Experts Are Eyeing Interplay of State, Federal Health Care Policies in 2025

2025 Outlook Prescription drug affordability boards (PDABs), PBM reform, and ripple effects from the possible end of the Affordable Care Act’s preventive services coverage mandate are a few of the issues topping some experts’ lists of policies to watch in 2025. Emily Donaldson, a principal at consulting firm Avalere Health, says she is keeping an eye on states’ moves regarding PDABs. Maryland enacted the first PDAB in 2019, and seven other states (Maine, Minnesota, New Hampshire, Oregon, Ohio, Colorado and Washington) have followed suit. Additionally, 11 states are considering or have considered creating PDABs. The goal of a PDAB is to evaluate drug prices and their effects on patients and the health system. The setup and operation of PDABs can vary greatly between states, Donaldson says. The boards in some states simply make recommendations to the legislature about how to help the system or patients better afford their medicines, while others have the authority to set upper payment limits (UPLs) on certain drugs. “In some states it might be an upper payment limit on reimbursement in the state-regulated commercial market. Other states have the upper payment limit reaching just state employee plans, or some states include Medicaid,” Donaldson explains. No state has enacted UPLs yet, but they are working their way through the process of determining the methodology of setting UPLs, Donaldson notes. For now, she is studying states that are considering legislation and seeing where existing PDABs are moving in their determination processes. “There are states that may bypass the whole PDAB implementation board and just have a statute that references Medicare MFP [maximum fair prices] as an upper payment limit in the state,” she says, referring to the prices set for drugs subject to the Inflation Reduction Act’s Medicare Drug Price Negotiation Program. “The MFP justifications were recently released and there doesn’t appear to be anything in those justifications that would give PDABs a road map of sorts for determining UPLs. It could serve to use MFP as a UPL or at least give states a little bit more information to work with as they’re determining their own.” Optimism for PBM Reform Is Still High Transparency-Rx, a coalition of smaller PBMs pushing for industry reform, is considering what its 2025 approach will look like. The group is enthusiastic, given President-elect Donald Trump’s comments on “knocking out the middlemen,” referring to PBMs, says managing director Joe Shields. “I think that’s something that we’re particularly optimistic about. [Trump’s] been particularly aggressive early on. I think this is a positive signal and a sign of progress to come,” he says. PBM reform was “pretty close to a done deal” in the December continuing resolution bill but “fell apart” when Trump and X CEO Elon Musk publicly complained about the size of the bill, prompting lawmakers to remove the reforms despite strong bipartisan support. The bill would have required new transparency measures, banned spread pricing in Medicaid, “delinked” PBM profits from drug prices in Medicare Part D, and required PBMs to pass through 100% of drug rebates and discounts to employer group plans. Despite the failure of the legislation, Shields believes “there are still wide swaths of Congress that are supportive and looking to embrace broad-based PBM reform and what I would call comprehensive PBM reform. And there's indication that that's going to continue within the early days of the new Congress and the early part of the Trump administration.” It is difficult to know what broad PBM reform will ultimately look like because “it means different things to different people” and PBMs have become amorphous. “The octopus has gotten larger over time,” Shields adds. “But our hope is that it’s going to be a comprehensive sort of approach and that it tackles challenges within government plans in the market. There seems to be a meaningful appetite for that. We’re optimistic that by the springtime, there’s the potential for real meaningful national action.” Donaldson raises another question about federal PBM reforms: “If those provisions passed, would Congress consider that to be the end of the conversation for a while, or would they continue to have discussions about PBM reform? I find that question rather more interesting,” she says. Donaldson and Shields both anticipate state PBM reform action in 2025. States might go beyond PBM transparency legislation and go for anti-steering, preventing PBMs from requiring patients to use the PBM’s own pharmacies. “Some states have already passed it; I just think we’ll continue to see that,” Donaldson notes. The “most exciting” work coming out of the states has been from attorneys general, Shields says. “That work has the potential to be even more effective and impactful right in the near term than legislative efforts. There’s ongoing work in Ohio that’s starting to brew up and there’s myriad other states beginning to think about legislative action,” he explains, referring to Ohio Attorney General Dave Yost leading a coalition of 39 attorneys general to encourage Congress to act on PBM reform. There is also legislation pending in Ohio for state-level PBM reforms. “That’s something that we’re continuing to monitor to support where appropriate.” But some of these state reforms will depend on what happens in Congress. “I think there's a bit of a yin and yang there between what ultimately gets codified in federal law and then what's appropriate and within state law.” Preventive Services Ruling Could Activate Mirror Laws The fate of the ACA’s coverage of preventive services without cost sharing also tops Donaldson’s list of must-watch policies. Braidwood Management, Inc. v. Becerra, filed by six individuals and Christian-owned businesses, challenges the legality of the ACA’s provisions mandating no-cost coverage of preventive services recommended by the U.S. Preventive Services Task Force (USPSTF), the Advisory Committee on Immunization Practices and the Health Resources and Services Administration. In June 2024, the Fifth Circuit Court of Appeals agreed with a lower court ruling that the government should stop enforcing the mandated coverage of USPSTF-recommended services, although the ruling only applies to the plaintiffs. In September 2024, the Biden administration asked the Supreme Court to take up the case, and that decision is pending. If the Supreme Court takes up the case and eliminates the preventive services coverage mandate, possible insurer actions “will kind of depend on the market,” Donaldson says. Additionally, “there have been state laws passed that mirror some ACA provisions, including the preventive services provisions,” she adds. “If you’re in a state where that’s the case and that statute extends to the individual market and or the fully insured market, they will follow those laws.” However, those types of mirror laws don’t apply to the self-insured market. “That’s where we could see the potential for a rollback of those preventive services measures,” Donaldson notes. And there is also the possibility that insurers could continue to cover some preventive services without cost sharing. “I also think that insurers understand the importance of preventive care and I imagine they would take a very thoughtful approach,” she says.