Health care costs lead trends to watch in 2025

WASHINGTON, D.C. – Health care costs, vendor accountability and the impact of the 2024 election are among the  health and well-being Trends to Watch in 2025, Business Group on Health announced today.

“A multitude of factors shape these 2025 trends, including the economy, technology, innovation, the political environment and the evolving role of employers in the broader health and well-being landscape,” said Ellen Kelsay, president and CEO of Business Group on Health. “As employers head into the new year, they face formidable challenges stemming from climbing health care costs, which are putting pressure on how employers manage their overall health and well-being programs.” 

Other top trends for 2025 include employers’ addressing escalating pharmacy spending; reassessing well-being programs; continuing to focus on mental health; helping employees navigate services; and effecting meaningful change in health care, according to the Business Group, the largest non-profit organization representing employers on critical health, well-being and workforce strategy issues.

The full list of Trends to Watch in 2025:

Health care costs are growing at historic rates, an impetus for change.

Employers, which have long prioritized cost management, affordability, quality and outcomes, will heighten their focus in 2025 to addressing climbing health care costs. For many companies, health care costs in 2023 were higher than anticipated, and cost increases are projected to be higher in 2024 and 2025 than they have been in more than a decade. 

As a result, employers will need to make tough decisions, some of them disruptive, including re-evaluating and possibly disengaging from long-standing partnerships. Near-term disruption may ultimately result in long-term improvements in health care cost and quality, as well as patient experience. 

Employers will explore a larger range of options through increased RFP activity, which will also help to boost vendor partner transparency and accountability, and focus on care appropriateness, among other outcomes. In addition, they will need to invest more in advanced primary care; quality, value-based initiatives; and chronic condition programs that generate tangible impacts.

To successfully manage costs, employers must address growing pharmacy expenditures.

Pharmacy-related costs, which now consume more than 25% of employers’ U.S. health care budgets, show no sign of abating. To address overall health care costs, employers must tackle pharmacy expenses by leveraging private sector strategies while engaging policymakers.

Employers also plan to reassess their current pharmacy partners; one-third anticipate taking a closer look at their pharmacy benefit managers (PBMs). Businesses will also evaluate coverage approaches for expensive GLP-1s in the broader context of their obesity and cardiometabolic health strategy. 

In addition, there is ample opportunity for employers to leverage biosimilars as a lower-cost option to more expensive specialty medications.

Employers may need to defend physical well-being programs, opening the door to more sophisticated approaches. 

The year 2025 presents an opportunity for HR and benefit leaders to re-evaluate their organizations’ well-being initiatives, especially as chronic conditions and health care costs continue to surge worldwide. 

Employers will use data to gauge how programs perform from a clinical, experience and/or financial standpoint. Wherever possible, employers will highlight how well-being programs help their workforces to flourish and impact business outcomes such as productivity and retention. 

Weight-management programs, for instance, will be scrutinized due to the prevalence of obesity and the costs associated with GLP-1s. To be successful, these programs must incorporate best practices; ultimately bridge the divide between traditional behavior change programs and health care benefits; and rely on outcome-based contracts from vendors. 

Employers have made progress in addressing mental health, though challenges remain on the horizon. 

Employers have made progress in addressing mental health, particularly in regard to reducing stigma and boosting access to care. Mental health services have been integrated into primary care, offered directly at the worksite and made widely available virtually.  This increase in access is promising but has contributed to mental health becoming one of employers’ top five conditions driving cost. A range of mental health areas, including child and adolescent mental health, maternal mental health, loneliness, substance use disorder and suicide, require ongoing focus. 

Employers must also focus on workplace policies, practices and norms to protect mental health and reduce risk factors. While the cost of and need for robust mental health services is an acute challenge in the United States, addressing access, reducing stigma and providing holistic approaches to mental health are priorities to employers with global workforces. 

Employers and their vendors need to enable employees to find the right support at the right time (and price), particularly for services embedded within a health plan’s network.

Novel specialty solutions offer clinical support for patients with diabetes, musculoskeletal, autoimmune and digestive health conditions, for example. In order to better integrate these solutions into the overall employee benefits experience, employers have pushed for these programs to be included as “in network” services. However, many of these solutions are unknown to participants and difficult to access, becoming “lost in network.” Employers must continue to push their health plan and navigation vendor partners to more readily communicate and promote these innovations.  

The year 2025 will also see a sharp focus on holding health plans, specialty solutions and navigation partners accountable to better integrate solutions and to make participants – employers and employees alike – more aware of them. 

Employers will hold vendor partners to higher standards.

Employers will both reassess and streamline their vendor partnerships in the coming year and hold vendors to a higher level of accountability for producing outcomes. To do this, accessible vendor data on cost transparency, quality and outcomes is critical to informed employer decision-making. 

Further, employers will explore alternative approaches, including directly contracting with centers of excellence (COEs), promoting network arrangements that steer employees toward high-value providers and looking to emerging copayment-based models to address affordability.

Changes in U.S. policy and the global economic climate will impact employers and employees.

The year 2025 will also bring changes in the political landscape, including changes to key health-focused roles in the administration, Senate and House. 

For employers operating in the United States, three major policy areas could dramatically impact their ability to provide high quality, affordable health coverage to their employees: safeguarding the tax-free status of employer health plan coverage; protecting ERISA preemption and the ability to offer uniform coverage/programs nationally; and empowering employers to hold vendors accountable through robust transparency and control over vendor fiduciary positioning.

Around the globe, rising health care costs add pressure to social health systems, which may pose challenges for employers managing health and well-being programs. 

Employers will lean into making real changes in health care.

Employers are prudent and responsible stewards of workforce health and as change agents within the health care system. They also have fueled advancements in value-based care, patient experience, mental health, health equity, innovation and transparency, to name a few.

To be sure, the myriad dynamics employers must contemplate and contend with can be overwhelming and daunting. However, no stakeholder has a better track record than employers for making the difficult decisions required to meet the diverse needs of employees and their families.

In the end, employers will lean in to drive the necessary collaboration among all stakeholders to achieve the collective goal of bringing affordable, high-quality health care to all employees worldwide.