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A new report from global professional services firm Aon says that US employers should brace for a significant increase in health care costs next year, anticipated to be around nine per cent.
According to the firm's projections, the average cost of employer-sponsored health coverage is expected to rise by nine per cent in 2025, pushing the per-employee expense beyond $16,000 annually.
The projected increase, which assumes employers maintain current employee cost-sharing levels, represents a substantial jump from the 6.4% rise experienced between 2023 and 2024. The analysis, based on data from over 950 US employers covering approximately 6.7 million employees, reveals that the average budgeted health plan cost per employee for 2024 stands at $14,823.
Debbie Ashford, North America chief actuary for Health Solutions at Aon, said: "Rising employment levels and wage increases fueled by economy-wide inflation are pushing health care costs higher.
Price of medicines driving cost increases
In response, the health care industry is negotiating higher prices to keep pace with economic pressures.
On the pharmaceutical front, specialty drugs continue to be a major cost driver. Surging demand for GLP-1 medications used to treat diabetes and obesity are among the big cost drivers. The company predicts that the influx of new drugs in that category alone could add an extra one per cent to the overall health care cost increase.
The report also sheds light on the distribution of costs between employers and employees. In 2024, employers will bear about 81% of plan costs, with employees covering the remainder through premiums and out of pocket expenses. On average, employees are contributing $4,858 towards health care coverage this year, with $2,867 paid through paycheck premiums and $1,991 through plan design features like deductibles and co-pays.
The rate of health care cost increases varies across industries. The technology and communications sector faces the highest average employer cost increase at 7.4%, while the public sector leads in employee cost increases at 6.7%. Conversely, the healthcare industry shows minimal change in employee contributions from previous years.
