Healthcare Costs Spiking 8% or Higher in 2025

Americans use more healthcare services than any other people. So we pay more as a result — and the cost is going up every year. 2025 won’t be an exception.

PricewaterhouseCoopers’ Health Research Institute (HRI) warns group health plan costs will rise, on average, 8% from 2024 to 2025. Individual plan costs won’t be a picnic either as HRI expects them to spike by 7.5%.

The last time healthcare costs spiked so high was in 2012, the second full year of Obamacare. Over the last decade, the cost of an employer-based healthcare plans increased twice as fast as wages.

These “near-record” year-over-year cost increases are being “driven by inflationary pressure, prescription drug spending and behavioral health utilization,” according to HRI’s new report, “Medical cost trend: Behind the numbers 2025.”

Bottom line: Benefits teams would be smart to touch base with their healthcare plan providers ASAP to get a heads-up on potential rate hikes. For some businesses, shopping around for a better deal is going to be a top priority as summer winds down and fall begins.

Healthcare Trend: Ozempic Use is Rising

Employers and employees can expect to pay more for healthcare — in part — because many people are getting serious about losing weight. They’re giving weight loss drugs like Ozempic a shot to help reduce their appetites and shed pounds. So at least there’s one upside to everyone spending more for coverage!

Doctors, health insurers, drug manufacturers and policy “experts” didn’t predict the “higher-than-expected utilization of glucagon-like peptide-1 (GLP-1) drugs as well as higher acuity (higher levels of care) inpatient and outpatient utilization,” says HRI. “The costs of GLP-1 drugs are on a rising trajectory that impacts overall medical costs. Innovation in prescription drugs for chronic conditions and increasing use of behavioral health services are reaching a tipping point that will likely drive further cost inflation.”

Taking the glass-is-half-full viewpoint, if enough people lose weight, we could see a decline in the need for insulin and diabetes treatment over the next decade. Obesity and sedentary behavior is the biggest driver of healthcare problems and the costs to the system. An employer-provided healthcare plan that offers incentives to employees to lose weight and use a gym or get in shape in a myriad of other ways is the way to go.

Tip: “Tax-favored” options such as health savings accounts (HSAs) are a good bet. Check out what the HSA contribution limits are for 2025. Bonus tip: Companies that offer childcare options often get rave reviews from their employees.