Healthcare Cost Trends: Mid-Year 2025

We're halfway through 2025, and cost trends are coming into focus. Here's what the data shows about healthcare cost trajectories and how employers are responding.

The Cost Picture

Healthcare cost growth in 2025 is running at 6-7% for most employers—elevated compared to pre-pandemic norms, but slightly better than the peaks of 2022-2023.

What's driving costs:
• Continued specialty pharmacy growth
• GLP-1 utilization increasing
• Provider rate increases reflecting labor costs
• Catch-up utilization still working through the system

What's moderating costs:
• Better chronic disease management
• Telehealth reducing some unnecessary ER/urgent care visits
• Increased focus on high-cost claimant management
• Site-of-care steering initiatives

Variation by Market

Cost trends vary significantly by geography and market:

Higher-cost markets: Major metros continue to see above-average costs, driven by provider consolidation and higher labor costs.

Lower-cost markets: Secondary cities and rural areas generally see lower absolute costs, but growth rates are catching up.

Self-funded vs. fully-insured: Self-funded employers have more visibility into what's driving costs and more levers to pull. Fully-insured employers are more dependent on carrier actions.

Employer Responses

Employers are taking various approaches to manage costs:

Plan design adjustments: Some employers are making incremental changes—higher specialist copays, adjusted coinsurance, tiered pharmacy benefits—rather than wholesale plan redesign.

Point solution adoption: Targeted programs for diabetes management, musculoskeletal conditions, and mental health are gaining traction as employers seek ROI on specific cost drivers.

Network optimization: More employers are exploring narrow networks, centers of excellence, and reference-based pricing arrangements.

Employee engagement: Helping employees become better healthcare consumers through education, price transparency tools, and decision support.

Looking to 2026

Early renewal indications suggest 2026 will see similar trends—mid-single-digit cost growth, continued pressure from specialty drugs, and ongoing need for active cost management.

Employers who plan ahead and use data to guide decisions will be better positioned than those who react to renewals passively.