Employer health costs projected to rise 9%
On average, the budgeted health plan cost for clients is $14,823 per employee in 2024, Aon's report finds.
Photo: Jose Luis Pelaez/Getty Images
The average cost of employer-sponsored healthcare coverage in the U.S. is expected to increase 9% next year, surpassing $16,000 per employee in 2025, according to a new Aon report.
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-saving strategies.
On average, the budgeted health plan cost for clients is $14,823 per employee in 2024. The analysis uses Aon's Health Value Initiative database, which captures information for more than 950 U.S. employers, representing about 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.
WHAT'S THE IMPACT?
In terms of 2024 health plans, employer costs increased 6.4%, while employee premiums from paychecks were slated for a more modest 3.4% increase from 2023, the analysis found.
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.
Employees in 2024 are contributing about $4,858 for healthcare coverage, of which $2,867 is paid in the form of premiums from paychecks and $1,991 is paid through plan design features, such as deductibles, copays and coinsurance, said Aon.
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.
THE LARGER TREND
Average costs for U.S. employers that pay for their employees' healthcare rose about 6.4% last year, largely due to economic inflation pressures. This is more than double the 3% increase to healthcare budgets that employers experienced from 2021 to 2022.
Employers of all sizes were looking to bolster their health-benefit options last year with an eye toward improving recruitment and retention, and focused on affordability and access, according to a Mercer survey.
More than two-thirds of the 700 respondents said they were looking to enhance their health and benefit offerings. In all, 61% of participating U.S. employers conducted surveys on employee benefit preferences.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
