Healthcare costs have grown significantly

To create the Milliman Medical Index (MMI), researchers estimated the annual costs of healthcare services for an average person, as well as a hypothetical family of four (two adults and two children), covered under an average employer-sponsored health plan. The MMI separated healthcare costs into five categories:

• Inpatient facility care
• Outpatient facility care
• Professional services
• Pharmacy
• Other services (home healthcare, ambulance services, medical equipment, etc.)

According to the MMI, annual healthcare costs for the average person increased by 6.7% from 2024 to 2025, going from $7,378 to $7,871. This increase was largely due to higher costs for pharmacy (9.7% increase) and outpatient care (8.5% increase). These two categories contributed to 69% of the year-over-year increase in healthcare costs for an average person.

"Pharmaceutical costs have been a leading driver of healthcare spending in recent years," said Dave Liner, principal and consulting actuary at Milliman. "This year, outpatient facility services and pharmacy costs together accounted for nearly 70% of the total cost increase. Much of the outpatient growth is linked to high-cost drugs administered in outpatient settings."

In 2025, annual healthcare costs for a family of four are $35,119, almost triple the cost in 2005 ($12,214). Between 2005 and 2025, healthcare costs increased by 188% while wages only increased by 84%. 

Over the last 20 years, the healthcare categories that saw the biggest cost increases were outpatient facility care and pharmacy, both of which grew by over 200%.

How high costs are impacting patients

As healthcare costs continue to grow, more Americans say that they are struggling to afford care. According to a 2024 KFF survey, around half of U.S. adults said it was difficult to afford healthcare costs, and 25% said that they or a family member in their household had difficulty paying for healthcare in the last 12 months.

In addition, around 25% of respondents said they had postponed care due to costs while 21% said they did not fill a prescription due to costs. Around 10% of respondents said they had either cut pills in half or skipped doses of their medicine.

Separately, a recent survey from West Health and Gallup found that over 31 million Americans had borrowed around $74 billion to pay for healthcare last year, even though most of them had some form of health insurance.

Among those who said they borrowed money to pay for healthcare, over half (58%) said they borrowed $500 or more, 41% said they borrowed $1,000 or more, and 14% said they borrowed $5,000 or more. 

"Too many Americans are racking up medical debt whether they have health insurance or not," said Tim Lash, president of the West Health Policy Center. "A high-priced healthcare system that requires Americans to take out loans or make painful tradeoffs just to stay healthy is in desperate need of policy reform or things will get even worse."

In the survey, 58% said they were at least somewhat concerned about a major health event landing them in debt, with 28% saying they were "very concerned." Across income levels, over 60% of households with annual incomes under $120,000 said they were worried about healthcare debt. Forty percent of households with annual incomes of over $180,000 also reported concerns about healthcare debt.

"It is clear that high healthcare costs continue to burden the American people, and financial insecurity around care is not limited to any one demographic," said Dan Witters, director of wellbeing research at Gallup.