The recent National Health Expenditure analysis from CMS reveals a dramatic increase in healthcare spending post-pandemic, primarily due to a surge in hospital procedures and retail prescription drug use including anti-obesity medications. The insured population has reached a historic high of 93%, allowing for increased utilization of healthcare services. Yet, this peak in insured rates coincides with a fragile healthcare system. ATI experts Anne Tumlinson, Allison Rizer, and Brian Fuller recently hosted a discussion situating the future of value-based care in this complex and evolving marketplace.
As we approach the 15th anniversary of the ACA on March 23rd, it’s evident that one of its primary goals — to lower healthcare costs through innovative care delivery methods — has not been achieved. The lingering effects of COVID-19 on the workforce and supply chain, combined with significant growth in demand, have intensified the friction between insurers, providers, and patients. Despite healthcare spending exceeding 17% of GDP in 2023, health outcomes are poor relative to spending among other wealthy countries. Value-based care remains the primary solution (VBC).
Our progress toward VBC is insufficient to address the extreme crisis in the healthcare system characterized by rapidly rising costs and fragile infrastructure. As we move into 2025, we have identified several key themes to guide innovation in VBC.
Growing Populist Pressure on Healthcare
The U.S. has chosen to ration healthcare through private insurance with blunt tools such as claims denial and prior authorization. Rising costs have increased reliance on these tools, leading to mounting frustration among consumers and providers. Fuller expects to see the Center for Medicare and Medicaid Innovation (CMMI) lead the pivot toward VBC to address this mounting pressure, promoting proactive health management and coordination. This approach aims to reduce the need for prior authorizations and denials, easing pressure on health plans and sharing accountability with providers.
Rizer expects to see an acceleration of efforts around transparency and communication. State and federal agencies will push for increased reporting on utilization, costs, and provider relationships. We will also see greater attention paid to mitigating plan-patient and provider abrasion with a growing focus on enrollee engagement and satisfaction.
Increasing Medical Utilization and Spend
Medical utilization and spending are rapidly increasing. VBC faces challenges in pricing payment models and normalizing erratic post-pandemic trends. Fuller noted difficulties in standardizing utilization and spending without mixed participation portfolios, as voluntary models cause market variation. Rizer highlighted that health insurance focuses on maintenance rather than emergencies, and policies need to adapt. Plans will continue to reduce avoidable expensive care and shift risk to providers. Plans and providers may rely on emerging AI tools aiming to prevent costly procedures, such as predicting high heart attack risks before events occur.
Value-Based Care Innovation Is Critical
VBC and plan innovations are a necessary reality as our economy is increasingly consumed by healthcare spending. Under the second Trump Administration, Fuller expects to see net savings to the system prioritized, with a focus on short-term, hard-hitting models and Medicare Advantage innovation. Rizer anticipates increased financial pressure on states, requiring policymakers to do more with less. Coupled with provider and patient abrasion, this will likely lead to faster growth in pursuing or requiring VBC in managed care contracts. States can also require plans to reinvest a portion of profits in advance VBC models.
The webinar closed with Fuller and Rizer’s expectations for the growth of privatization and Medicare Advantage under the incoming Administration.