Employers are moving to shift more healthcare costs to workers next year as expenses climb and drug prices stay high, according to a new report from Mercer.
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Sixty-six percent of large employers—those with over 500 employees—said they’re likely or very likely to raise premiums in 2025. About half plan to increase other cost-sharing measures, like higher deductibles or out-of-pocket maximums. These adjustments reflect broader efforts to offset financial strain without eliminating essential benefits, as businesses face pressure to sustain full coverage while managing budgets.
The push comes as health benefit costs are projected to rise by 6.7% this year, the steepest increase in 15 years. The average cost per employee is now above $18,500, according to the survey, which ran from April 15 to May 8. Persistent inflation in medical services, combined with the growing prevalence of chronic and high-cost conditions, has intensified the challenge for employers trying to predict and control expenditures.
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Rising drug spending is a major driver. Employers also said they plan to pull back on coverage of GLP-1 medications, as the pricey medication pushes drug spend higher for the fourth year in a row. Originally developed for diabetes, these drugs are now widely used for weight loss. Their rapid adoption has created a new layer of financial pressure, as demand outpaces initial projections and forces insurers and employers to recalibrate their pharmacy budgets.
The survey suggests employers are balancing rising expenses with the need to maintain coverage, but the shift in costs may leave workers paying more for the same benefits. As businesses adopt these measures, they must also consider the potential impact on employee satisfaction and retention, particularly in a competitive labor market where health benefits remain a key factor in recruitment and morale.
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Technology is also part of the strategy. 27% of respondents said they use or will use AI for benefits navigation and customer support by next year. Others are applying it to communications and data analysis, such as identifying trends in claims data to pinpoint areas for intervention or optimizing plan designs based on employee utilization patterns. The integration of AI allows for more precise and responsive adjustments to benefits administration, reducing administrative overhead and enhancing decision-making.
