The average American covered by an employer health plan is projected to spend $8,460 on healthcare this year, up from $7,838 in 2025, according to Milliman’s 2026 Medical Index released May 20.
The index captures both employer and employee cost share and is not drawn from a specific population.
Five things to know:
1. The 7.9% jump marks the sharpest annual increase in more than a decade, excluding pandemic-era fluctuations.
2. Milliman estimates total annual costs for a hypothetical family of four on a typical employer plan will reach $37,824, up 7.2% from a restated 2025 figure of $35,281.
3. Prescription drug and outpatient services are together responsible for roughly 69% of this year’s cost growth. Pharmacy is the fastest-rising category, up nearly 15% per person, with GLP-1 medications for diabetes and weight management playing an increasingly significant role in employer drug spend.
4. Outpatient care now makes up about 31% of total employer-sponsored spending and has grown more than 300% in cost for a family of four over the past two decades. Contributing factors include more physician practices operating under hospital ownership, a long-running migration of care from inpatient to outpatient settings and rising use of high-cost specialty drugs administered in outpatient facilities.
5. Employers are absorbing a shrinking share of the total bill. Milliman’s data shows the employer portion of healthcare costs has declined from 61% to 58% since 2005, while the employee share of premiums has climbed from 21% to 27% over the same period.
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