Health care costs for a typical family of four have increased to $35,119 this year, according to the Milliman Medical Index. Costs for the average person increased by 6.7% to $7,871 in 2025 led by a 9.7% hike in pharmacy expenses and an 8.5% rise in outpatient facility care costs.
“Pharmaceutical costs have been a leading driver of health care spending in recent years,” said Dave Liner, principal and consulting actuary for the global consulting and actuarial firm. “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.”
Although employers still pay most of the bill, their share decreased from 61% in 2005 to 58% today. Employees now shoulder more of the costs through payroll deductions. Their contributions rose from 21% in 2005 to 27% in 2025. Employee out-of-pocket spending decreased from 18% to 15%, showing that higher employee contributions have displaced lower out-of-pocket cost sharing.
Costs for outpatient facility care continue to rise, driven by a combination of clinical and contractual factors. One major contributor to these costs is the increased use and cost of outpatient-administered drugs, including radiopharmaceuticals and high-cost oncology treatments, which often are delivered in hospital outpatient settings.
The adoption of new technologies, such as advanced implants and minimally invasive surgical tools, also has added to procedure complexity and associated costs. In addition, reimbursement structures that tie payment to a percentage of billed charges, particularly for drugs and implants, have amplified cost growth, especially in cases where list prices have increased significantly.
Last year’s index identified approvals for new drugs or new uses for existing drugs, as well as increased use of GLP-1 drugs, as drivers of prescription drug costs.
“We anticipate these market forces will continue to contribute meaningfully to prescription drug trends in 2025,” the report said. “We also anticipate the introduction of additional biosimilars — drugs made from living organisms that are very similar to existing biologic medications — will be a moderating force by increasing competition in the specialty drug market. The impact from biosimilars is reflected in the pharmacy trend.”
Since the company began publishing the index 20 years ago, health care costs for American families have nearly tripled, Principal and Consulting Actuary Deana Bell said.
“Annual growth has averaged 6.1%, far outpacing any other household expense,” she said. “No other cost category has risen as steeply or as consistently over the past two decades. Outpatient facility care saw the largest increase of any category, rising 286% since 2005, reflecting the growing complexity of procedures now handled outside of inpatient settings.”