As healthcare costs continue to rise, employers in the U.S. are navigating a challenging landscape of increasing expenses, evolving employee expectations, and the need to remain competitive in attracting and retaining talent. Insights from Aon’s 2025 U.S. Health Survey shed light on how organizations of all sizes are addressing these pressures.
Healthcare Costs on the Rise
Employers are bracing for a 9.2% average increase in healthcare costs for 2025, up from 8% in 2024. While larger employers anticipate a slightly lower increase of 8.3%, small businesses face steeper challenges with an average increase of 10.3%. Adjustments in plan designs are projected to moderate these increases to 7.3% overall, though smaller companies still bear a heavier burden compared to their larger counterparts.
Strategies to Address Rising Costs
To manage escalating costs, four out of five employers plan to increase employee contributions to health insurance premiums, with an average hike of 5.9%. Interestingly, small businesses are limiting these increases more than mid-sized firms, possibly to remain competitive in attracting talent.
Beyond raising contributions, employers are deploying a range of cost-containment measures:
- Pharmacy strategies, particularly targeting costly diabetes and obesity management drugs like GLP-1s, are being implemented by 32.4% of employers. These include requiring prior authorization, step therapy, and limiting refill quantities.
- Plan design changes, such as higher deductibles and co-insurance amounts, are another widespread approach, affecting employees’ out-of-pocket costs.
- Vendor strategies focus on consolidating services and negotiating better terms.
- Member support and wellbeing programs aim to improve employee health outcomes while managing costs effectively.
Well-being Takes Center Stage
Wellbeing strategies are gaining prominence as employers recognize their dual role in improving employee health and enhancing organizational performance. From expanding employee assistance programs (EAPs) to introducing financial wellbeing initiatives, these measures are particularly prevalent among larger organizations with the resources to implement them.
Mental health, in particular, has emerged as a key focus area, driven by increasing awareness and demand from younger workforce segments. Employers are responding by expanding emotional support programs, even as provider shortages push costs higher.
The Complexities of Smaller Employers
Small businesses, often lacking the resources of their larger counterparts, face unique challenges. While 25% of small employers are making no changes to their plans — more than double the overall number — those that do act are taking targeted steps to mitigate employee costs. This cautious approach underscores the delicate balance they must maintain between cost control and employee retention.
Crafting Benefits for the Future
Employers are not passive observers in the face of rising costs. By embracing innovative strategies — from using data to refine plan designs to promoting high-quality, cost-effective care — organizations are tailoring their benefits to reflect their values and meet employee needs. Wellbeing programs, in particular, represent a shift from being viewed solely as health initiatives to becoming critical components of business strategy.
The road ahead for U.S. benefits is undeniably challenging, but it also offers opportunities for employers to innovate and lead. Through strategic planning and a focus on holistic employee support, companies can navigate this complex terrain while ensuring their workforce receives meaningful and sustainable benefits.