Rising healthcare costs often seem unpredictable. But many of the pressures facing today’s employers can be attributed to demographic realities. Employees and their dependents are aging, chronic conditions are appearing earlier in life, and the healthcare workforce itself is changing in ways that affect both access and pricing and will likely shape employer health costs into the next decade.
| Year | NHE | GDP |
|---|---|---|
| 2025 | 7.1% | 4.6% |
| 2026 – 2027 | 5.6% | 4.4% |
| 2028 – 2033 | 5.3% | 4.2% |
Source: Healthaffairs.org
Source: Healthaffairs.org
However, because current cost drivers are clear and quantifiable, employers can take proactive steps to manage spend while strengthening long‑term employee health.
Current state of benefit spend
01
The population is aging, and older adults require more intensive care.
As employees and dependents get older, they naturally rely more on preventive visits, chronic condition management, and specialty care. Industry sources confirm that utilization is a major contributor to rising health expenditures, with overall spending expected to grow at an average 5.8% annually from 2024–2033, consistently outpacing GDP growth.
- Consistent primary care, early diagnosis, and chronic disease monitoring become essential cost‑management levers because they help catch issues before they escalate into costly acute events.
- Age‑related conditions, including heart disease, diabetes, arthritis, and cancer are driving steady increases in medical and pharmacy spending.
02
Chronic conditions are increasing across all age groups, even younger adults.
Employers are reporting higher rates of obesity, mental health concerns, and cardiometabolic issues among younger workers, which are all chronic conditions that require long‑term management or continuous medication, shaping cost trends for years into the future.
- Chronic conditions already account for much of employer healthcare spending.
- Supporting early engagement, preventive care, and treatment adherence helps prevent avoidable complications that lead to costly emergency or inpatient care.
03
The healthcare workforce is shrinking as many clinicians retire and staffing shortages grow.
A significant portion of the physician workforce is nearing retirement, and shortages continue to deepen. In fact, the U.S. could face a shortfall of up to 86,000 physicians by 2036 according to recent estimates by the American Association of Medical Colleges (AAMC). These staffing shortages contribute to longer wait times, rising labor costs, and capacity constraints.
- Delayed care often becomes higher‑cost care, as employees wait longer for appointments and conditions worsen.
- Increased provider labor costs eventually flow into higher reimbursement rates and employer premiums.
04
Employee expectations for wellbeing support are rising.
Today’s employees increasingly view wellbeing as a core part of an employer’s value proposition. According to Wellhub’s 2025 Workplace Wellness Report, 78% of employees believe their employer has a responsibility to support their wellbeing.
- Many organizations feel pressure to expand their wellbeing offerings beyond traditional medical plans. Despite headwinds, 93% of employers surveyed in a recent Business Group on Health study said they plan to maintain or even expand wellbeing offerings.
- Ancillary benefits, such as wellness apps, fitness stipends, or mental health resources, can deliver high perceived value at a relatively low cost.
05
Shifts in coverage and policy are placing more pricing pressure on employer plans.
As national health spending continues to rise, shifts in public program payment models are increasingly pushing a larger share of costs onto commercial and employer‑sponsored health plans, which cover most working‑age adults.
- Expect steady cost pressure over the next several years.
- Take proactive steps with health plan design, vendor selection, and utilization management to maintain affordability.
What employers can do now
Close care gaps early, especially for cardiometabolic and mental health issues.
- Promote annual physicals, preventive screenings, and recommended lab work.
- Use partners that identify employees who are overdue for care or at higher risk.
Make preventive care easy and barrier‑free.
- Offer low‑ or no‑cost preventive services.
- Communicate clearly and frequently so employees know when and how to seek care.
Use data dashboards that segment results by age, condition, and risk.
- Pinpoint which groups or conditions are driving claims trends.
- Detect emerging risks before renewal season.
- Use insights to guide benefit design and vendor strategy.
Strengthen chronic care and wellness programs.
- Prioritize diabetes prevention, blood pressure management, weight support, and behavioral health programs.
- Provide coaching, digital tools, and resources that help employees stay on track with treatment and healthy habits.
Put our skills and experts to work
The Baldwin Group provides industry‑leading tools and expertise that can help employers anticipate demographic trends and proactively manage health costs, including:
- Predictive analytics that identify emerging risks and future cost drivers, as well as help employers understand how aging populations and rising chronic conditions will impact long‑term spend.
- Custom dashboards that break down population trends by age, condition, and utilization to give employers a clear line of sight into the demographic shifts driving their claims experience.
- Chronic condition insights to guide investments in cardiometabolic and mental health solutions that can improve outcomes and reduce avoidable costs.
- Year‑round strategic support to help employers evaluate plan performance, optimize vendor strategies, and shift from reactive cost control to proactive planning.
- A people‑first approach that balances affordability with a positive employee experience.
Let’s work together to stay ahead of demographic shifts and build a healthy benefits strategy for your organization.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
