US Employer Healthcare Costs Expected To Rise 9 Percent in 2025

The average cost of employer-sponsored health care in the United States is projected to increase by 9 percent in 2025, surpassing $16,000 per employee, according to a recent analysis by Aon plc. This anticipated rise follows a 6.4 percent increase in employer healthcare budgets from 2023 to 2024.

This projection, based on data from Aon's Health Value Initiative, assumes that employers will not implement additional cost-saving measures. Currently, the average health plan cost for 2024 stands at $14,823 per employee, with costs expected to rise due to several factors, including elevated medical claims and increasing prescription drug costs, particularly for specialty drugs and GLP-1 medications used to treat 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, North America chief actuary for Health Solutions at Aon. Additionally, "specialty drugs remain the leading factor in spending, even though they represent a small fraction of overall utilization."

Farheen Dam, Aon's North American Health Solutions leader, emphasized the need for employers to balance the rising costs of GLP-1 drugs with the potential long-term benefits of treating obesity and reducing related chronic conditions.

In 2024, employers are expected to cover approximately 81 percent of the total plan cost, with employee contributions making up the remainder. Employee premiums are projected to increase by 3.4 percent, while out-of-pocket costs are expected to rise by 2.3 percent.

Cost increases vary across industries, with the technology and communications sector experiencing the highest employer cost increase at 7.4 percent, while the public sector sees the highest employee cost increase at 6.7 percent. The healthcare industry shows minimal change in employee contributions, with no significant increase from 2023.