How are employers controlling rising health care costs? With these strategies

March 26, 2025

This paid piece is sponsored by Marsh McLennan Agency.

For almost 20 years, the cost of medical care has increased at a higher rate than all other goods and services. In fact, 2025 is expected to be the third year in a row where health benefit costs increased by more than 5 percent, according to McKinsey.

The 2025 Marsh McLennan Agency Employee Health & Benefits Trends report discovered that employers are actively looking for sustainable ways to control rising health care costs, both in the short term and for the future. Why? Because there is still no end in sight for the upward trend in these costs.

The cost-control strategies we reference here are potentially viable for most employers, but to make them work effectively, it helps to have the deep knowledge and expertise of an experienced broker.

Cost-shifting strategies are growing, with some large employers considering transferring more health care costs to employees. Employers are seeking solutions such as self-insurance and stop-loss protections to mitigate rising costs. The report also learned that as employers face the reality of having to reduce employee benefits, they want to use every tool available to get expenses under control and allow employees to keep their current health care coverage.

Traditional approaches to managing benefits costs may no longer be enough. Here are some that might deliver more:

1. Self-insured plans. Almost 70 percent of people with employer-sponsored health insurance are self-insured. That’s an increase of 5 percent since 2018, according to McKinsey. Self-funded insurance plans give employers complete transparency and control over their health care costs in exchange for assuming greater risk and responsibility in administering their plans. Large employers have opted for self-insurance plans for decades, but their use by medium and small employers has been growing steadily since the passage of the Affordable Care Act in 2010, according to the Employee Benefit Research Institute. One reason for this increase is from insurance brokers working with employers to hedge their risk exposure through stop-loss coverage for high-cost claims.
2. Shifting costs to employees and reducing benefits as a cost-cutting strategy. Fourteen percent of large employers say it is very likely they will have to raise employee deductibles or out-of-pocket maximums this year. Thirty-one percent reported that it is likely, according to McKinsey, and 95 percent of employers reported that they are considering reducing benefits if costs increase by 4 percent or more. With almost all estimates of cost increases in the coming years exceeding that, the majority of employers may have to face this decision sooner rather than later.

The 2025 Marsh McLennan Agency report identified two main strategies employers are using or planning to use to keep health care costs under control and increase the potential that coverage doesn’t have to be reduced:

1. Managing high-cost claimants. This includes early identification, intensive case management strategies, coordinating care with specialized providers, promoting preventative care, exploring cost-effective treatment options like second opinions and focusing on employee well-being.
2. Managing cost for specialty drugs. This can include strict prior authorization processes, prioritizing lower-cost alternatives, implementing utilization management programs to monitor appropriate usage, collaborating with health care providers on treatment plans and leveraging data analytics to identify cost-saving opportunities.

How Marsh McLennan can help

Marsh McLennan Agency can help you understand the challenges presented by these trends and how best to navigate them. Our team is here to help you find straightforward, cost-effective ways to provide your employees with a competitive program of essential benefits, including maximizing your health care cost management.

Contact your local Marsh McLennan Agency representative to learn more about the experience and resources we can put to work for you.