Rising Health Care Costs Threaten Employers, Despite Strategies for Control

Strategic Insights -

As the US health care system continues to shift, employers are bracing for significant increases in health care costs. According to an analysis from Aon, the average cost of employer-sponsored health care coverage is expected to rise 9% in 2025, surpassing $16,000 per employee. This is a stark contrast to the 6.4% increase in health care budgets experienced from 2023 to 2024, with an average cost of $14,823 per employee after cost-saving strategies.

Key Takeaways:

  • Employers can expect to pay an average of $16,000 per employee for health care coverage in 2025, a 9% increase from the previous year.
  • High demand for GLP-1 drugs, such as Ozempic and Wegovy, is a major contributor to rising health care costs, with a typical cost of $1,000 to $1,500 per month per patient.
  • Employers can reduce costs by understanding direct contracted prices from manufacturers, using coupons, and aligning drug coverage and medical coverage in obesity care.
  • Utilization control initiatives, such as prior authorization, disease management, and nurse advice lines, are becoming increasingly effective in managing costs, with 27% of employers citing them as the most impactful initiative for 2025.
  • Offering guidance and resources to employees about healthy choices, such as telehealth services and coaching services, can help support positive outcomes and manage side effects of medications.
  • Sharing costs with employees through deductibles and cost-sharing provisions is becoming more challenging for employers as health care costs continue to rise.
  • Mental health supports, including apps, stress programs, and a healthy work environment, can have significant benefits, including a reduction in the overall cost of health care.
  • Understanding the interplay between medical and pharmacy benefits, particularly for specialty drugs, can help employes manage costs and prevent unnecessary spending.

Statistics:

  • $16,000: Average cost of employer-sponsored health care coverage in 2025, a 9% increase from the previous year.
  • 9%: Projected increase in average cost of employer-sponsored health care coverage in 2025.
  • $1,000 to $1,500: Typical monthly cost of GLP-1 drugs, such as Ozempic and Wegovy.
  • 27%: Percentage of employers citing utilization control initiatives as the most impactful strategy for 2025.
  • 31,000: Number of members of the nonpartisan group, the International Foundation of Employee Benefit Plans (IFEBP).
  • 8%: Predicted median health care plan cost increase for 2025, according to a survey from the IFEBP.
  • 7%: Projected rise in health care plan costs for 2022 and 2023, according to the IFEBP.

Sources:

  • Aon analysis
  • International Foundation of Employee Benefit Plans (IFEBP) survey
  • Society for Human Resource Management (SHRM) release
  • Mercer data
  • Prescryptive statement by Rae McMahan
  • ComPsych statement by Jennifer Birdsall
  • Key Benefit Administrators statement by Oliver Ayres
  • Mercer statement by Tracy Watts