Pharmacy, cancer and musculoskeletal conditions remain the top drivers of increased healthcare costs for employers, but cardiovascular conditions are on the rise as well, a Business Group on Health report found.
Business Group of Health’s “2025 Employer Health Care Strategy Survey” surveyed 125 large employers across varied industries who together cover 17.1 million workers. The survey was conducted between June 3 and July 12.
The survey found projected healthcare costs will jump almost 8% in 2025, the highest in more than a decade. The increase comes among heightened demand for expensive drugs such as GLP-1s and the ongoing burden of treating cancer and other chronic conditions.
“Employers are steadfast in their desire to provide comprehensive offerings to their workforces,” Ellen Kelsay, president and CEO of Business Group on Health, a nonprofit, said in an Aug. 20 company news release. “They continue to absorb much of the upticks in cost and remain keenly focused on lowering spending and improving outcomes and experiences for employees. However, the foreboding cost landscape has accelerated the need for bold transformation, and employers seek partners who will make that happen.”
Here are eight findings to know:
- Healthcare costs are expected to grow almost 8% for 2025, compared to 6% in 2022, and employers report being prepared to absorb the increases while leaning into additional costs management strategies.
2. Pharmacy costs are largely responsible for the increases, and 76% of employers said they were “very concerned” about the overall pharmacy costs. Healthcare spend attributed to pharmacy rose from 21% in 2021 to 27% in 2023.
3. GLP-1 medications were the top driver of pharmacy costs.
4. About 79% of employers said they saw heightened interest in obesity medication and 96% are concerned about the long-term cost implications.
5. Cancer remained the top condition driving costs up, but cardiovascular conditions were also in the top three cost drivers for 40% of employers, compared to 30% in 2023.
6. Cancer treatment needs are increasingly prevalent among the younger workforce, but employers said they wanted to boost cancer prevention efforts.
7. More employers are eying nontraditional health plans and transparent pharmacy benefit managers to lower costs and simplify member experience.
8. Improving access to mental health is a priority in 2025 for 79% of employers, who are pursuing strategies for no- or low-cost virtual counseling and eliminating out-of-network barriers.