Individuals Could Pay $7,900 for Health Care in 2025, Triple What it Cost 20 Years Ago, Says Study

The annual health care bill for a family of four in 2025 is estimated to be $35,119, according to the Milliman Medical Index.

Brian O'Connell

Published: 6/13/2025, 7:50:37 AM EDT

Individuals Could Pay $7,900 for Health Care in 2025, Triple What it Cost 20 Years Ago, Says Study — (Shutterstock)

A new study has found that American households are facing higher health care costs in 2025.

The 2025 Milliman Medical Index (MMI), which tracks health care expenses for Americans covered by a standard employer-sponsored health insurance plan, estimates the annual health care bill for a family of four to be $35,119, or $7,871 for an average individual. The study noted annual per-person health care costs will rise 6.7 percent in 2025, with accompanying prescription drug costs spiking 9.7 percent yearly and outpatient care costs increasing 8.5 percent.

To provide context, the annual cost-of-living percentage, as defined by the U.S. inflation rate, is approximately 2.50 percent, meaning health care costs have risen by more than double the cost-of-living rate over the past 20 years.

The study added that in 2005, the average annual household health care cost stood at $12,214. The MMI Index is based on a four-person U.S. household, with a 37-year-old female, a 47-year-old male, and children at 1 and 4 years old.

“Since we began publishing the MMI 20 years ago, health care costs for American families have nearly tripled,” noted Deana Bell, principal and consulting actuary at Milliman, a risk management advisory firm, in a statement. “Annual growth has averaged 6.1 percent, far outpacing any other household expense. No other cost category has risen steeply or consistently over the past two decades.”

Outpatient facility health care cost trends are exceptionally high, rising 286 percent since 2005, “reflecting the growing complexity of procedures now handled outside of inpatient settings,” Bell added.

Insurance and Liability Fuel High Health Care Prices

Why are across-the-board health care prices rising so high and so fast? Experts cite multiple reasons, particularly linked to health care insurance.

“Health care in the U.S. is expensive for a number of reasons: the first is that insurance companies tend to defer risk to their customers by 'cost sharing,” said Ben Spielberg, founder and CEO at Bespoke Treatment, a California-based personalized mental health services provider, by email to NTD. “Over time, deductibles, coinsurance, and copays increase year over year.”

Health plans marketed as “affordable,” like high-deductible policies, are increasingly charging less for monthly premiums, but hiking the out-of-pocket cost for patients. “The cost increases are so high that using the insurance is prohibitive, barring catastrophic situations,” Spielberg said.

Another reason for family health care price spikes is that delivering health care in the United States is highly expensive. “Liability, especially, is a major concern for health care providers, and as malpractice premiums increase, those costs essentially end up being passed down to consumers,” Spielberg noted.

Additionally, rising health care prices stem from a supply and demand problem. As the U.S. population gets older, seniors need more care and more expensive care. And, through market consolidation and attrition, there aren’t as many providers as there used to be. “Consequently, when supply is short and demand is higher, health care prices are going to rise,” said Randy Lobur, growth market manager at Action Benefits, a health insurance field marketing organization in Southfield, Michigan, via email to NTD.

Lobur also points to health care market distortions as a big price influencer. “There’s not a lot of transparency into things like prescription drug pricing, for example, but as demand for those drugs increases, prices will surely rise,” he said.

Lowering Household Health Care Costs

There are multiple strategies consumers can use to help contain their health care costs. Health Savings Accounts are a good option. “With HSA’s, cash can be put in pre-tax, and when you spend it on qualified expenses—think doctor bills, over-the-counter medicine, eyeglasses, etc.—that spending is also tax-exempt,” Lobur said.

If savings are a challenge, or a $9,000 deductible is out of the question, pairing supplemental policies with a core health plan can help offset costs.

“For modest monthly premiums, those plans can reimburse you for hospital stays, heart attack/stroke/cancer care, and/or accident care—all of the things which would put you in danger of having to come out of pocket $9,000 all at once,” Lobur added.

U.S. households can also educate themselves on how health insurance plans work and become better overall health care consumers.

“People increasingly visit a store or go online when looking at more expensive commodities,” said David Goldfarb, founder and president of DSG Benefits Group in Dallas, Texas, in an email to NTD. “Shopping around can also work in health care, especially for elective services (like imaging services, MRIs, CAT scans, etc.), and for prescription drugs where consumers often opt for generic versus brand name drugs.”

The views and opinions expressed are those of the interviewees. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.