The total cost of healthcare for a typical person with employer-sponsored insurance is expected to be around $8,460 this year, representing a nearly 8% increase in individual healthcare costs and the highest cost hike in nearly a decade, according to the 2026 Milliman Medical Index.
The MMI measures expected healthcare costs for individuals and the "typical" family of four with employer-sponsored health insurance. Like in past reports, this year's analysis spells bad news for both consumers' and employers' wallets, as prices are expected to climb.
Healthcare costs aren't just climbing for individuals -- they're also increasing for families. For a family of four, spending is expected to reach $37,824 this year.
Employers are feeling the pinch, too, although financial responsibility is shifting. Employers still sponsor the majority of employee health insurance costs, although to a lesser extent each year. This year, employers are covering 58% of the cost, or $4,899.
As a result, employees are bearing a greater share of their healthcare costs. For an individual, premiums are $2,295, and other cost-sharing totals $1,266. That means individuals pay $3,561 toward their total healthcare expenditures, on average.
According to Milliman Principal and Consulting Actuary Deana Bell, these cost hikes are the result of years of structural changes that continue to drive healthcare costs.
"The 7.9% increase we are seeing this year is not the result of a single acute shock -- it reflects structural forces that are not going away," Bell said in a press release.
"Outpatient costs have quadrupled for the MMI's family of four since the MMI was first published in 2005, with much of the trend exacerbated by delivery system consolidation, specialty drug growth, and site-of-care shifts."
In addition to outpatient cost hikes, which rose 7.5% this year over last, the report flagged a steep increase of 14.8% in the pharmacy cost category. These cost categories are the two biggest cost drivers this year, accounting for 69% of the healthcare cost hikes since last year.
Zooming in on GLP-1s and pharmacy cost growth
GLP-1 drugs are among the biggest drivers of pharmacy cost growth, as more people use the drugs long-term.
"Pharmacy costs have been a persistent driver of healthcare cost growth for several years now, but 2026 represents an acceleration of the trend," according to Andrew Timcheck, Milliman principal and consulting actuary, speaking in a press release. "A 14.8% increase in pharmacy costs -- driven by GLP-1 utilization and high-cost specialty drugs -- combined with continued outpatient facility cost growth, puts the 2026 trend environment in a category of its own for this decade."
According to Milliman, oral GLP-1 drugs could further drive that cost pressure, as patients are likely to be more adherent to oral GLP-1s and more patients are interested in taking them.
However, there's little evidence about how the use of GLP-1 drugs, which are proven to control diabetes and support obesity care, offsets larger healthcare costs. According to Milliman, people using GLP-1 drugs for weight loss had lower acute utilization over four years, including 4% fewer emergency department visits and fewer inpatient admissions. However, the utilization reductions do not fully offset the near-term increases in pharmacy costs.
Additionally, employer coverage of these drugs remains varied, with Milliman citing data showing that 91% of employer health plans cover GLP-1s for diabetes but only 34% for weight loss.
"These findings suggest GLP-1 coverage is not binary; coverage policy details, such as indication criteria, eligibility rules, and clinical documentation requirements, are likely to remain central drivers of who receives treatment, treatment duration, and employer cost outcomes," the report's authors wrote.
Zooming in on outpatient facility cost growth
According to Milliman, outpatient facility costs have quadrupled for a family of four since 2005. In the past five years alone, the cost growth has totaled 37%.
These trends are due to several factors, including physician practice consolidation.
According to a separate report from Avalere Health and the Physicians Advocacy Institute, more than four in five U.S. physicians were employed by hospitals, health systems or corporate entities by the end of 2025. As the share of hospital-owned physician practices increases, costs can shift due to higher-intensity coding and increased use of hospital-based diagnostics, the Milliman report explained.
Additionally, the ability to administer high-cost specialty drugs in outpatient settings has driven costs. These drugs can create both a drug cost and a separate facility fee, helping to drive a bigger cost impact.
Finally, Milliman said the shift to more outpatient care is simply driving more spending in this cost category. Between 2005 and 2024, the share of inpatient hospital days decreased by 5%, while outpatient visits grew by 44%.
This trend isn't slated to go anywhere anytime soon, Milliman stressed. As organizations face more incentives to direct care to the outpatient setting, including through Medicare's elimination of the Inpatient Only list, more costs could stem from increased outpatient care utilization.
What's AI's role in rising healthcare costs?
There is always an AI angle.
According to Milliman, AI-enabled billing optimization could spur hospital cost growth even when utilization remains the same. That is because these tools help "strengthen revenue integrity and reduce uncaptured revenue," Milliman said. The tools can also reduce undercoding and speed up the appeals process for denied claims.
AI isn't cutting overall healthcare costs, at least not yet, according to some reports. And when applied to flawed workflows, such as prior authorization, AI could lead to worse outcomes.
It could also lead to higher out-of-pocket costs for patients. While healthcare organizations can capture more dollars using AI, payers will have to spend more, and it's likely those costs will be passed off to patients.
"For the first time in the MMI's history, we're flagging artificial intelligence as a factor in healthcare cost trends," Jason Clarkson, Milliman principal and consulting actuary, said in the press release.
"Hospitals are using AI to optimize their billing and claim coding, and payers are using it to enhance their claim adjudication processes, especially for detecting fraud, waste, and abuse. That dynamic is worth watching as costs hit their highest growth rate in over a decade."
Sara Heath is an executive editor at Xtelligent Healthcare Media, where she covers patient engagement, healthcare policy and health IT.
