Companies face 6% spike in insurance premiums, will pass cost onto employees
A survey from human resources consultancy firm Mercer found the costs for employers who provide healthcare benefits, including insurance, are expected to rise by 5.8% in 2025—and that’s only if they enact cost-controlling measures.
According to Mercer’s 2024 National Survey of Employer-Sponsored Health Plan, the price of health insurance could rise as much as 7%. For smaller companies, defined as those with between 50 to 499 employees, the pricetag to offer health plans that would fully insure their labor force could spike 9%, unless they make some changes.
The survey results are based on answers from 1,800 respondents, representing employers of various sizes from across the U.S. Of them, 53% said they would be implementing cost-saving measures to mitigate the price hike, including offering plans with higher deductibles, higher employee-paid premiums and higher copays.
Ostensibly, the survey results reveal most employers intend to simply pass on the cost, largely because they don’t think they have any other choice. This marks the third straight year where employers were hit with a 5% or higher price increase for employee health benefits.
“Employers are still concerned about healthcare affordability and ensuring that employees can afford the out-of-pocket costs when they seek care,” Tracy Watts, Mercer’s National Leader of US Health Policy, said in a statement. “But they also need to manage the overall cost of healthcare coverage to achieve a sustainable level of spending for the organization. Balancing these competing priorities will be a challenge over the next few years.”
On average, employees are currently paying 21% of the total cost of premiums, Mercer said. That number isn’t expected to change, but workers will ultimately pay more out of their own pocket.
Why is the price going up?
As for factors raising the price of insurance premiums—it’s complicated. Mercer said it’s a combination of rising costs for care delivery, healthcare staff shortages, a spike in the utilization of prescription drugs and inflation more broadly.
“While we’ve seen significant increases in utilization in a few areas, such as for behavioral healthcare and GLP-1 medications, overall utilization has had a relatively modest impact on trend this year,” Sunit Patel, Mercer’s US Chief Actuary for Health and Benefits, said in the statement.
Further, Patel said the cost of care varies regionally, making it difficult to blame any one factor for the hike in insurance costs nationally.
“The biggest driver of higher costs is price dynamics, some of which are macro in nature,” Patel added.
The full report is available here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.