The average cost of employer-sponsored healthcare coverage in the U.S. is expected to increase 9% in 2025, surpassing $16,000 per employee, according to projections developed using Aon’s Health Value Initiative database.
This projected increase, which assumes employers do not implement employee cost sharing increases and other cost saving strategies, is higher than the 6.4% increase to healthcare budgets that employers experienced from 2023 to 2024 after cost savings strategies. On average, the budgeted health-plan cost for clients is $14,823 per employee in 2024. Aon’s Health Value Initiative database captures information for more than 950 U.S. employers representing approximately 6.7 million employees.
Medical claims continue to trend at elevated levels, while prescription drug costs are climbing higher due to continued growth in specialty drugs and increased utilization of GLP-1 medications for diabetes and obesity.
“In the healthcare sector, both rising employment levels and wage increases fueled by economy-wide inflation during the past few years are pushing healthcare costs higher,” said Debbie Ashford, the North America chief actuary for Health Solutions at Aon. “To keep pace with these pressures, the healthcare industry negotiates higher prices, which in turn emerge as higher medical trends.”
On the prescription drug side, Ashford added that specialty drugs remain the leading factor in spending, even though they represent a small fraction of overall utilization. “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% to the aggregate healthcare cost increase.”
“We are at a pivotal time in helping employers think about balancing the costs of GLP-1 prescription drugs with the opportunity they provide to treat obesity and reduce the chronic conditions associated with this disease,” said Farheen Dam, North American Health Solutions leader at Aon. “It’s imperative that employers consider the clinical evidence and health benefits as well as the near-term cost impacts.”
Increase to healthcare plan costs from 2023 to 2024
In terms of 2024 health plans, employer costs increased 6.4%, while employee premiums from paychecks were slated to be a more modest 3.4% increase from 2023, according to Aon’s analysis.
Both are notably higher than averages from the prior five years, when employer budgets grew an average of 4.4% per year and employees averaged 1.2% per year. On average, employers subsidize about 81% of the plan cost, while employees pay the remainder.
Increase by Industry to Plan Costs from 2023 to 2024
The rate of healthcare cost increases vary by industry, as does the proportion of cost shared by the employer plan sponsor and employee. The technology and communications industry has the highest average employer cost increase at 7.4%, while the public sector has the highest average employee cost increase at 6.7%. The healthcare industry has the lowest average change in employee contributions, with no material change from 2023.
Using predictive analytics to identify emerging risks and refine budgeting processes
High-cost claims continue to be an issue for employers and are being driven by emerging high-cost gene and cell therapies, complex procedures and a rise in chronic conditions. Aon recently launched its Health Risk Analyzer, which uses advanced machine learning to help employers predict high-cost claimants and gain a deeper understanding of which conditions will drive future healthcare spending so they can more proactively budget for these costs and implement targeted strategies to manage their highest-risk plan members.
“Self-insured plan sponsors face challenges in providing stable plan increases, funding and renewals in this volatile environment,” Dam said. “Combining Aon’s Health Risk Analyzer and the firm’s health risk financing and reinsurance capabilities, plan sponsors are able to access new funding and risk transfer strategies, allowing flexibility in funding of plan costs and converting unexpected volatility into predictable and planned expenses.”
To learn more about Aon’s Health Solutions, visit https://www.aon.com/home/solutions/health.
