A new WTW medical trends survey projects healthcare costs will rise over 10% in 2025. That’s more than last year’s 9% increase, on top of back-to-back increases of 7% or more in previous years. This whopping five-year cumulative cost drain of 47% exceeds all other business expense increases.
Many employers will likely increase employee health plan cost share by raising payroll contributions and out-of-pocket expenses such as higher deductibles, co-insurance, and copays. This reduces employee disposable income and increases financial exposure and the risk of medical debt. Covered members often compensate by avoiding important medical care and skipping medications to save money.
Should employers choose to absorb the cost increase, earnings are reduced as well as the ability to provide wage increases, bonuses, and fringe benefits. Either way, employees suffer.
Successfully Managing Healthcare Costs
A growing number of employers now realize the fundamental truth that:
- Perennial health care cost increases create chronic financial inflammation and debilitating corporate and employee financial disease, and
- The status quo insurance industry does almost nothing to control rising healthcare costs.
“While recognizing that some factors influencing costs may be out of their control, employers can explore initiatives that may help control costs while boosting the value of their health benefits,” said Courtney Stubblefield, WTW’s managing director of Health & Benefits.
With no meaningful cost relief in sight, enlightened employers are gaining a competitive advantage by moving to a modern health plan administrator to reduce total healthcare spending by 25% or more. Such plans offer a manageable strategic pathway to provide employees better coverage and high-touch support at a lower cost, and alleviate the financial pressures that negatively affect employee health.
