabilities should be deliberate and incremental. Solutions should be low-cost, scalable, and adaptable to evolving regulations. Employers and insurers should evaluate tools, like private exchanges, to determine their viability in supporting ICHRA adoption while maintaining competitive and accessible coverage options.
9. Hot Reconciliation Battle
The upcoming reconciliation battle(s) in Congress will be one to watch, with nearly every area of healthcare spending and policy under review. With tax cuts expected to reduce revenue by $3 trillion through 2034, policymakers will be under pressure to reduce spend. Given the thin Republican margins in the House, healthcare and tax negotiations may stretch into the summer. Viewed as must-pass legislation, reconciliation will be influenced by interest group lobbying, with tremendous pressure to include (or exclude) key healthcare provisions. This is an “everything is on the table” moment, where cost-containment measures and reforms could reshape Medicare, Medicaid, and ACA programs, with ripple effects across the healthcare system.
What This Might Look Like:
Medicaid reform proposals, such as block grants or FMAP reductions, will be discussed but are highly unlikely due to the complexity, state pain, and lack of prominent sponsorship. Instead, certain states may consider work requirements or stricter eligibility criteria. Consumer rewards and value-based requirements could become more dominant. Companies like Equality Health and Playground Pediatrics, focused on enabling value-aligned arrangements among Medicaid populations, are well-positioned to help navigate these shifts.
In Medicare, reforms like site-neutral payments, 340B transparency, and expanded competitive bidding will take center stage as major cost-containment tools.
Telemedicine extensions, hospital-at-home programs, PBM reform, and other proposals—ranging from cost-saving measures to spending initiatives—will be on the table. These will align with the Trump Administration and DOGE's priorities to address drug pricing, streamline system inefficiencies, and manage rising medical costs.
Implications:
Advocacy agendas in Washington, D.C. will be in full swing. Whatever legislation passes will likely include adjustment periods and opportunities for exceptions. The final outcomes will hinge on the fiscal discipline applied during the process.
Conclusion
2025 and 2026 will be pivotal years for the incoming Administration to advance its policy and technology agenda. These years will also represent an essential window for healthcare companies to strategically invest in targeted areas. How healthcare participants navigate these 9 themes will determine shifts in market leadership, measured both in improving outcomes for Americans and achieving financial success.
2025 will be a uniquely transformative year, offering higher margins and new growth opportunities but demanding greater accountability and rewards for those who deliver tangible improvements in care outcomes. At Town Hall Ventures, our mission is to support this transformation by investing in and driving the innovation needed to reshape healthcare for a healthier future.
Town Hall Ventures is eager to collaborate in navigating these changes and explore potential new opportunities in healthcare. Please reach out to begin a dialogue about how these themes may impact your practice, healthcare business, or new ideas.
We can be reached at steinberg@townhallventures.com
