The cost of health insurance for American families has reached record highs in 2025, with a typical employer-sponsored plan now exceeding $35,000 annually for a family of four. This nearly triples what families paid in 2005, according to a new Milliman Medical Index report.
Premiums rising faster than wages
Health care expenses have risen by an average of 6% annually since 2005, far outpacing wage growth and inflation. While employers still cover the bulk of premiums, employees are contributing more from their paychecks.
- In 2005, employees paid 21% of their total health care costs
- By 2025, that share has grown to 27%
Caroline Pearson of the Peterson Center on Healthcare explains that even when workers don’t see the full premium cost, it affects them. “Your paycheck is smaller because your premium costs are higher,” she said. “Your wages go up by less because your employer is paying more for health care.”
Why is health insurance so expensive?
Several factors are driving the spike in health care costs:
- Outpatient care and prescription drugs are top cost drivers for individuals
- Professional services and hospital stays add to the employer burden
- New technologies and rising disease prevalence inflate expenses
The average cost of care for someone with private health insurance is now $7,800 per year — a 7% increase from 2024.
What Americans are paying out-of-pocket
Beyond premiums, Americans are also shouldering more direct expenses:
- Average out-of-pocket spending in 2025: $1,211
- In the UK (2022): $764 per person
Despite spending more, Americans do not use significantly more health care than people in other countries. “We just pay a lot more for each thing,” said Dr. Atul Grover of the AAMC Research and Action Institute.
The uninsured population
As of last year, 26.2 million Americans — or 7.9% of the population — lacked health insurance. A Congressional Budget Office analysis warns that 10.9 million more could lose coverage by 2034 under proposed federal tax changes.
Uninsured Americans are more likely to delay care:
- 46% of uninsured individuals skipped treatment due to cost
- 25% of insured individuals did the same
In 2023, nearly a quarter of adults reported unexpected medical expenses, with median bills between $1,000 and $1,999.
What’s next for health care costs?
The Peter G. Peterson Foundation forecasts total health care spending to hit $21,927 per person by 2032, potentially consuming 20% of the U.S. economy.
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