It’s January, and you’ve likely just wrapped up open enrollment for your employees’ 2025 health insurance. Based on data from recent reports, you probably saw a 6%-8% increase in premiums, if not higher. If you kept the increase below that for your employees, you’ve likely taken on more of the cost yourself—a decision that helps retain talent but also impacts your bottom line.
Why are healthcare costs rising? Here are six key factors driving increases:
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New weight-loss drugs like Ozempic® are expensive and in high demand.
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Specialty medications, like advanced cancer treatments or rare disease therapies, are costly to produce.
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Prescription drug prices continue to rise across the board.
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Increasing rates of chronic health conditions like diabetes and heart disease.
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America’s aging population creates higher healthcare demand.
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Higher healthcare labor costs, as hospitals and providers pay more to retain staff.
Let’s explore two of these factors in greater detail.
Weight-loss drugs such as GLP-1 medications are not just for diabetes anymore; they’re widely used for weight loss, which can significantly increase claims costs. Fun fact: GLP-1 actually refers to the hormone that the body releases to signal your body to produce insulin. These new weight loss drugs mimic the effects of the GLP-1 hormone.
Specialty drugs, including biologics and gene therapies, offer cutting-edge treatments but are among the most expensive options available. Fun fact: Biologics and gene therapies generally refers to the process for making the drugs. Biologics are complex sugars, proteins, nucleic acids, or combinations evolved from cells or tissues. Cell and gene therapies (CGT’s) offer very targeted treatments specific to a patient’s needs. As a result, all these drugs are quite costly.
These trends make it harder to keep health plans affordable for both employers and employees. Balancing cost containment with offering competitive benefits is more challenging than ever.
This is where working with experienced Employee Benefits professionals becomes essential. Our experts can help you structure a health insurance program that manages rising costs while meeting the needs of your workforce. Their insights into cost-control strategies, market trends, and innovative solutions ensure your business stays competitive and your employees stay satisfied.
More Info on Rising Costs of Healthcare
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About the Authors
Georgine Howlett joined Rue Insurance in 2012 as the Employee Benefits Manager and has more than 20 years of experience in the employee benefits industry. Georgine has a bachelor of science degree from Seton Hall University and holds health and life licenses in New Jersey and Pennsylvania. She is PPACA certified by the National Association of Health Underwriters (NAHU).
Garrett Grega joined Rue in 2023 as the Director of Marketing & Communications, bringing over 2 decades of marketing experience from various Fortune 500 companies. Garrett is responsible for developing the external communications platform consistent with the strategic direction, strategic vision, mission, and values for Rue Insurance.
