U.S. employers’ health benefits costs are expected to increase to nearly eight per cent for 2025, the highest amount in more than a decade, according to a new survey by Business Group on Health.
The survey, which polled 125 large employers, found they’re planning to continue to absorb much of the increases at least for the upcoming year, while more rigorously leaning into additional cost management strategies.
Read: U.S. employers projecting health benefits cost increase of 8% for 2025: survey
Pharmacy spending was largely responsible for the increased health-care trend in 2023, as the median percentage of health-care dollars spent on pharmacy rose from 21 per cent in 2021 to 27 per cent in 2023. Three-quarters (76 per cent) of employers reported being “very concerned” with overall pharmacy costs.
Nearly all (96 per cent) respondents expressed concern about the long-term cost implications of glucagon-like peptide 1 drugs and 79 per cent said there’s a heightened interest in obesity medications among plan members. While nearly all (96 per cent) employers said they cover these medications as a standard treatment for diabetes, two-thirds (67 per cent) provide coverage of these drugs for obesity and a third (34 per cent) provide coverage for treatment of cardiac conditions.
While cancer and musculoskeletal conditions remained the top two cost drivers, 40 per cent of employers reported cardiovascular conditions as the third most costly condition, up from 30 per cent in 2023.
Read: 34% of U.S. employers covering GLP-1s for both diabetes, weight loss: survey
More than three-quarters (79 per cent) of respondents said improving access to mental-health treatment is a priority for 2025. To address both access and cost, employers said they’re continuing to pursue strategies such as no- or low-cost virtual counselling and the use of onsite counsellors.
Employers said they’re focusing on areas such as affordability for lower-income employees, women’s health, as well as support for the needs of LGBTQ2S+ employees, neurodiverse employees and those with a disability.
“Employers are steadfast in their desire to provide comprehensive offerings to their workforces,” said Ellen Kelsay, president and chief executive officer of Business Group on Health, in a press release. “They continue to absorb much of the upticks in cost and remain keenly focused on lowering spending and improving outcomes and experiences for employees. However, the foreboding cost landscape has accelerated the need for bold transformation, and employers seek partners who will make that happen.”
Read: Employer health benefits cost trends rising 10% in 2023: survey