The cost of employer-sponsored health insurance has risen by seven percent for the second consecutive year, according to a report released Wednesday by the nonprofit health policy organization KFF. This increase is adding significant financial pressure on both businesses and employees, as average family premiums have soared to around $25,000 per year. For employers, the rising costs have meant an additional $1,800 in expenses per employee this year alone.
The steady rise in healthcare costs has been particularly challenging for small businesses, many of which struggle to absorb the added expenses. As a result, workers are increasingly bearing the brunt of the hikes, often in the form of job cuts, smaller wage increases, or reduced benefits packages. While inflation has eased in other sectors, healthcare remains a financial strain for businesses across the country.
Drew Altman, president of KFF, noted that these consecutive years of premium increases have added over $3,000 to the average family’s health insurance costs. “For families already feeling the financial squeeze, this trend is unsustainable,” Altman said. “Unfortunately, we don’t see relief in the short term, as the pressures on the healthcare system remain significant.”
Experts point out that the rise in health premiums is being driven by a combination of factors, including increased healthcare utilization, higher drug costs, and expensive medical technologies. Despite efforts to curb costs, the sector remains under strain, and projections suggest that these trends may continue into 2025.
As employers seek ways to mitigate the impact of these rising costs, some are exploring alternatives such as high-deductible health plans or shifting a greater portion of the financial burden onto employees. However, these solutions have sparked concerns that they may lead to reduced access to care, particularly for lower-wage workers.
With no immediate end in sight, businesses and employees alike are bracing for another difficult year ahead, as healthcare costs continue to outpace wage growth and overall inflation in the U.S. economy.
