US employers expect health insurance costs to rise nearly 6% in 2025, says Mercer By Reuters

By Amina Niasse

NEW YORK (Reuters) – U.S. employers expect health insurance costs to rise an average of 5.8 percent in 2025, largely due to the rising cost of medical services as well as higher utilization, according to a survey released on Thursday by consulting firm Mercer (NASDAQ:) .

2025 is projected to be the third year in a row that employer health care costs increase by more than 5%. Costs have risen an average of 3 percent over the past decade, the report said.

In part, the higher cost of each medical service is driven by an ongoing shortage of health care workers linked to rising provider prices, Mercer said. Spending on behavioral health and the popular but expensive weight loss drug GLP-1 are also contributors.

The share of total employee-paid health plan costs, averaging 21 percent, is expected to remain about the same in 2025, said Beth Umland, director of employer research for health and benefits at Mercer.

Mercer said 53 percent of employers plan to implement cost management changes in 2025, up from 44 percent in 2024.

Those strategies would aim to reduce use by plan members with costly conditions and manage specialty drug costs, Umland said. In 2024, prescription drug spending remained the fastest-growing cost for employers, rising 7.2% from 8.6% in 2023.

Among employers’ concerns are expensive gene and cell therapies, Umland said. Such therapies can cost $1 million or more. “These drugs are at cost levels we’ve never seen before. And although they are still few and far between, when one of these claims hits, employers really feel it.”

Employers with a workforce between 50 and 499 employees reported the largest cost increases, with 9% if they take no cost management measures and 6.3% if cost management changes are made.

Many small employers pay private insurers for fully insured health plans. The costs for such plans tend to bring a higher premium, and employers can’t add cost-saving wellness programs, Mercer chief actuary Sunit Patel said.

The Mercer survey covers 1,800 US employers, from those with 50 to more than 500 employees.