Another year, another hefty raise in employers’ health care costs.
For 2025, the average cost of coverage in the United States is expected to climb by 9%, surpassing $16,000 per employee, said professional services firm Aon.
The anticipated jump, which assumes employers will not implement employee cost-sharing initiatives and other savings strategies, is higher than the 6.4% increase employers absorbed this year, after applying cost-saving measures.
The average health care budget for 2024 is $14,823 per employee, according to Aon’s analysis, which draws information from more than 950 employers with a collective 6.7 million workers and $100 billion in 2024 health care spend.
Aon noted medical claims continue to rise at elevated levels while prescription drug costs are climbing due to continued growth in specialty drugs and increased use of GLP-1 medications for diabetes and obesity.
“In the health care sector, both rising employment levels and wage increases fueled by economy-wide inflation during the past few years are pushing health care costs higher,” said Debbie Ashford, Aon’s North America chief actuary for medical solutions. “To keep pace with these pressures, the health care industry negotiates higher prices.”
Specialty drugs, although the leading factor in prescription drug spending, represent only a small fraction of overall utilization, Ashford noted. A surge in new drugs in the GLP-1 category alone is expected to add 1% to the aggregate health care cost increase.
Compared to employers’ cost hike in 2024, employees are expected to see a more modest increase. “Employers continue to bear the brunt of rising health care costs,” said Farheen Dan, North American health solutions leader at Aon. “Plan sponsors are wary of passing significant expenses onto plan participants, striving to keep plan benefits affordable.”
There were significant industry-by-industry differences this year in employers’ cost changes. The biggest hikes were for technology/communications (7%), the public sector (7%), finance/insurance (7%), and professional services (6%).
Lesser increases were borne by retail/wholesale (2%), manufacturing (5%), and health care (5%).
Aon suggested that its cost prognostications will improve now that it’s launched its “Health Risk Analyzer.” The predictive analytics tool uses advanced machine learning “to help employers predict high-cost elements and gain a deeper understanding of which conditions will drive future health care spending.”
