Healthcare costs for employers are expected to increase by 10.2% in 2025. Beyond the potential double-digit increase, unpredictable factors like high-cost claimants, GLP-1 drugs for obesity, gene cell therapies, tariffs, legislative changes and geopolitical uncertainty are creating budget variability and added unpredictability.
In today’s dynamic healthcare landscape, a proactive, data-driven approach to risk management is an absolute necessity. With the exponential power of modern computing and the transformative strengths of artificial intelligence, we're now better equipped than ever before to forecast future circumstances with remarkable accuracy.
This shift is evident. Our 2025 Benefit Trends Survey shows that future-focused analytics are gaining momentum with our clients: 20% are now actively adopting sophisticated risk analytics to stress-test and forecast future costs, up from only 7% in 2023. A comprehensive, full-fledged risk analytics approach can improve program effectiveness and navigate an increasingly complex benefits landscape.
Healthcare costs can be affected by unexpected events like pandemics or rare genetic diseases. But we're doing more than just reacting to these surprises. We can anticipate and manage several known factors that impact cost variability.
High-cost claimants (HCCs) have an increasing impact on the total cost of healthcare. There are now almost twice as many claimants with costs greater than $250,000 in one year as there were in 2015. HCCs are one of the most significant cost contributors for employers, representing up to 35% of healthcare costs. HCCs are increasingly driven by high-cost medications.
Specialty drugs like new biologics and gene therapies offer life-changing treatments for complex and rare conditions but come with exorbitant price tags. A single patient requiring a high cost specialty drug can decimate a small-to-medium-sized self-funded plan's budget without appropriate reinsurance. Cell and gene therapy medication approvals are rising, with the most costing over $1 million per year. Lenmeldy, a newly approved gene therapy treatment used to address a rare neurological disorder in children, will cost over $4 million per year.
More GLP-1 drugs are expected to hit the market by 2026. Costs for employer health plans are expected to continue rising even if costs per month of therapy decline. The per member per month spending on these medications nearly doubled each year since 2021. This massive increase is adding to the double-digit healthcare budget increases many organizations are now facing.
Tariffs are increasing costs for medical devices and medications, and providers will pass these costs onto self-funded employers.
There's a fine line between success and failure. Employers that move to a fully formed risk management approach using advanced analytics will be able to identify actions that allow them to meet their budgets.
In the current healthcare environment, risk is a constant factor. For self-funded employers, the issue isn't whether uncertainty will occur, but how prepared they are to handle it. By turning data into actionable insights, it’s possible to anticipate volatility, measure exposure and make informed decisions that safeguard both budgets and employees.
Ultimately, the future belongs to those who treat risk management as a proactive discipline — one powered by data, guided by insight and aligned with long-term resilience.
As with any risk, the typical risk management steps for a health plan include:
Employers can adopt several strategies:
