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U.S. employers predict a 5.8% rise in health benefit costs for 2025, according to Mercer’s 2024 National Survey of Employer-sponsored Health Plans. This is the third year in a row that the total cost per employee rose more than 5%. This surge is due to a shortage of healthcare workers, rising demand for services, and expensive treatments like behavioral health care and GLP-1 medications.
The report analyzed responses from over 1,800 employers nationwide found that costs would rise by an average of 7% without cost-lowering actions. Smaller employers (50-499 employees) would be hit hardest, with an estimated 9% increase. These figures align with other industry reports from Aon and the International Foundation of Employee Benefit Plans.
According to the survey, half (53%) of employers plan to cut costs next year by raising deductibles, up from 44% in 2024. Managing these costs is crucial to keep employee premium contributions in check.
Prescription drug spending remains the fastest-growing driver of health benefit costs. Drug benefit cost per employee rose 7.2% rise per employee in 2024 influenced by the introduction of costly gene and cellular therapies.
Employer Takeaway
The Mercer report indicates that employers will continue to face rising health care costs next year. To address this, they should focus on cost reduction and balancing health care affordability for employees. Reviewing benefits offerings can help identify effective cost-saving strategies and ensure they meet employees' needs. Download the bulletin for more details.
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