Benefits Execs Say Higher Provider Pay, Drug Costs Are Fueling 2025 Health Cost Hike

Employers expect their health care costs will increase next year at a higher rate than in previous years, as they continue to deal with inflation and other headwinds, according to recent surveys and database analyses from major benefits brokers. Actuaries from two of those firms tell AIS Health, a division of MMIT, that the increases are being driven by a few factors, including higher reimbursement for hospitals and providers, a rise in care utilization now that the coronavirus pandemic is over, and a higher percentage of people using expensive specialty medications and GLP-1 drugs.  

Aon predicts the average cost for employer-sponsored health plans will increase by 9% in 2025, up from a 5.8% increase this year. Meanwhile, WTW projects a 7.7% increase in health care costs next year compared with a 6.9% increase this year and a 6.5% increase last year. Mercer anticipates a 7% increase in costs for employer plans in 2025.