Global Healthcare Costs Projected to Surge Again in 2025, U.S. Employers Brace for Impact
For the third year in a row, global healthcare costs are expected to climb by double digits, according to a recent survey. Insurers predict a 10.4% increase in global medical costs for 2025, matching the rise seen this year, according to the WTW Global medical Trends Survey. In North America, the projected rise is slightly lower at 8.7%, up from 8.1% in 2024. Though,in the United States,costs are expected to jump by 10.2%, a significant increase from last year’s 9.3%.
The survey, which included 348 health insurers across 75 countries, reveals that 64% of insurers anticipate higher or significantly higher medical trends globally over the next three years. Additionally, 67% of insurers expect a surge in global demand for healthcare services during the same period. Thes projections paint a concerning picture for employers and individuals alike, as healthcare costs continue to escalate.
Key Factors Driving the Surge
Several factors are contributing to the relentless rise in healthcare costs. The introduction of new medical technologies and pharmaceuticals is a major driver, with WTW data showing that global health costs peaked at a 10.7% increase in 2023. The COVID-19 pandemic has also played a significant role,with increased healthcare utilization—notably in mental health services—adding to overall costs. According to ComPsych data, workplace absences due to mental health issues, such as anxiety and depression, have surged by 300% from 2017 to 2023.
The WTW survey found that 33% of insurers expect considerable increases of 15% or more in mental health service costs per person over the next three years. Europe is expected to see the highest rise, with 44% of insurers anticipating such increases, followed by 25% in Asia Pacific and 23% in the Middle East and Africa.
Employers Face Growing Challenges
Linda Pham, global health and risk leader at WTW, emphasized the ongoing challenge of rising costs for employers. “With medical cost increases remaining at double-digit levels, employers will need to manage budget expectations and balance cost increases with data-driven business and health outcomes,” she said.
While some factors may be beyond employers’ control, there are strategies to mitigate the impact. Courtney Stubblefield, managing director of health and benefits at WTW, suggested that employers evaluate vendor and digital health solutions to expand well-being resources and reduce needless utilization. She also recommended reviewing market options to ensure efficient sourcing of private healthcare coverage.
U.S. Employers Feel the Strain
The WTW report echoes other findings about rising healthcare costs for U.S.employers. Inflation, mental health conditions, expensive GLP-1 drugs, and catastrophic medical claims are all contributing to the escalating costs.As employers navigate these challenges, they are increasingly looking for innovative solutions to manage healthcare expenses without compromising employee well-being.
Related: health Care Costs Are Frightening Employers—but These Strategies Can Make Them Less Scary
As global healthcare costs continue to rise, the pressure on employers to find lasting solutions is mounting. With the right strategies, however, it is possible to navigate these challenges and ensure both cost-effectiveness and employee well-being.
Healthcare costs in the U.S. Projected to Rise Sharply in 2025
A recent analysis by Aon has revealed that the average cost of employer-sponsored health care coverage in the United States is expected to surge by 9% in 2025, pushing the per-employee expense beyond $16,000. This significant increase marks a notable jump from the 6.4% rise in health care budgets that employers faced between 2023 and 2024, with an average cost of $14,823 per employee after implementing cost-saving measures.
The findings underscore a growing trend of escalating healthcare costs, which are placing increasing financial strain on both employers and employees.”The rising cost of healthcare is a critical issue for businesses,” said a spokesperson from Aon. “Employers are having to navigate a complex landscape to manage these expenses while still providing quality coverage to their workforce.”
Survey Predicts Steep Increases in Healthcare Costs
In parallel,a survey conducted by the International Foundation of Employee benefit Plans (IFEBP) forecasts a median health care plan cost increase of 8% for 2025. This projection is slightly lower than Aon’s estimate but still represents a significant hike compared to previous years. The IFEBP, a nonpartisan association with over 31,000 members, noted that similar surveys in 2022 and 2023 had predicted a 7% rise for those years.
“The data from our survey highlights the ongoing challenge of managing healthcare costs,” said a representative from IFEBP.”As costs continue to rise, employers are seeking innovative strategies to maintain affordable coverage without compromising on quality.”
Implications for Employers and Employees
The anticipated increases in healthcare costs are expected to have far-reaching implications for both employers and employees. For businesses, this could mean reevaluating their benefits packages and exploring new cost-saving measures. Meanwhile, employees may face higher premiums, deductibles, or out-of-pocket expenses, potentially impacting their overall financial well-being.
As the U.S. grapples with rising healthcare costs, stakeholders are calling for a complete approach to address the issue. “Its crucial for employers, policymakers, and healthcare providers to work together to find sustainable solutions,” said the Aon spokesperson. “only through collaboration can we hope to mitigate the impact of these rising costs on American businesses and their employees.”
The projected increases in 2025 serve as a stark reminder of the ongoing challenges in the U.S. healthcare system. As costs continue to climb, the need for innovative solutions and collaborative efforts becomes more pressing than ever.
