Cost of health benefits expected to rise over 5% for 3rd year in a row, report says

The cost of health benefits is expected to rise by over 5% next year, according to the preliminary results of an annual survey on employer-sponsored health plans .

The survey was conducted by Mercer, a global consulting firm that specializes in health, retirement and investments.

Mercer said it analyzed responses from over 1,800 U.S. employers to find the average cost of health benefits will increase by 5.8%, even after cost-reduction measures are accounted for.

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Based on these projections, Mercer said 2025 would be the third year in a row that health benefit costs rise by above 5%.

Employers estimated their cost of benefits would rise by about 7% if they didn’t do anything to help lower the cost, Mercer said. Small employers said their costs would rise by an average of 9%.

Mercer said with overall inflation going down, there are a variety of factors contributing to high costs.

The high demand and low supply of health care workers, the cost of prescription drugs and the ongoing introduction of expensive gene and cellular therapies are all contributing to the higher cost of health benefits, Mercer said.

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The preliminary survey results suggest that about half of employers — 53% — will make cost-cutting changes to their plans next year, which is an increase from 44% in 2024, Mercer said.

The firm’s final report on health benefits is expected to be released later this year.