Employer Healthcare Costs Projected To Rise 9% In 2025: Aon

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Dive Brief:

• The average cost of employer-sponsored health plans is expected to grow 9% next year if companies don’t find ways to cut down on costs, according to a report by professional services company Aon.
• The increase will bump plan costs per employee past $16,000 in 2025, the report found. This year, employer insurance costs grew 6.4% compared to 2023, while average expenses per employee rose to more than $14,800. 
• Inflation and the cost of more expensive specialty drugs are pushing healthcare costs higher, according to Aon. Pricey glucagon-like peptide 1 drugs, or GLP-1s, for weight loss are also projected to increase spending.

Dive Insight:

Most non-elderly Americans receive health insurance coverage through their employers, according to health policy firm KFF. A large portion of the price tag is covered by the companies: On average, employers subsidize about 81% of the health plan costs, while employees pay the rest, according to Aon.

But as healthcare costs rise, employers have shifted more expenses onto workers through higher premiums and deductibles.

A recent survey by consultancy Mercer found employers plan to maintain their current health benefits next year, despite rising costs. But 45% reported they were likely or very likely to shift rising expenses onto their employees. 

That could make it harder for workers to pay for healthcare. Many Americans report delaying or foregoing care because of worries about cost, and having insurance doesn’t always protect them from high bills. 

Forty-three percent of people with employer-sponsored coverage said it was difficult to afford care, according to a survey published last year by the Commonwealth Fund. 

In 2024, each employee is contributing on average about $4,858 to their healthcare coverage — $2,867 comes from premiums, while $1,991 is paid through deductibles, copays and coinsurance, according to the Aon report. This year, employee premiums collected from paychecks increased 3.4% from 2023.

That’s “more modest” than the 6.4% cost bump for employers, according to the report, but higher than the previous five years when employer budgets grew at an average of 4.4% per year, while employee costs averaged a 1.2% increase each year. 

Rising employment levels and increased wages spurred by inflation has driven growing healthcare costs, according to Aon. Healthcare providers are negotiating higher prices for their services to cover these growing expenses.

Expensive specialty drugs, or medications that treat complex and chronic conditions like cancer or HIV, also drive up costs — even though they’re a small portion of overall utilization. 

GLP-1s, a type of drug that’s shown efficacy at treating obesity, are concerning for employers too. A large percentage of workers could be eligible to take the medications, but they’re expensive — and only effective if patients continue taking them. 

“The demand for GLP-1 medications has skyrocketed, and a surge in new drugs in the GLP-1 category is expected to drive up costs even further, adding 1 percent to the aggregate health care cost increase,” Debbie Ashford, the North America chief actuary for health solutions at Aon, said in a statement.