What's Happening With Health Insurance Going Into 2025?

It’s that time of the year again! No, not pumpkin spice season. We’re gearing up for open enrollment!

Okay, so maybe you’d rather use a stick of pumpkin spice deodorant (yep, that’s a thing) than talk about health insurance. But there’s some stuff you’ll want to know about like premiums rising and AI making your doctor’s appointments. Plus, when you need it, you’ll be way more glad you got health insurance than a pumpkin spice latte.

Health Industry Trends

Our whole economy has been changing, to say the least. And health insurance has felt the effects as much as any industry.

Rising Health Care Costs and Their Impact on Premiums

Health care costs have risen every year for the last few decades, so it’s no surprise they’re expected to go up again next year.

There are a few reasons for the rise, but spending on prescription drugs was—and still is—the fastest-growing factor.^[1] Inflation also contributes, although it has slowed down some. Then, there’s the growing need for mental health care, the increase in people with chronic conditions, and an ongoing worker shortage. These all contribute to the extra dollar sign on health care.                                 

We all took Economics 101: When costs go up, prices rise. And in this case, prices are premiums. Affordable Care Act Marketplace insurers already asked for a median premium increase of 7% for 2025.^[2]

For workers who’ll get their insurance through their employer next year, the total cost for health benefits is expected to rise 5.8% on average per employee—even after factoring in employers’ efforts to reduce costs (such as reassessing their vendor partnerships). This will be the third year in a row that health-benefit costs increase by more than 5%.^[3]

Medical Trends

The biggest reason health insurance costs are going up is the rise in specialty drugs. Researchers are making advances in treatments, particularly in pharmaceuticals and gene therapy. But these new treatments are expensive (gene therapy can cost millions!), and they’re being pushed as the best treatment options.

Consumers’ health isn’t trending well either. Obesity rates and prediabetes diagnoses are going up. For employers providing health insurance benefits to their teams, cancer is the top cost driver (with an increase in diagnoses among younger people), and cardiovascular conditions are the third-highest cost driver.^[4]

But not everything is bad news.

The last few years have seen a shift in how health care providers are paid—pushed by insurers and government programs.

Rather than a fee-for-service model, where providers are paid for each test, procedure or what have you, they’ll be paid based on the value of care they give—a payment model not surprisingly called value-based care. The hope is, this will incentivize providers to get the patient better as quickly as possible, while cutting down on things like unnecessary tests—and high health care costs! By 2030, the government hopes to have all Medicare and most Medicaid users enrolled in value-based care programs.⁵

Technological Advancements

Flying cars! Robot servants! Teleportation! Yeah, health insurance might not be the first industry that comes to mind when you think of sci-fi or technology, but it’s changing along with the rest of the world. And there are robots.

Rise of Telehealth and Virtual Care Services

Telehealth, the new remote way to get health care over the phone, saw a boom following COVID-19, but it’s here to stay.

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Thanks to technological advances that allow for patients to be monitored remotely, at-home health care is becoming more common. One great thing about this is it increases accessibility and convenience for patients. What’s more, this could end up cutting costs in the long run because the constant stream of information can help doctors catch problems earlier and avoid costly complications and hospital visits. Win-win!

Many insurers include telehealth coverage in their health policies already, but what qualifies as telehealth varies. As insurers see the cost-saving value of this kind of care, more and more companies are including remote patient monitoring in their telehealth coverage.⁶

Integration of AI and Machine Learning

Whether you’re scared of a robot uprising or you would order a robot maid this minute, the robots are coming. They’re now doing repetitive tasks for insurance companies related to claims processing, fraud detection and customer service. You may have already noticed, but AI-powered chatbots are all over insurance carrier websites.

In health care, AI is helping with similar tasks like making appointments, viewing test results, and refilling prescriptions. But it’s also helping diagnose. One company that’s still in the clinical stages is using AI to help find cancerous skin lesions.⁷

Insurance companies are now using AI and machine learning to help assess individuals’ risk, plan offerings and price. Since AI can process huge amounts of health care data (and process it faster), it can more accurately predict a patient’s future need for insurance and can personalize insurance plans.

Also, insurance fraud costs the industry billions every year, and AI is good at detecting patterns in data that suggest fraudulent activity. RoboCop is real!

Consumer Behavior Shifts

So, how is consumer behavior changing in the health care world?

People are warming up to AI in health care. A survey shows 80% of 18–34-year-olds are willing to use AI as a doctor’s assistant, while older folks are a little less gung ho.⁸

Since COVID-19, people have sought more behavioral (think mental health and substance abuse) care, so the cost of that care has gone up. There aren’t enough workers in this field either, so like we mentioned earlier, this means costs will keep rising.⁹

Currently, 65% of consumers say they don’t seek care until it’s urgent.¹⁰ We get it—nobody wants to darken the door of a doctor’s office until their arm is falling off. But maintaining good health will cost way less in the long run than a burst appendix.

Because of this, government and health care leaders are nudging consumers to prioritize preventive care. Insurers are on board because this could save them money as well, and they’re expected to move toward a model that encourages preventative measures.¹¹ These could include things like covering more screenings and nutrition help.

Regulatory Changes and Policies

Let’s not forget about the government. They like to tinker in the health insurance industry fairly often. So, what have they been up to lately?

Impact of Government Regulations on Health Insurance

Two laws that passed in 2022 are still affecting health insurance:

• No Surprises Act: This law aims to protect people from getting a surprise bill when they receive care from a provider outside their plan’s network without knowing (like what would happen if you were airlifted to a hospital in an emergency). Experts are divided on whether this law will push prices up or down, but most agree it could affect in-network and out-of-network rates.

• Inflation Reduction Act: The intention of this law is to lower drug costs overall in the long run, but right now it could inflate prices. Manufacturers set high initial prices with the idea they’ll raise them more slowly in the future. The government believes this will lead to lower costs eventually. Who knows? But we do know costs on new drugs will be higher now.

In addition to these two laws, here are some other ways the government’s actions might affect your health insurance:

• The government regulates the affordability of employer-provided health coverage by setting a cap on how much of your household income can go toward employer-sponsored health insurance. In 2025, this percentage will increase from 8.39% to 9.02%, meaning your premiums can be a little bit higher next year.¹²
• If you have Medicare, your prescription drug plan might be a bit cheaper. After bids are finalized, the final Part D premiums for next year are expected to come in slightly lower than last year.¹³
• Also, to expand Medicare coverage, the government extended special enrollment periods next year.¹⁴

Impact of Government Regulations on Mental Health Care

Near the end of this year, the federal government issued final rules to a law from 2008 that expands access to mental health services. These new rules help make sure health insurance plans make it as easy to get mental health care as it is to get treatment for physical illness or surgeries.¹⁵ One way is by encouraging insurers to contract with more mental health providers so people have more options.

This could affect your premiums or even your plan. Some health insurers and employers say the new rules will increase costs—possibly to the point of employers dropping mental health coverage entirely.¹⁶

To help offset costs, employers may need to cut mental health benefits or use behavioral health initiatives to support their workforce’s mental health (and so cut down on how many team members need to use a mental health care benefit).

How to Save Money on Health Insurance in 2025

When it comes to health insurance costs, you’re not completely at the mercy of the market. Your best weapon is to get an independent insurance agent in your corner. They’ll shop all the options out there and bring you the best deal for what you need.

Where do you find these secret weapons? We recommend our RamseyTrusted® partner Health Trust Financial. They’ve rounded up the best independent insurance agents from all over who can help you figure out how to get your health care covered the Ramsey way. Is your employer’s plan best? Or do you need to go out and find something in the marketplace? Should you get a HDHP or PPO? They’ll know.