The cost of US health care benefits provided by employers are predicted to increase in 2025 by about five percent, after a decade of averaging three percent annually, according to the Survey on Health and Benefit Strategies for 2025 by Mercer. Yet, most employers (56 percent) are pursuing value options for employees over cost shifting to employees in 2025. These “value” options include lowering the costs for one of the health care plans offered, offering a free employee-only coverage option, or by reducing annual deductibles or co-payments paid by employees.
Research has learned that most employee wellness programs are ineffective at reducing stress. However, there are better ways to reduce American workers’ stress while improving morale. Many Americans needing mental health or substance abuse care do not have access to treatment or incredible difficulties in getting care–more on these two issues below.
Prescription Drug Costs Continue to Increase
According to Mercer, prescription drug costs jumped 8.6 percent in 2023 and are driven by the surge in use of Glugon-like peptide receptor agonists (GLP-1). These drugs are used to treat type 2 diabetes and sometimes obesity. Many companies are hoping that funding these drugs, rather than lowering coverage of cost-sharing with employees will reduce the expense of employees with obesity and diabetes. Other specialty drug costs rose by 10.2 percent in 2023.
Mercer reports that employers who don’t currently offer coverage for obesity medications, including GLP-1s, are considering offering them. GLP-1s are expensive. They typically cost $1,000 a month per patient and the large number of patients who use them results in significant costs to medical health plans.
According to Mercer, many employers are also considering financial support for work and living expenses, such as financial wellness programs (coaching and investment advice), subsidized phone and internet for remote workers, and subsidized commuter cards, to name a few.
Below is a chart form Mercer that shows all ten options of financial support for work and living expenses in 2025.
High-Performance Networks
Some employers, according to Mercer, are considering adding high-performance networks in 2025. These networks typically are an overlay on a major carrier’s broader PPO (Preferred Provider Network) network. (I have had good success with such networks in the past for specialty surgeries such as organ transplants. Sometimes, we contracted directly with specialty surgery centers and not through a health care provider.)
As traditional insurers, both national and regional, expand their offerings of high-performance medical plan options, Mercer is seeing growth in employer use and interest. Mercer reports that National carrier HPN products like Aetna APCN+, Anthem Blue HPN, Cigna Local Plus, and UHC Nexus are moving into more geographies each year and now generally cover most major urban markets. However, employers with workers in rural locations may not find products that are a good fit in all areas. Regional health plan offerings such as HMOs and ACOs have the potential to work well for an employer if a large portion of their population is within the plan’s service area.
However, some high-performance networks can operate as an exclusive provider organization, meaning no benefits are paid out-of-network.
Mental or Behavioral Health Benefits.
Mercer reports that 45 percent of employers currently or will soon offer EAP care options beyond telephonic or video sessions for coaching or text therapy.
Almost 30 percent (29 percent) of employers offer in-person counseling at one or more worksites. Employers have increased the number of EAP sessions available from a traditional three to five sessions to higher, more robust session models (eight or more), which further decreases financial barriers to care and can help employees resolve more issues within the EAP framework without the need to transition to longer-term care through the health plan.
I am delighted to see almost 30 percent of employers offering in-person counseling. I have had great success with offering in-person (and confidential) counseling across a whole range of topics from mental health to elder care, financial and legal counseling, and advice for raising teenagers, and with more than 10 sessions per employee.
Research shows wellness programs are not effective
However, Oxford researchers have found that workplace wellness programs such as virtual therapy programs, mindfulness programs, and time management programs don’t work.
As reported by Fortune, the study, which analyzed data from 46,336 workers across more than 230 companies, found nearly all interventions, including resilience training, access to sleep apps, and online coaching, did not benefit employee well-being. There was one notable exception, however: Volunteering did positively correlate with improved workplace well-being.
According to Dr. Richard Safeer, the chief medical director of employee health and well-being at John Hopkins Medicine and the author of A Cure for the Common Company, as reported by Fortune, says, “Well-being is more than a program, prize or portal. Well-being requires the compilation of an intentionally crafted well-being culture, whereby every member of the organization plays a role not only in their own well-being, but also a role in supporting those with whom they work.” Safeer points to what makes a workplace psychologically safe. For example, beyond benefits, it’s about fostering “human-centered leaders.”
Some experts have compared these wellness programs to putting a band-aid on a festering wound, if the work culture is overly demanding and toxic. It is far better to create a mission-focused, collaborative, learning, and inclusive culture that lessen stress and improve employee commitment and morale than to have a toxic culture and spend money on wellness programs.
There is more to do regarding mental health
While talking about mental health in the workplace has become more commonplace, less progress has been made in reducing stigma around alcohol and substance use disorders (SUD), which became both more common and more severe during the pandemic, according to Mercer. Only 23 percent of employers engage in raising awareness about SUDs. According to the National Council on Mental Well-Being, about 40 percent of adults who needed substance use and mental care did not get treated. Those who did receive mental health or substance use care over the past 12 months also cite difficulties in getting that care:
- 81 percent of U.S. adults who received substance use care had trouble getting care.
- 67 percent of U.S. adults who received mental health care experienced difficulties getting care.
The survey also found that many U.S. adults, overall, believe insurance-related issues complicate access. Nearly three in five U.S. adults believe it is easier (59 percent) and faster (56 percent) to get mental health or substance use care if you pay out-of-pocket versus using insurance.
One of the barriers cited is the lack of insurance coverage for mental health and substance abuse. Larger employers used to cover outpatient and inpatient treatment but stopped doing so due to the cost. From my days administering health care, I get it. It is expensive, but we are at a national epidemic here with mental health challenges, substance abuse and the opioid and fentanyl crisis.
Sadly, I have heard many stories of mentally ill adults who were not able to get into treatment without the intervention of parents, who paid $50,000 or more for treatment, and even sadder, some of these adults who did not get treatment quickly slipped away from their families not to be heard from again.
There needs to be a national discussion on this topic. If it is too expensive for industry to cover, and I believe it is, it will need to be picked up by the government.
Childcare
About 40 percent of companies with 5,000 or more employees will provide childcare referrals in in 2025. About 23 percent of these large companies provide childcare subsidies, and 13 percent provide onsite childcare facilities. For employers with 500 to 4,999 employees, 32 percent of them will offer childcare referrals, 16 percent subsidies, and nine percent onsite childcare facilities.
About Mercer’s Survey
Mercer’s survey included 697 organizations with 49 percent being from organizations with 5,000 or more employees, 23 percent were from employees with fewer than 500 employees, and 28 percent from employers of 500 to 4,999 employees. The survey was taken in March, 2024.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com