Health-benefit costs are expected to exceed salary increases despite the Biden-Harris administration claiming to have helped redress the issue, a study from advisory firm Mercer found.
Employer-provided health insurance expenses rose 7% in 2024 and are expected to rise 5.8% in 2025, with over half of the 1,800 employers surveyed telling Mercer they plan to cut insurance plan costs in the new year, often through increasing out-of-pocket costs for employees. The increase in healthcare expenses is expected to outpace salary growth, with performance-based raises and total salary budgets predicted to rise just 3.3% and 3.6% next year, respectively.
Prescription drug spending is the fastest-growing component of the surge in health-benefit costs, rising 7.2% in 2024 and expected to continue increasing in 2025 due to new high-cost gene and cellular therapies, according to Mercer. Rising healthcare costs are also largely driven by a growing disparity between the supply of healthcare workers and a rising demand for medical services as older Americans become an increasingly large segment of the population.
The Biden-Harris administration claimed it would address rising healthcare costs, vowing
in March to reduce premiums by an average of $800 a year for millions
of Americans by expanding Affordable Care Act tax credits. The White
House also capped prescription drug costs at $2,000 per year for
Medicare beneficiaries starting in 2025 — a move that experts told
the Daily Caller News Foundation would have caused a spike in Medicare
premiums if not for the administration providing billions in subsidies
for insurers in a ploy to buy votes.
Delusions of Adequacy 