July 30, 2025

This piece is sponsored by Marsh McLennan Agency.

In today’s challenging benefits marketplace, coupled with inflation, maximizing your benefits investment has never been more critical.

Marsh McLennan Agency’s 2025 Midwest Employee Health & Benefits Benchmarking Reports feature data from 670 regional employers to provide benchmarking and insight on:

• Total health benefit costs per employee.
• Prescription drug spending trends.
• Strategies employers are using to boost health care affordability.
• Benefit offerings that matter the most.
• And more.

The findings demonstrate that, although inflation may have ebbed somewhat, employers are feeling the ongoing impact on health plan costs. Employees also are experiencing the pain of high health care costs, especially in the Midwest where the average salaries were the lowest in the nation. Health benefit cost as a percentage of payroll was also the lowest in the nation at 13.7 percent, compared with the national average of 15.4 percent.

The question now is what can be done to control costs? Employers don’t necessarily want to cut benefits, and they’re doing what they can to keep benefit costs affordable while still offering value. Many industries are still facing labor shortages, so retaining employees is essential, and a lot of employers genuinely want to improve health care affordability and fill benefit gaps that lead to health disparities. They want to ensure that they have a solid, competitive benefits strategy to guard against further inflation and possible recession.

Report findings

Cost per employee in the Midwest averaged $15,917 for all employers in 2024, an increase of 2.5 percent. That increase is expected to rise 5.5 percent this year.

How are employers handling the rising cost of health plans, especially since that growth is expected to continue over the next few years? How do they do that without losing ground in ongoing efforts to ensure benefits support the full range of employee needs and preferences?

The study reveals employers are focusing on multiyear health benefit strategies to manage costs and create value for employees and the business. These areas are emerging as key initiatives:

• Mitigating risks and future-proofing their benefits by addressing fiduciary responsibilities, financial risks of rising costs and the drug pipeline, and the quality of health care.
• Working to drive health improvements for better business results, which means prioritizing health improvements for everyone, as well as resiliency for current and future challenges.
• Leveraging artificial intelligence to promote efficiencies and better health through enhanced member experience, outreach and personalization, and program administration and decision support.

It’s clear that more than quick fixes are needed to address these systemic issues, but employers are rising to the challenge.

What’s causing the increase in health plan costs?

​The continuing pandemic-related inflationary struggle has worked its way into health benefit costs as health care providers renew contracts with carriers and raise prices to cover their own increased spending on wages and medical supplies. But inflation is only one of the factors driving increased costs:

• Medical advances come at a higher price, especially in pharma.
• Increased use of behavioral health services and GLP-1 drugs for diabetes and obesity have contributed to the rise in costs.
• The current structure of the health care system often emphasizes the volume of services provided rather than the value of care delivered, which may create challenges in aligning incentives for providers to focus on patient outcomes.
• As increased costs strain health care affordability, employees may put off necessary care in the short term, leading to more expensive treatments later.

As these macro trends shape employer-sponsored health benefit programs, employers expect a third consecutive year of higher cost trends in 2025 — and new cost drivers will add pressure in the years ahead.

How Marsh McLennan Agency can help

Continuing the benefits status quo is increasingly financially and organizationally unviable. Employers can create thriving, resilient organizations that are better positioned to weather the storms of today’s uncertain world through plan optimization, investment in whole-person health and addressing the needs of today’s multigenerational workforce.

Ready to transform your employee benefits experience? Get in touch with a Marsh McLennan Agency consultant for a detailed benchmarking report and analysis of your health plan and other benefits to show how you perform versus your competition, plus personalized guidance tailored to your organization’s unique needs.