Codie Sanchez, founder of Contrarian Thinking Capital, talks about how inflation affects small business owners and consumers on “Making Money.”
While inflation may be easing in some sectors of the economy, health care costs are expected to soar next year.
According to a new study from professional services firm Aon, employer health care costs are projected to increase 9% in 2025 to more than $16,000 per employee — significantly higher than the 6.5% increase in corporate health care budgets from 2023 to 2024.
Employer health care costs are expected to increase by 9% in 2025, according to a new study. (iStock/iStock)
“This year’s forecast comes after several years of slow growth in employer health care spending during the pandemic,” Debbie Ashford, North America lead actuary for Aon Health Solutions, told FOX Business.
“Over the past few years, other sectors of the economy have experienced high inflation that is now coming down. However, the impact on the health care sector has been delayed because health care providers’ contracts with insurers and payers are multi-year,” she explained. “As these contracts are renegotiated, health care providers will be looking to generate more revenue from the services they provide in order to pay for higher labor and supply costs.”
Inflation remains top concern for small business owners, NFIB survey finds
Drivers of the expected cost increases include continued high levels of medical claims growth and increased spending on specialty prescription drugs, such as GLP-1 drugs such as Ozempic and Wegovy, which are used to treat obesity and diabetes, according to the analysis.
Medtronic Chairman and CEO Jeffrey Murtha told “The Craman Countdown” that robotics is driving growth.
When it comes to prescription drugs, Ashford said that although specialty medicines make up a small portion of overall utilization, they remain a major driver of spending.
Ashford noted that demand for GLP-1 drugs, which have become popular weight-loss medications, is surging, increasing 87% by 2023. Costs are expected to rise further due to a proliferation of new drugs in the GLP-1 category, with these drugs alone accounting for 1% of the increase in costs for employers, Ashford said.
Kamala Harris’ plan to raise corporate taxes would punish workers: Lou Bassenais
While GLP-1 and other specialty drugs are driving increased spending, rising prescription drug prices are nothing new: Over the past decade, drug prices have soared nearly 40 percent, well above the rate of inflation.
A recent study by GoodRx found that prescription drug prices have increased by nearly 40% over the past decade. (Lindsay Nicholson/UCG/Universal Images Group via Getty Images/Getty Images)
A separate report from drug-savings company GoodRx found that prescription drug list prices have risen about 37% since 2014. Though price increases have slowed this year, costs remain a “significant burden” for many consumers.
Click here to get FOX Business on the go
Meanwhile, employers aren’t the only ones seeing health care costs rise further.
A 65-year-old retiring today can expect to spend $165,000 on health care costs in retirement, up 5 percent from last year and more than double the 2002 estimate, according to a study released by Fidelity earlier this month.
FOX Business’ Megan Henney contributed to this report.
