Healthcare costs are expected to rise again in 2025 by about 8%, further compounded by similar increases over the last two years.1 American employers have felt the pinch through higher health insurance rates.

What’s fueling the uphill climb in costs

Healthcare costs continue to go up for several reasons:

  • Medical and general inflation outstripping rising costs in non-healthcare-related industries
  • Increasing rates of chronic medical conditions
  • Clinical personnel shortages

The greatest drivers of medical costs, however, are the price of new technologies and drug costs, including gene therapies, oncology drugs and the explosive popularity of GLP-1s like Ozempic and Wegovy, which can exceed $1,000 a month.2

Higher utilization of high-cost specialty drugs — that often replace existing but effective therapies — has significantly increased drug costs. As a result of these trends, prescription drugs costs rose 13.7% in 2023, compared to an expected increase of 9.8%.3

Health plan sponsors — and employees — feel the pinch

Between 2014 and 2024, health insurance premiums for family coverage rose 52%, going from an average of $16,834 to $25,572. Of that total, employers paid an average of $19,276, or 75% of the total cost.4

Health insurance costs are some of the largest monthly expenses of small- and mid-sized businesses. When these costs become unsustainable, organizations may need to reduce benefits or turn to high-deductible health plans where employees pay a higher share of premiums.5 This can have a negative impact on recruiting and retention.

The HUB EDGE

There are ways for organizations to lower the cost of their health benefits with the right tools and advisors. Here are a few to consider:

  • Use data analytics. Once only available to large companies, health claim data is now accessible for small- and medium-sized organizations. An experienced partner can help organizations leverage data to get an entirely new perspective of their workforce’s healthcare costs and provide solutions that address those costs.
  • Harness the power of clinical informatics. Data analytics can show where costs are rising but clinical informatics can tell you why — and what to do about it. HUB Infused Analytics™ offers sophisticated tools to improve a healthcare plan’s sustainability, affordability and efficiency.
  • Leverage contract compliance. Reviewing contracts to spot discrepancies and unmet financial guarantees can be a tedious task, requiring an expert eye and infinite patience. In one instance, HUB reviewed a pharmacy benefits manager (PBM) contract for a new client and found a poorly designed financial guarantee stipulation. By helping renegotiate the stipulations, the client received a $750,000 payout in the contract’s first year.
  • Seek alternative insurance vehicles. Organizations that embrace alternative plans, such as self-funded plans, group captives and other health insurance structures, may be rewarded with reduced expenses and better employee health outcomes. Talk to your insurance broker to find out what options make the most sense and are available for your organization.

By partnering with the right health insurance advisor and taking a proactive approach, businesses can better navigate the twists and turns of rising healthcare costs. While the rollercoaster ride may never completely slow down, strategic planning can help stabilize expenses and create a more effective, sustainable benefits plan over the long term.

1 PwC, Medical cost trend: Behind the numbers 2025, accessed February 13, 2025.
2 USA Today, “Wegovy costs $1,349 in the US vs. $92 in the UK. Why are weight loss drugs so pricey?” November 26, 2024.
3 Segal, What Are the Projected Health Plan Costs for 2025? Survey Finds Double-Digit Projected Rx Trends, September 18, 2024.
4 KFF, Employer Health Benefits, 2024 Summary of Findings, October 9, 2024.
5 McKinsey and Co., “The gathering storm: The transformative impact of inflation on the healthcare sector,” September 19, 2022.