The average cost of insuring a family of four through the workplace has nearly tripled since 2005, according to a report from Milliman Medical Index in May. A typical employer-sponsored health plan now costs more than $35,000 for the average family. The burden of these increasing costs is falling on employers and employees alike.

“Every month, your paycheck is smaller than it would be, because your premium costs are higher,” Caroline Pearson, executive director of the nonprofit Peterson Center on Healthcare, told USA TODAY. “Every year, your wages go up by less because your employer is paying more for health care.”

From 2005 to 2025, costs of health care increased an average of 6% each year, outpacing median wages and the average annual inflation rate of 2.5%.

Employees now contribute a larger percentage of their paycheck to health care premiums through payroll deductions. From 2005 to 2025, employee contributions toward their total health care costs increased from 21% to 27%.

Pearson told USA TODAY that only a fraction of health care premiums comes out of an employee’s pay. “The vast majority is getting picked up by the employer,” Pearson said, “as a benefit in lieu of wages.”

Why is health insurance so expensive?

The total cost of providing health care to the typical family of four accounts for inpatient and outpatient care, professional services, pharmacy/drug costs and other services such as home health care, ambulance services, durable medical equipment and prosthetics.

For individuals, outpatient facility care and higher prescription drug costs are the top two drivers of increased spending on health care over the past two decades, according to Milliman.

Pricing structures, disease prevalence, and new medicines and technologies also factor into rising care costs, according to USA TODAY reporting.

How much are Americans spending out-of-pocket on care?

The average American spent $1,211 out of pocket on health care in 2025, according to Milliman Medical Index. Out-of-pocket expenses are costs not covered by insurance.

Americans spend more out-of-pocket on health care than people in most comparable countries, the health policy nonprofit KFF found. In the United Kingdom, for example, out-of-pocket health care costs totaled $764 per person in 2022.

“We don’t consume a lot more health care than other countries,” Dr. Atul Grover, executive director of the nonprofit AAMC Research and Action Institute, told USA TODAY. “We just pay a lot more for each thing.”

Health care costs are rising across the board: The average cost of care for an individual with private health insurance is close to $7,800, an increase of about 7% from the year before, Milliman reported.

Total health care spending is projected to climb to $21,927 per person in 2032, according to a report from the nonprofit Peter G. Peterson Foundation. At that pace, health care spending is on track to consume one-fifth of the U.S. economy by 2032.

Cost of insurance: Why Americans pay so much more for health care in 2024

How many Americans are uninsured?

As of last year, 26.2 million Americans did not have health insurance, or 7.9% of the population, according to the National Center for Health Statistics.

Another 10.9 million Americans could lose their health insurance coverage through 2034 under President Trump’s proposed tax cut bill, according to an analysis from the Congressional Budget Office.

Americans without health insurance are more likely to skip getting medical treatment because of the expense, the Federal Reserve reported. Of those uninsured, 46% skipped medical treatment because they could not afford it, compared with 25% of the insured.

In 2023, 23% of adults had major, unexpected medical expenses; the median cost was between $1,000 and $1,999, according to the Federal Reserve.

CONTRIBUTING Daniel de Visé and Janet Loehrke