Key Takeaways
- In 2026, health care expenses for a hypothetical American family of four covered by an average employer-sponsored health plan were $37,824.
- Compared to the 2025 data, health care costs for the average person increased 7.9%.
- Outpatient facility care and pharmacy services contributed 69% of the year-over-year increase for the average person.
Health care expenses continue to rise at breakneck pace
The latest data from actuarial firm Milliman confirms that employer-sponsored health care expenses continue to rise at a breakneck pace. According to the 2026 Milliman Medical Index (MMI), health care expenses increased 7.9% over the last year for the average individual, the highest increase for the MMI in more than a decade, excluding the fluctuations experienced as a result of the COVID-19 pandemic. For a hypothetical American family of four covered by an average employer-sponsored health plan, the total expense is now over $37,000.
What makes MMI different as a measure of health care expenses?
The MMI quantifies health care expenses for a hypothetical family of four with employer-sponsored health insurance including employee out-of-pocket costs such as deductibles and point-of-service copayments or coinsurance in addition to employer and employee contributions towards insurance premiums. The MMI uses actual health insurance administrative claims data to reflect the total amount spent on health care.
What’s driving the increase in health care expenses?
Outpatient facility care and professional services are the two largest components of total expenses, each representing approximately 30% of the total. Pharmacy net of rebates has grown to approximately 23% of total health care expenses.
Conclusion
At nearly $38,000, annual health care expenses for a family of four represents nearly half of the median household income in Texas. Not all health care expenses are paid out of pocket by Texas families — employers may pay 75% of a family insurance premium as part of an employee benefits package. But those expenses represent a significant opportunity cost: funds allocated to health care expenses cannot be used for increased wages, job creation, or business development.