Nearly Half of Large Employers Plan to Raise Worker Healthcare Costs in 2025
If you've noticed your paycheck looking a little lighter after benefits deductions, you're not imagining things — and it could be about to get worse. According to a recent survey by Mercer, one of the world's leading human resources and benefits consulting firms, nearly half of large U.S. employers are planning to increase the share of healthcare costs that workers must bear. The finding is part of a broader trend reshaping the American employee benefits landscape, one driven by persistently rising medical inflation, the growing expense of specialty drugs, and an employer community under mounting financial pressure.
The news lands at a difficult time for American workers, many of whom are already grappling with elevated costs of living. Understanding what's changing, why it's happening, and what options may be available is more important than ever for employees and HR professionals alike.
What the Mercer Survey Found
The Mercer survey, which polled a wide cross-section of large U.S. employers, revealed that close to 50% are actively planning to shift a greater portion of healthcare expenses onto their employees. This can take several forms, including higher premiums, increased deductibles, expanded copays, or a reduction in the overall scope of covered services. While cost-sharing between employers and employees has always been a feature of workplace health benefits, the scale and speed of these planned changes is notable.
The survey also identified several specific strategies that employers are now actively evaluating or deploying to rein in soaring benefits costs. These range from scaling back coverage of trendy but expensive medications to experimenting with entirely new plan structures that fall outside the traditional insurance framework.
GLP-1 Drug Coverage on the Chopping Block
One of the most significant signals coming out of the Mercer data is that employers are beginning to drop or restrict coverage for GLP-1 medications — the class of drugs that includes blockbuster weight-loss and diabetes treatments like Ozempic, Wegovy, and Mounjaro. These medications have surged in popularity over the past few years, fueled by strong clinical evidence of their effectiveness for weight management and metabolic health.
However, GLP-1 drugs carry a steep price tag, often exceeding $1,000 per month per patient before any discounts or rebates. For large employers with thousands of employees, even modest uptake of these medications can generate enormous costs across the benefits plan. As a result, many companies are reassessing whether covering GLP-1s for weight loss — as opposed to their FDA-approved indication for type 2 diabetes management — is financially sustainable.
This is a notable reversal from just a year or two ago, when a wave of employers were rushing to add GLP-1 coverage as a recruitment and retention tool. The pendulum appears to be swinging back, with cost discipline now taking priority over benefits generosity for many organizations.
Nontraditional Health Plans Are Gaining Traction
Beyond cutting specific drug coverage, employers are also exploring a range of nontraditional plan designs that might help control costs without simply passing all the burden onto workers. These alternative approaches include the following options that are gaining serious attention across the industry.
- Reference-based pricing models, which set benefit payments based on a benchmark rate rather than negotiated insurer contracts, can reduce what employers pay providers and create more predictable cost structures.
- Direct primary care arrangements, where employers pay physicians a flat monthly fee for primary care services, can reduce reliance on expensive specialist visits and emergency department use.
- Captive insurance programs, which allow groups of employers to pool risk and self-insure together, offer smaller companies the cost advantages typically reserved for large self-funded plans.
- Narrow network and tiered network plans, which incentivize employees to use high-value, cost-efficient providers, are being revisited as employers look for smarter — not just cheaper — benefit designs.
While none of these approaches is a silver bullet, they reflect a growing appetite among HR and finance leaders to move beyond the traditional fully-insured or standard self-funded model and embrace more creative solutions.
Why Healthcare Costs Keep Rising
To understand why employers are making these moves, it helps to look at the forces driving healthcare inflation. Medical cost trend — the rate at which healthcare spending increases year over year — has been running well above general inflation for the better part of a decade. Specialty drug expenditures are a major culprit, with breakthrough treatments for cancer, autoimmune diseases, and metabolic conditions commanding prices that were unimaginable a generation ago.
Hospital consolidation has also reduced competitive pressure in many markets, allowing health systems to command higher rates from insurers and self-funded employers alike. Add to that the lingering effects of deferred care from the pandemic years, an aging workforce with greater chronic disease burdens, and rising mental health utilization, and the picture becomes clear: employers are caught in a cost spiral with very few easy exits.
What This Means for Workers
For employees, the practical implications of these trends are significant. Workers at companies that raise premium contributions or increase deductibles may find themselves choosing between affording coverage and affording care. High-deductible health plans, while nominally cheaper on a monthly premium basis, can expose individuals and families to thousands of dollars in out-of-pocket expenses before insurance kicks in — a barrier that leads some people to skip preventive care or delay treatment for serious conditions.
HR professionals and benefits advisors are urging workers to review their plan options carefully during open enrollment periods, take advantage of health savings accounts where available, and engage with any employee assistance programs or wellness incentives that their employer offers. Being a more informed consumer of healthcare services — asking about costs, seeking in-network care, and using telehealth when appropriate — can help stretch healthcare dollars further in an increasingly expensive environment.
The Road Ahead for Employer-Sponsored Health Benefits
The Mercer findings paint a picture of an employer benefits market under serious strain and in active transformation. The era of generous, comprehensive health coverage as a near-automatic component of large-company employment may be giving way to a more variable, cost-conscious landscape where workers carry a greater share of both financial risk and decision-making responsibility.
For employers, the challenge is to manage costs without undermining workforce health, productivity, or the ability to attract and retain talent in a competitive labor market. For workers, the challenge is to navigate a more complex and expensive system with fewer guarantees. And for policymakers and healthcare industry stakeholders, the Mercer data is yet another signal that the status quo of American healthcare financing is increasingly untenable — and that meaningful structural change may be long overdue.