Dive Brief:
- Health benefit costs are expected to increase 5.8% in 2025, according to Mercer’s 2024 National Survey of Employer-Sponsored Health Plans. That marks the third consecutive year total health benefit cost per employee will climb more than 5%.
- Employers estimated costs would rise 7% on average if they didn’t take cost-reduction measures, per the survey. Smaller employers, those with 50 to 499 employees and that generally have fully insured plans, predicted costs would climb 9% on average without cost-saving efforts.
- Sunit Patel, Mercer’s U.S. chief actuary for health and benefits, attributed the higher costs to price dynamics and the gap between the supply of healthcare workers and the demand for healthcare services.
Dive Insight:
To manage rising costs, 53% of the more than 1,800 employers surveyed said they will make cost-cutting changes to their plans next year, up from 44% who planned to take cost-saving measures in 2024. Such changes often include raising deductibles, which typically lead to higher out-of-pocket costs for plan members, Mercer noted.
“Employers are still concerned about healthcare affordability and ensuring that employees can afford the out-of-pocket costs when they seek care. But they also need to manage the overall cost of healthcare coverage to achieve a sustainable level of spending for the organization. Balancing these competing priorities will be a challenge over the next few years,” Tracy Watts, Mercer’s national leader of U.S. health policy, said in a statement.
Employees will pay an estimated 21% — the same as in 2024 — for health insurance premiums through paycheck deductions in 2025, per the survey.
Employers said the high cost of medical services and specialty drugs like weight loss medications are the two top healthcare cost management pain points, according to a recent report by Gallagher.