Q3 2025 snapshot
Healthcare costs will remain higher than historical norms.
While cost trends have steadied as expected, they’ve stabilized at a higher level than the industry had hoped, with no expectations of a decline in the coming years. Lockton’s trend projections have risen 2% to a projected 9% since last year, with many carriers expecting even higher numbers. In this sustained high-cost environment, employers will need to be diligent in finding savings and monitor emerging market factors driving higher costs.
Why are healthcare costs so high?
01
BRAND & SPECIALTY MEDICATIONS
The cost of brand medications continues to increase significantly each year, alongside utilization increases of specialty medications.
14%: The unit cost of brand medications increased 14% in 2024, primarily driven by GLP-1s for diabetes treatment.
>50%: Specialty medications are driving over half of Rx costs.
02
GLP-1s
The cost and utilization of GLP-1s is rising, and employers will feel additional pressure to cover for conditions beyond diabetes as more indications are FDA approved.
840%: Employers that cover GLP-1s for weight management have seen an almost 840% PMPM increase since they became prevalent in the marketplace in 2022.
02
HIGH-COST CLAIMS
The occurrence of million-dollar-plus claims is increasing, with emerging rare disease treatments expected to drive additional high-cost claims in the coming years.
04
CHRONIC CONDITIONS
Chronic conditions are driving higher utilization of both medical services and pharmacy spend.
8.3x: Plan members with multiple chronic diseases have over eight times higher costs than members without.
05
MARKET PRESSURES
Continued inflationary pressures in the U.S. and at a global level, tariff developments, and challenges around provider contract negotiations are introducing additional cost concerns for plan sponsors.
