Mercer's 2024 National Survey of Employer-Sponsored Health Plans Reveals Rising Health Benefit Costs

Strategic Insights -

Despite general inflation cooling, the health benefit cost trend is expected to rise by 5.8% on average in 2025, according to Mercer's 2024 National Survey of Employer-Sponsored Health Plans. The study, which analyzed responses from over 1,800 US employers, found that total health benefit cost per employee is projected to increase, even after accounting for planned cost-reduction measures. Smaller employers, which typically have fully insured health plans, have been hit the hardest, with estimated cost increases of 9% on average if no action is taken to lower costs.

Key Takeaways:

  • The health benefit cost trend is expected to rise by 5.8% on average in 2025, driven by complex forces such as price dynamics, the widening gap between healthcare workers and demand, and consolidation of health systems.
  • Smaller employers (those with 50-499 employees) are expected to face the largest increases in health benefit costs, with a 9% rise on average if no action is taken to lower costs.
  • Spending on prescription drugs remains the fastest-growing component of health benefit cost, with employers reporting a 7.2% rise in 2024.
  • About half of employers (53%) will make cost-cutting changes to their plans in 2025, including raising deductibles and other cost-sharing provisions.
  • Employee premium contributions through paycheck deductions will remain steady at 21% of health insurance premiums in 2025.

Statistics:

  • Total health benefit cost per employee is expected to rise 5.8% on average in 2025.
  • Smaller employers (those with 50-499 employees) expect a 9% rise in health benefit costs on average if no action is taken to lower costs.
  • Spending on prescription drugs rose 7.2% in 2024.
  • About half of employers (53%) will make cost-cutting changes to their plans in 2025.
  • Employee premium contributions through paycheck deductions will remain steady at 21% in 2025.

Sources:

  • Mercer, "2024 National Survey of Employer-Sponsored Health Plans"
  • Businesswire, "Mercer's 2024 National Survey of Employer-Sponsored Health Plans Reveals Rising Health Benefit Costs" (https://www.businesswire.com/news/home/20240912355491/en/)