22 Health insurance industry trends and statistics for 2025

Projected to reach $1.4 trillion in revenue this year, the health insurance industry is a rapidly evolving space requiring businesses and individuals to adjust to changes in regulations, technology, and economic pressures. Innovations like personalized coverage and digital tools are transforming how health plans are designed and delivered.

Understanding these trends can mean the difference between managing costs effectively and facing unnecessary financial strain for companies, especially small businesses. It’s not just about saving money—it’s about offering employees benefits that support their well-being while keeping businesses competitive.

To dig deeper into these shifts, our team at Thatch surveyed small business owners across America to learn how they’re approaching health insurance in today’s climate. Coupled with data from trusted industry sources, the findings below shed light on the key factors driving change in 2025.

5 health insurance industry trends shaping 2025

1. Rising premiums concerns: Employer-sponsored family health insurance premiums have climbed 24% since 2019, which explains why 68% of small business owners say rising premiums are their biggest concern in 2025. (KFF, Thatch)

2. Regulatory uncertainty: 83% of small businesses are concerned about the political impact on health insurance, making adaptability in benefits crucial as legislative actions like the Inflation Reduction Act shape the market. (Thatch)

3. Shift to Flexible, Employee-Centric Benefits: As workforce needs diversify, businesses prioritize customizable health plans, with 31% of employees desiring more flexibility in their benefits. (EBRI)

4. Focus on Mental Health: Employers are responding to increased demand for mental health support, which 41% of small business owners identified as a key concern in 2025. (Thatch)

5. Technology and AI Integration: AI adoption is reshaping health insurance administration, with potential U.S. healthcare savings of $150 billion annually by 2026 and increased efficiency in claims management and patient care. (National Library of Medicine)

Additional key takeaways

• Employees contribute an average of 16% of premiums for single coverage and 25% for family coverage. (KFF)

• Only 22% of small businesses are extremely confident in meeting workforce needs, highlighting a gap in benefits optimization. (Thatch)

• With 62% of employees citing its importance, employer-sponsored insurance is critical for financial security, yet significant access disparities exist between small and large businesses. (AHRQ)

• With $399.4 billion in revenue and a 7.9% profit margin, UnitedHealth Group is the market leader, followed by CVS Health and Anthem. (IBIS World)

• 64% of small businesses are exploring ICHRAs as a cost-effective alternative to traditional group plans. (Thatch)

Let these trends inform and inspire you all year long. Download a FREE PDF of this 2025 Health Insurance Industry Trends report.

1. Rising premium costs and increased cost-sharing

The cost of health insurance premiums has steadily climbed over the past five years, posing significant challenges for businesses and individuals alike. According to the Kaiser Family Foundation (KFF), the average annual premium for employer-sponsored family health insurance reached $25,572 in 2024, a 24% increase compared to 2019.

This consistent upward trend is accompanied by rising deductibles and out-of-pocket costs, which further strain both employers and employees. 

Our survey revealed that 68% of small business owners feel that rising premiums and deductibles are their biggest concerns about the future of healthcare. This is in line with a previous Thatch survey that showed 93% of small business owners worry their employee benefits plans aren’t sustainable.

While affordability remains a top concern, quality of care cannot be overlooked. We found that 56% of small business owners cited "quality of care and patient outcomes" as another key worry, illustrating the interconnected nature of cost and care quality in shaping employer decisions.

With rising healthcare costs, employers are increasingly seeking plans that integrate value-based care to prioritize high-quality outcomes while managing expenses. Our findings also revealed that 64% of small businesses offering benefits will likely explore alternatives like ICHRAs in 2025 to cut costs.

By adopting solutions like Individual Coverage Health Reimbursement Arrangements (ICHRAs), small businesses can adapt to these dual challenges, empowering employees with more choices and controlling escalating expenses. 

2. Preparing for policy shifts and regulatory uncertainty

Policy decisions at the federal level can directly affect insurance coverage, pricing, and accessibility, particularly for small businesses that already struggle with rising costs. 

The ongoing impact of legislation like the Inflation Reduction Act, which extended health insurance subsidies through 2025, will remain critical. According to the KFF's recent analysis, these subsidies reduced the cost of premiums by 44% on average, leading to increased marketplace participation. 

However, uncertainty about subsidy extensions beyond 2025 is adding to employers' concerns. Thatch survey findings revealed that 83% of small business owners are concerned about U.S. political turmoil impacting their health insurance offerings in 2025.

When asked to identify their level of concern, respondents indicated:

• 30% are extremely concerned

• 19% are very concerned

• 22% are somewhat concerned

• 12% are slightly concerned

• 12% are not at all concerned

• 4% are unsure

As uncertainty looms, small businesses are increasingly turning to adaptable health benefits. Despite the volatility of health insurance policy, ICHRA has proven resilient

Introduced during the first Trump administration, ICHRA empowered employers to reimburse employees for individual health insurance premiums. The Biden administration maintained this policy, reflecting its compatibility with ACA marketplace fortifications. 

This bipartisan support for ICHRA reflects its potential for long-term stability, even amidst political uncertainty. By enabling employers to offer flexible, personalized benefits without being tied to traditional group plans, ICHRA provides a viable pathway to affordability and resilience. 

As 30% of surveyed small business owners expressed extreme concern about future political turmoil, solutions like ICHRA can offer reassurance by helping businesses adapt to evolving regulations while maintaining cost-effective coverage.

3. Growing focus on flexible and employee-centric benefits

The American workforce is more diverse than ever, spanning multiple generations with varying priorities and health needs. This shift has driven employers to adopt more customizable and employee-centric benefits plans, moving beyond traditional one-size-fits-all health insurance options. 

Our survey findings reveal that small business employers are divided in their confidence about current health benefits plans. When asked to rate their confidence in meeting workforce needs, 22% reported being extremely confident and 28% very confident, suggesting a level of optimism among half of the respondents. 

However, 46% expressed only moderate or low confidence, with 23% feeling somewhat confident, 15% slightly confident, and 8% admitting to having no confidence at all.

This split among employers mirrors employee sentiment. According to the 2024 Workplace Wellness Survey by the Employee Benefit Research Institute (EBRI), 44% of employees report being extremely or very satisfied with their current benefits, yet 31% want increased flexibility and more options. 

This alignment highlights the ongoing challenges both employers and employees face in achieving fully tailored and effective benefits solutions.

One way to address these challenges is by offering employee-centric health benefits. Flexible health plans, like FSAs, enable employees to tailor their coverage to their specific needs. This can lead to increased satisfaction, potential tax savings, and improved access to care for unique situations like dependent care or high medical expenses.

While 22% of our survey respondents are extremely confident in their current ability to meet diverse workforce needs, businesses that embrace flexible solutions may be able to drive these numbers higher. Working with a trusted employee benefits broker can help you find the right setup for your team.

4. Emphasis on mental health benefits and holistic well-being

The demand for comprehensive mental health benefits has surged in recent years, driven by heightened employee awareness and workplace mental health needs. Employers increasingly recognize that addressing mental health isn't just a perk—it’s necessary for a thriving, productive workforce.

We found that 41% of small business owners we surveyed identified "inadequate mental health support" as one of their top worries about the future of healthcare. 

Their concern is well-placed when we consider recent related data: 

• Research from EBRI reveals that 78% of employees believe their employer is responsible for ensuring employees are mentally healthy and emotionally well. 

• The 2024 Ipsos Health Service Report notes that mental health is seen as the biggest health problem, ranking first among 45% of respondents across 31 countries.

• According to an early 2024 Gallup poll, a record low of only 21% of employees expressed strong agreement that their organization valued their overall well-being.

This shift toward prioritizing mental health reflects a broader focus on holistic well-being, encompassing physical, emotional, and financial health. Employers are beginning to view mental health benefits as an integral part of a comprehensive benefits package.

Some choose to integrate these programs into flexible reimbursement structures like ICHRAs. Such solutions benefit the 28% of employees who report the cost of mental health care has contributed to their medical debt struggles.

5. Integration of technology and AI in health insurance administration

Artificial intelligence (AI) has the potential to significantly reduce US healthcare costs, with an estimated savings of $150 billion annually by 2026, according to a study from the National Library of Medicine.

From automating routine administrative tasks to revolutionizing claims management, technology enables insurers to operate more efficiently, reduce costs, and provide a better customer experience. Which translates to better options and user experience for you and your staff.

A recent Deloitte survey found that 76% of US insurance executives have already integrated generative AI into various business operations. AI-powered systems are also increasingly being used to process claims, detect fraud, and predict patient needs.

For example, a case study from the Harvard Business Review details how one health provider saw 12% fewer hospitalizations, a 7% drop in emergency room visits, and almost $400,000 in cost savings after using AI to analyze complex patient data to assist in making clinical decisions.

This pairing of AI and insurance administration streamlines back-end operations and enhances customer satisfaction by speeding up approvals and providing personalized support. 

Healthcare costs and spending statistics

As we’ve noted, rising healthcare costs continue to be a major concern for individuals and employers alike. Recent data highlights the increasing burden of healthcare expenses, particularly for families and small businesses.

• In 2024, the average annual premium for employer-sponsored health insurance is $8,951 for single coverage, a 6% increase over the past year, and $25,572 for family coverage, a 7% YoY difference. (KFF, 2024)

• PwC projects 8% medical cost growth in 2025 for group insurance and 7.5% for individual markets, driven by factors such as inflation, prescription drug spending, and increased behavioral health utilization. (PwC, 2024)

• On average, employees contribute 16% ($1,368) of the premium cost for single coverage and 25% ($6,296) for family coverage. (KFF, 2024)

• 87% of workers with single coverage have a general annual deductible of $1,787 on average, which must be met before the plan covers most services. (KFF, 2024)

• 62% of employees report that access to employer-sponsored health insurance drastically contributes to their sense of financial security. (EBRI, 2024)

These statistics underscore the significant financial impact of healthcare costs on individuals and businesses. As healthcare costs continue to rise, organizations must explore innovative solutions to manage expenses and improve employee well-being.

Employer-sponsored health insurance by the numbers

Employer-sponsored health insurance remains a significant benefit for many American workers. However, access to such coverage varies widely across employers and geographical lines.

• A significant disparity exists in health benefit offerings, with 98% of large companies (50+ employees) providing coverage compared to just 53% of small businesses in 2024. (KFF, 2024)

• At companies offering health benefits, an average of 81% of workers are eligible, and 75% of eligible workers enroll, resulting in a 61% overall enrollment rate. (KFF, 2024)

• Spouse enrollment opportunities are widely available, with 95% of small businesses and nearly all large companies offering this option. (KFF, 2024)

• The average offer rate of employer-sponsored health insurance is 85.4% nationally, but varies significantly across states, ranging from a low of 69.8% in Wyoming to a high of 95.8% in Hawaii. (AHRQ, 2023)

• Small businesses offered health insurance at rates ranging from 29% in Alaska to 88.7% in Hawaii, compared to the national average of 50.7%. (AHRQ, 2023)

Access to employer-sponsored health insurance varies widely, particularly for small businesses and workers in certain states. As healthcare costs continue to rise, employers and policymakers can leverage trends to adopt solutions like ICHRAs and tools like Thatch to control costs and customize benefits.

Health insurance industry market size and growth

The health insurance industry is a complex and dynamic sector, influenced by various factors such as regulatory changes, technological advancements, and economic conditions.

• Revenue from the health insurance industry is projected to reach $1.4 trillion in 2024, growing at a 3.3% CAGR through 2029. (IBIS World, 2024)

• UnitedHealth Group remains the market leader, generating $399.4 billion in revenue and a 7.9% profit margin in 2024. CVS Health Corporation ranks second and Anthem, Inc. is third in the market. (IBIS World, 2024)

• The health insurance industry's underwriting gain declined by 31% to $12 billion in the first half of 2024, compared to $18 billion in the same period of 2023. (NAIC, 2024)

• The health insurance industry's net income decreased by 14% to $16 billion in the first half of 2024, resulting in a profit margin of 2.7%. (NAIC, 2024)

• Within the health insurance industry from 2023 to 2024, hospital & medical expenses increased 7.4% ($35 billion), administrative costs rose 2.4% ($2 billion), and enrollment declined 3% (9 million). (NAIC, 2024)

• Florida led the nation in health insurance premiums in the second half of 2024, with over $20 billion in comprehensive medical and over $23 billion in Medicare premiums. (NAIC, 2024)

• Between June 2020 and June 2024, health insurance claims increased 56% ($182 billion) due partly to COVID-19. (NAIC, 2024)

An analysis of the health insurance industry's financial performance reveals both opportunities and challenges. While the industry continues to grow, businesses can address challenges like rising costs and regulatory changes by leveraging flexible health benefits solutions to adapt to evolving consumer demands and ensure sustainable coverage.

What these trends mean for small businesses

As healthcare costs continue to rise and regulations evolve, small businesses face unique challenges in providing their employees affordable and comprehensive health insurance. 

Rising premiums, deductibles, and out-of-pocket costs can significantly impact employee satisfaction and retention. And navigating the complex landscape of regulatory changes can be time-consuming and costly. To address these challenges, small businesses should consider innovative health insurance solutions. 

ICHRAs offer greater flexibility and control over benefits, allowing businesses to tailor plans to meet the specific needs of their employees. ICHRAs can help businesses reduce costs and offer more comprehensive coverage options by providing employees with funds to purchase individual health insurance plans.

Take control of your health benefits with Thatch

By staying informed about industry trends and exploring innovative solutions like ICHRAs, businesses of all sizes can ensure the well-being of their workforce while managing costs effectively.

Thatch can help businesses navigate the complexities of health insurance and ICHRAs. It allows you to easily set up and manage ICHRAs, provide personalized guidance to employees, and streamline the entire process.

Methodology

The survey of 417 US-based small business owners was conducted via Centiment for Thatch on November 29, 2024. Data is unweighted and the margin of error is approximately +/-3% for the overall sample with a 95% confidence level.