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Health insurance coverage costs soar 6% in 2025

Spikes in health insurance coverage costs could raise questions about how much employers and employees will shoulder these expenses moving forward.

Sara Heath
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Published: 04 Jun 2025

Employer-sponsored health insurance coverage costs have ballooned to $35,119 for an average family of four and $7,871 for an individual in 2025, according to this year's Milliman Medical Index.

Those figures represent significant increases from years previous, especially for family coverage. Over the course of the two decades the firm has run the Milliman Medical Index (MMI), the cost of a family health insurance plan has soared nearly threefold, from $12,214 in 2005 to where it is today. That represents an average annual increase of 6.1%.

The cost of an individual employer-sponsored health insurance plan has seen similar year-over-year increases. Most recently, the cost of an individual plan increased 6.7%, from $7,378 in 2024 to where it is now.

The increase in healthcare costs has far outpaced wage increases for the typical American. While healthcare costs for the typical family of four have increased by 188%, wages have only increased by 84%. Healthcare costs have also outpaced inflation and the rising cost of typical household items, like bread, milk, gasoline and electricity.

"Since we began publishing the MMI 20 years ago, healthcare costs for American families have nearly tripled," Milliman Principal and Consulting Actuary Deana Bell said in a press release.

"Annual growth has averaged 6.1%, far outpacing any other household expense. 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."

What's driving rising healthcare costs?

The MMI calculates healthcare costs by looking at the following five categories:

  • Inpatient facility care.
  • Outpatient facility care.
  • Professional services.
  • Pharmacy.
  • Other services.

The report authors explained that outpatient facility care costs have risen the fastest over the past two decades by nearly 286% for a family of four, now accounting for 37% of a family's healthcare costs. That's followed by increases in pharmacy costs (234%), inpatient facility care (167%), professional services (155%) and other services (70%).

Who's shouldering the cost of care?

Healthcare costs are usually distributed across three general categories: the amount an employer pays for health insurance coverage, the amount an employee pays for health insurance coverage and the amount an employee pays for out-of-pocket costs, such as copays.

Currently, employers are still covering most of the cost of healthcare for families and individuals. Employers pay 58% of a health insurance plan, while employees pay 27% through payroll contributions. The remaining 15% of healthcare costs are covered via employees' out-of-pocket costs.

These figures mark a shift from 2005, when employees shouldered more out-of-pocket costs and less payroll contributions.

Still, the rising health insurance costs pose an untenable situation for employer and employee alike. Employers have historically been reticent to pass the cost of insurance off to their employees in a tight labor market, but the rise in costs may bring that situation to a tipping point.

Sara Heath has reported news related to patient engagement and health equity since 2015.

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