CHICAGO, 15 August 2024 /PRNewswire/ — The average cost of employer-sponsored health insurance in the United States is expected to increase by 9.0 percent*, 16,000 US dollars per employee in 2025, according to Aon plc (NYSE: AON), a global leader in professional services.

This projected increase, which assumes that employers do not implement increases in employee cost-sharing and other cost-saving strategies, is higher than the 6.4 percent increase in health care budgets that employers experienced from 2023 to 2024 after cost-saving strategies. On average, the budgeted cost of health insurance plans for customers is 14,823 USD per worker in 2024. The analysis uses Aon’s Health Value Initiative database, which captures information on more than 950 U.S. employers employing a total of about 6.7 million workers.

Medical claims continue to rise sharply, while prescription drug costs continue to rise due to continued growth in specialty drugs and increasing use of GLP-1 drugs for diabetes and obesity.

“In the health sector, both rising employment and wage increases fuelled by overall economic inflation in recent years are driving up health care costs,” said Debbie AshfordThe North America Chief Actuary for Health Solutions at Aon. “To keep up with this pressure, the healthcare industry is negotiating higher prices, which in turn are reflected in higher medical trends.”

“In prescription drugs, specialty drugs remain the largest cost driver, even though they represent only a small portion of total use. Demand for GLP-1 drugs has skyrocketed, and an increase in new drugs in the GLP-1 category is expected to drive costs even higher, adding 1 percent to the overall health care cost increase,” Ashford added.

“We are at a critical moment where we need to help employers balance the cost of prescription GLP-1 drugs with the opportunity they offer to treat obesity and reduce the chronic suffering associated with this disease,” said Farheen DamHead of North American Healthcare Solutions at Aon. “It is imperative that employers consider the clinical evidence and health benefits as well as the short-term cost implications.”

Cost increase for US health plans from 2023 to 2024

According to Aon’s analysis, health insurance plan costs rose 6.4 percent for 2024, while employee contributions were expected to rise only 3.4 percent starting in 2023. Both figures are well above the average over the past five years, when employer budgets grew an average of 4.4 percent per year and employee budgets grew an average of 1.2 percent per year.** On average, employers subsidize about 81 percent of plan costs, while employees pay the rest.

“Employers continue to bear the brunt of rising health care costs,” Dam said. “Plan sponsors are cautious about passing significant costs on to plan participants and strive to keep benefits affordable.”

Employees in 2024 will contribute approx. $4,858 for health insurance, of which 2,867 USD is paid in the form of bonuses from paychecks and 1,991 USD is paid through the design of the tariffs such as deductibles, co-payments and cost sharing, according to the company’s analysis.

Increase in costs for US health plans by industry from 2023 to 2024

The rate of cost increase in healthcare varies by industry, as does the share of costs split between employers and employees. The technology and communications industry has the highest average cost increase for employers at 7.4 percent, while the public sector has the highest average cost increase for employees at 6.7 percent. The healthcare industry has the smallest average change in employee contributions, with no significant changes expected after 2023.

Use predictive analytics to identify new risks and optimize budgeting processes

High-cost claims continue to be a problem for employers, driven by new, expensive gene and cell therapies, complex procedures and an increase in chronic diseases. Aon recently launched its Health Risk Analyzer, which uses advanced machine learning to help employers predict high-cost claims and gain a deeper understanding of which diseases will drive up future healthcare spending. This enables employers to more proactively budget for these costs and implement targeted strategies to care for their highest-risk policyholders.

“Self-insured plan sponsors are challenged to provide stable plan increases, funding and renewals in this volatile environment,” Dam said. “By combining Aon’s Health Risk Analyzer with the company’s health risk funding and reinsurance capabilities, plan sponsors can access new funding and risk transfer strategies that enable flexible funding of plan costs and transform unexpected volatility into predictable and planned expenses.”

* The forecast is applicable in a status quo environment where employers do not make changes or implement care management programs. Aon consultants expect many employers will implement cost-saving changes or programs to mitigate this increase.
** Plan costs represent the combined employer and employee premiums for medical treatments and prescription drugs, but exclude employee out-of-pocket costs such as deductibles, copayments, and co-payments.
*** Based on clients’ weighted average costs in Aon’s analysis for both 2023 and 2024.

Aon’s Health Value Initiative
The historical information and forecasts shown above were developed using Aon’s Health Value Initiative database, which tracks healthcare cost and performance models for more than 950 U.S. employers with 6.7 million employees and 100 billion US dollars Healthcare spending in 2024. The above projections are prepared taking into account plan changes and demographic and geographic population adjustments. For more information about Aon’s healthcare solutions, visit https://www.aon.com/home/solutions/health.

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better – to protect and enrich the lives of people around the world. Through actionable analytical insights, globally integrated venture and human capital expertise, and locally relevant solutions, our colleagues in over 120 countries give our clients the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

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Disclaimer
The information contained in this document is for informational purposes only and is for general guidance only and is not intended to address the circumstances of any particular person or entity. Although Aon endeavors to provide accurate and up-to-date information and uses sources it believes to be reliable, the company makes no representation or warranty as to the accuracy, adequacy, completeness or suitability of the contents of this document for any purpose and accepts no liability for any loss suffered by any person who relies on it. There can be no guarantee that the information contained in this document is accurate at the time of receipt or that it will remain so in the future. No person or entity should make any decision or act based solely on the information contained herein without appropriate professional advice and specific research.

Media contact
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Source: Aon plc