Soaring Healthcare Costs Threaten Employers in 2025
American businesses are bracing for a financial storm in 2025 as healthcare costs skyrocket to unprecedented levels. This trend, identified by the Business Group on Health, the largest non-profit representing employer interests in healthcare and workforce strategies, leaves companies facing difficult decisions to balance affordable coverage with quality care for their employees.
"A multitude of factors shape these 2025 trends, including the economy, technology, innovation, the political environment, and the evolving role of employers in the broader health and well-being landscape,” said Ellen Kelsay, president and CEO of the Business Group on Health. "As employers head into the new year, they face formidable challenges stemming from climbing health care costs, which are putting pressure on how employers manage their overall health and well-being programs.”
The group’s "2025 Trends to Watch" report unveils the complex landscape companies will navigate in 2025. Recognizing the potential disruption ahead, many are re-evaluating long-standing partnerships and exploring alternative strategies to manage healthcare expenses.
Seeking Value and Transparency
This year’s projected cost spike is the first double-digit increase in over a decade, leaving many companies scrambling to control spending. Employers are demanding greater transparency and accountability from vendor partners, with increased scrutiny of pharmacy benefit managers (PBMs) and health plan contracts.
Historically high prescription drug costs, particularly for specialty medications like GLP-1 drugs for weight management, are a key driver of these expenditures.
“A third of employers plan to take a closer look at their PBMs in 2025, focusing on cost transparency and performance metrics," the report notes.
Employers are also actively seeking innovative solutions to combat rising costs. Value-based care models, advanced primary care programs, and chronic disease management initiatives are gaining traction, offering the promise of improving patient outcomes while curbing costs.
Mental Health Remains a Priority
Recognizing the growing impact of mental health on employee well-being and overall costs, businesses are continuing to prioritize mental health services. Efforts include integrating mental health services into primary care, offering onsite programs, and expanding access to virtual care.
However, challenges remain in addressing the needs of specific populations, like children and adolescents, mothers, and those struggling with loneliness or suicidal thoughts.
In 2025, organizations will emphasize holistic approaches to mental health, incorporating workplace policies and fostering a culture that supports employee well-being.
Navigating the Path Forward
Despite the challenges ahead, "Employers have a strong track record of making the difficult decisions required to meet the diverse needs of employees and their families,” Kelsay said. “In the end, they will lead the charge to bring affordable, high-quality health care to workforces worldwide.”
The Business Group on Health’s report highlights the crucial role employers play in shaping the future of healthcare. As the year unfolds, they will continue to advocate for change, wielding their influence to drive down costs, improve quality of care, and ensure access to essential services for their workforce.
Health care costs are a major trend to watch in 2025: ©Toowongsa – stock.adobe.com
