Once again, the U.S. outpaced itself on healthcare spending. The latest numbers from government actuaries estimated that national spending on healthcare reached $5.7 trillion in 2025, reflecting a growth of 7.3% over the previous year.
These numbers from the Office of the Actuary at CMS were published in Health Affairs yesterday, revealing the third consecutive year of spending growth over 7.0%. With this rate, the growth in healthcare spending likely exceeded that of gross domestic product, pushing healthcare's share of GDP to 18.4% last year from 18.0% in 2024.
The U.S. continues to be one of the biggest spenders on healthcare in the world, spending about twice as much per person as other large, wealthy countries like Switzerland, Germany and the Netherlands. Still, quality is not the driver of such excessive spending, according to research.
Life expectancy is lower in the U.S. compared to peer nations, according to the Peterson-KFF Health System Tracker. The country also underperforms in certain treatment outcomes, including maternal mortality and congestive heart failure hospital readmissions, as well as some patient safety measures and health system capacity measures, such as the rate of general practitioners.
Still, the CMS actuaries expect U.S. healthcare spending to continue to grow -- to the tune of early $9 trillion by 2034. This would push healthcare's share of the economy to a record 20.6% over the next decade.
How was the cash spent?
Federal actuaries attributed the continued high growth in U.S. healthcare spending largely to greater utilization of care. In particular, prescription drug use and costs have significantly affected recent spending, Jacqueline Fiore, an economist within the Office of the Actuary, told reporters during a briefing on Wednesday.
"For the major spending categories, retail prescription drugs is the fastest growing major spending category over the projection period," she stated.
There has been greater demand for high-cost drugs, Fiore continued, particularly GLP-1s and expensive oncology drugs. This contributed to a substantial increase in spending growth, from 7.9% in 2024 to 11.1% in 2025.
This trend has been especially pronounced among Medicare and privately insured populations, she continued. Prescription drug spending in Medicare is projected to remain elevated at 12.6% in 2025 (up from 12.9% in 2024). Estimated prescription spending among private payers rose faster, increasing to 11.8% from just 3.8%.
Out-of-pocket spending growth is also projected to have accelerated from -0.9% in 2024 to 5.0% in 2025, largely due to wider use of GLP-1s for diabetes and obesity, particularly among people who either paid large copayments or bought the drugs directly.
Hospital spending also increased in 2025, according to the actuaries' report. Total spending in this category is projected to have grown 8.2%, totaling $1.8 trillion. However, this is a slight deceleration compared to 8.9% hospital spending growth in 2024.
Meanwhile, spending on physician and clinical services is projected to grow at just 6.2%, down from 8.1% in 2024. Actuaries estimated spending here to total $1.2 trillion in 2025.
But healthcare spending is expected to slow
Actuaries predict this will be the first year in a while that healthcare spending growth will exceed 7%. They estimated there will be 6.3% growth in 2026, followed by another decline to an average of 4.9% from 2027 to 2028.
Health policy changes will have a major impact on healthcare spending, they said in the analysis. For one, enrollment on the Affordable Care Act Marketplaces is expected to decline significantly, with early data from the Commonwealth Fund already showing a 1.2 million drop in sign-ups this year following the expiration of enhanced premium tax credits.
Actuaries also pointed to Medicaid reform that will affect both payments and enrollment.
"Together, these legislative provisions play a role in reducing the insured share of the population," Fiore said.
Medicaid-related provisions of President Donald J. Trump's major spending law, also known as the One Big Beautiful Bill Act, will limit state-directed payments to providers and restrict how their taxes are used to supplement Medicaid funding. As a result, the analysis projected Medicaid spending to grow by 4.8% this year, down from 8.3% last year.
Actuaries also projected fewer Medicaid beneficiaries, with enrollment estimated to decline by 0.4% because of the OBBBA's new enrollment policies and more frequent redeterminations.
Overall, they estimate the population who is uninsured to increase by 3.0 million this year, reaching 31.6 million Americans total.
The effects of Medicaid reforms and other policy changes will continue to impact U.S. healthcare spending through 2028, the analysis added, especially as states operate under new Medicaid work requirements for beneficiaries. They think Medicaid spending will grow even more slowly during this period, at 2.7% per year, on average.
Jacqueline LaPointe is an Executive Editor at Xtelligent Healthcare Media, covering revenue cycle management, healthcare payers, health policy and health IT since 2016.
