The Future of Public Sector Health and Healthcare: Perspectives for 2025

As we settle into 2025,  the US Government Health and Healthcare organizations find themselves navigating a pivotal period shaped by the past year's events and the potential for significant policy/program changes across the private and public ecosystems. In 2024, the United States made progress in a variety of high-impact areas such as: 

• Expanding/promoting national interoperability efforts 
• Updating certified health IT requirements such as data standards, AI/Algorithm transparency, and promoting TEFCA 
• Continued investments in modernizing public health data/analytic infrastructure
• Deploying a strategy to improve transparency into the quality of Medicaid MCOs 
• Continuing efforts to improve healthcare cost transparency 
• Innovative approaches to integrating AI into national/local programs/policy 

2025 promises to bring new challenges but also incredible opportunities, from record amounts of ACA-insured populations to federal/state health/healthcare administration changes to the continued AI revolution expectations are high for a year of improvements across the government health and healthcare ecosystem. To understand what lies ahead, we sat down with our experts and asked them to share their top predictions for 2025. Their insights shed light on key narratives and initiatives that will define the future.

1. How will AI impact the government health & healthcare organizations in 2025?

John Bastin General Manager, Public Sector, Innovaccer

“In 2025, AI will accelerate the innovation of whole person-centric strategies across government health and healthcare organizations. Public health organizations will continue to explore and invest in high-impact whole-person initiatives like Social and Community Health Information Exchanges (SHIE). The initiatives are essential to addressing many of the longstanding challenges of connecting citizens, based on their unique needs, with the right public health programs and services. Additionally, State Medicaid agencies will continue to explore innovative cross-organizational initiatives that provide a 360-degree view of Medicaid beneficiaries, including clinical and non-clinical variables. This will better enable Medicaid organizations to better understand the impact of a variety of non-traditional data such as SDoH and enable the creation of programs, policies, and care interventions that can help reduce health disparities and improve outcomes. 

This isn't just about technology but about creating sustainable funding models that support whole-person care delivery. States that embrace these integrated care models will not only improve outcomes but also realize significant cost savings through reduced emergency department utilization and better preventive care. The key to future success here lies in building strong partnerships and connective technology fabric between healthcare entities and community-based organizations”

Jennifer Conner, Senior Director, Product Management, Public Sector, Innovaccer

“In 2025, we will see more states and public health departments leverage artificial intelligence to enhance administrative efficiency, improve member and citizen outcomes, and drive equitable access to care. AI will start to play a pivotal role in streamlining operations for Medicaid and public health programs through automated processes such as claims review for fraud detection, and real-time data analysis to improve decision-making. State Medicaid programs are likely to adopt AI-powered tools to predict member needs, identify social determinants of health, and intervene earlier to close gaps in need and prevent costly complications. Additionally, AI-based chatbots and virtual assistants will help address member and citizen inquiries, reducing administrative burden and improving user experience for beneficiaries. With these advancements, however, comes the need for even tighter data governance frameworks to ensure accuracy and security and mitigate any bias risk in AI-driven systems.”

Nate Wienert, Area Vice President, Public Sector, Innovaccer

"In 2025, AI is set to transform the delivery of care in government programs like Medicaid, public health, and behavioral health through enhanced efficiency, personalization, and cross-sector collaboration. By enabling seamless data sharing across these programs, AI will unlock holistic insights into patient needs, identify high-risk individuals, and facilitate proactive, coordinated interventions. Advanced analytics and automation will streamline administrative tasks, reducing costs and allowing more focus on direct care. AI-powered solutions will also expand access through telehealth and personalized health education, particularly for underserved populations. By integrating data from diverse sources, these programs can address social determinants of health more effectively, driving equitable and comprehensive care for vulnerable populations."

2. What changes in Medicaid will reshape the program in 2025?

John Bastin General Manager, Public Sector, Innovaccer

“I believe Medicaid's spending and reimbursement landscape in 2025 will be changed by innovative payment models that emphasize community health partnerships and population-specific care approaches. States will move beyond traditional managed care to experiment with hybrid payment systems that combine budgets for entire communities with targeted incentives for addressing specific health disparities. 

Building on the current Section 1115 waiver flexibilities, states will create sustainable funding streams for prevention-focused initiatives. States will also experiment with dynamic reimbursement rates that adjust based on real-time community health metrics, moving away from the current fixed-rate systems that don't account for population-specific needs. The key to success will be finding the right balance between fiscal responsibility and maintaining robust provider networks in historically underserved areas.”

Jennifer Conner, Senior Director, Product Management, Public Sector, Innovaccer

“Medicaid in 2025 will continue to evolve, driven by regulatory changes, technological advancements, and a heightened focus on addressing whole-person care and needs. There are two major trends that I anticipate will drive changes in the coming years:  

• Increased Flexibility for States: Many states will expand waiver programs under Section 1115 to test innovative models addressing behavioral health integration, housing stability, and social determinants of health. Additionally, this will encourage enhanced collaboration between Medicaid, MCOs, and technology providers to support innovative approaches to care and service delivery.
• Greater Emphasis on Health Equity: Medicaid programs will prioritize addressing disparities in care, leveraging data analytics and public-private partnerships to identify underserved populations and close care gaps. We can expect to see expanded programs targeting maternal health outcomes, access to behavioral health services, and support for vulnerable populations such as seniors and individuals with disabilities.”

Nate Wienert Area Vice President, Public Sector, Innovaccer

‍“Looking ahead to 2025, Medicaid faces significant fiscal pressures, especially if the federal government adopts block grant financing or per capita caps. Such funding structures could limit federal contributions, increasing the financial burden on states and potentially affecting coverage for vulnerable populations. These challenges are likely to drive a continued emphasis on value-based care, which rewards providers for improved patient outcomes rather than the volume of services rendered. By focusing on preventive care and integrated services, value-based models aim to enhance care quality and reduce costs. The Affordable Care Act's Medicaid expansion has already improved access to care for many low-income individuals. However, sustaining funding to support this growth remains a challenge. Effective implementation of value-based care could lead to a future where healthcare is more affordable and accessible for those who need it most.”

3. What immediate changes will the Trump administration bring to public healthcare policy?

John Bastin General Manager, Public Sector, Innovaccer

“We're looking at some fascinating shifts in public healthcare under the Trump administration. First, there's this ambitious "Make America Healthy Again" initiative targeting chronic diseases - a massive issue affecting 129 million Americans. While the administration wants to tackle chronic conditions head-on, potential cuts to social programs like food assistance could undermine these very efforts. I mean, how do you effectively manage diabetes if people can't afford healthy food? The second major shift involves a bold move toward industry self-regulation in healthcare AI. By taking a step back from heavy regulation, the administration hopes to unleash innovation in AI healthcare solutions. Healthcare organizations would have more room to experiment and implement AI tools faster, but they'll need to walk a careful line between innovation and protecting patient interests. What makes this particularly intriguing is how it could affect Medicaid's 80 million beneficiaries - they could either be the first to benefit from these AI innovations or risk being left behind if proper safeguards aren't in place to ensure equitable access.”

Jennifer Conner, Senior Director, Product Management, Public Sector, Innovaccer

“As the Trump administration kicks off its agenda in 2025, I anticipate a strong focus on deregulation, healthcare cost containment, and private-sector-driven reforms. Some key areas I feel will be impacted include:

• Revisiting Medicaid Work Requirements: A likely push to reintroduce work requirements for Medicaid beneficiaries could impact eligibility in states that adopt these measures, potentially leading to coverage reductions for low-income individuals.
• Scaling Back the ACA: There will be efforts to reduce federal funding and tighten requirements for Medicaid expansion programs under the Affordable Care Act (ACA). This may include revisiting rules around essential health benefits and introducing alternatives like short-term health plans.
• Increased Block Grant Flexibility: The administration is likely to promote block grants and capped funding approaches for Medicaid, granting states more autonomy but potentially reducing overall federal contributions. 
• Public Health Funding: There may be shifts in funding priorities, with more emphasis on privatized solutions and reduced support for programs like the CDC and community health initiatives, raising questions about preparedness for future public health challenges.

While the administration will focus on cutting federal spending, states and public health organizations will also need to adapt to shifting funding landscapes.”

Nate Wienert Area Vice President, Public Sector, Innovaccer

“Under the Trump Administration, several key topics are likely to shape public healthcare policy. Medicaid reforms could include promoting work requirements and other eligibility restrictions through Section 1115 waivers, a priority during Trump’s previous term. Additionally, the administration may explore capped financing models like block grants or per capita caps, which could increase state flexibility while potentially reducing federal funding. In public health, there may be a shift toward diminishing the federal role in favor of state and local control, possibly involving restructuring agencies such as the Centers for Disease Control and Prevention (CDC) and redirecting funding priorities. Long-term care continues to face mounting challenges, and potential policy changes could involve reducing Medicaid’s role in funding, encouraging private solutions, and emphasizing personal responsibility for care planning. Lastly, for prescription drugs and fentanyl, the administration might focus on lowering drug costs through importation or pricing reforms while intensifying efforts to combat fentanyl trafficking and the opioid crisis with stricter enforcement and regulatory measures.”  

Looking Ahead for Government Health and Healthcare 

2025 will undoubtedly bring about change and be shaped by enduring policies, new administrative priorities, and continued advancements in technology, including AI. These changes can and should offer opportunities to more deeply explore program self-awareness, lean into collaborative and innovative strategies, and explore all possible paths to leverage change for positive outcomes.  

As we navigate these uncharted waters the future success will depend on bold ideas, innovative solutions, and a shared commitment to improving health and healthcare outcomes for all.

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