U.S. Employers Brace for Rising Health Insurance Costs in 2025

U.S. employers anticipate a 5.8% rise in health insurance costs by 2025, driven by higher medical service prices, increased use, and spending on behavioral health and GLP-1 weight loss drugs, according to a Mercer survey. Cost-management strategies are planned to mitigate these expenses, especially for smaller employers.

U.S. employers are set to face a 5.8% hike in health insurance costs by 2025, stemming from pricier medical services and higher usage, as revealed by a Mercer survey released on Thursday.

The year 2025 will mark the third consecutive year of over 5% healthcare cost increases for employers. Previously, costs rose by an average of 3% per year. A key factor driving this surge is the ongoing shortage of healthcare workers, which has led providers to raise prices. Additionally, spending on behavioral health and GLP-1 weight loss drugs are significant contributors.

The survey indicates that employees will continue to bear an average of 21% of total health plan costs in 2025. To manage these rising expenses, 53% of employers plan to implement cost-management changes, an increase from 44% in 2024. These strategies will focus on reducing utilization by members with expensive conditions and managing specialty drug costs.

Smaller employers, those with 50 to 499 employees, are experiencing the highest cost increases, potentially reaching 9% without cost management measures and 6.3% with such measures in place. Many small employers use fully insured health plans from private insurers, which often come with higher premiums and lack cost-saving well-being programs.

(With inputs from agencies.)