Family healthcare costs reach $37,824, analysis finds

For the average person, healthcare costs rose 7.9% in 2026 to $8,460, which is the highest annual increase in more than a decade, according to the 2026 Milliman Medical Index (MMI). For a hypothetical family of four, healthcare costs reached $37,824, Milliman found. The Milliman Medical Index measures healthcare costs covered by a typical employer-sponsored health insurance plan.

The increase reflects structural forces that are not going away, Milliman Principal and Consulting Actuary Deana Bell said in a news 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.”

Outpatient facility costs rose 7.5% and represent approximately 31% of total spending. Outpatient costs have quadrupled for the MMI family of four since the study was first published in 2005.

Pharmacy is the fastest-growing cost in 2026, rising 14.8%. Milliman project rebates in 2026 are to be approximately 31% to 33% of allowed drug costs for an average person for the commercial large group market. Without rebates, Milliman projects the average person would see increased premiums that are about 10% higher.

Pharmacy costs have been a persistent driver of healthcare cost growth for several years now, said Milliman Principal and Consulting Actuary Andrew Timcheck. “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.”

The uptake of GLP-1 medications has been driving drug costs. These include semaglutide (Ozempic for diabetes and Wegovy for weight loss) and tirzepatide (Mounjaro for diabetes and Zepbound for weight loss), as well as the newly approved oral Foundayo (orforglipron). Milliman analysis of a commercially insured population found that among patients using GLP-1s for weight loss, total pharmaceutical costs per patient per year grew substantially with longer adherence, reaching more than $18,000 before rebates for 24-month adherent patients by 2023.

The Milliman Medical Index represents annual healthcare costs for a specially defined family of four covered by employer-sponsored insurance. Milliman’s hypothetical family consists of a 37-year-old woman, a 47-year-old man, and two children, four years of age and a baby under the age of 1. This family, according to Milliman, represented the mathematical average when it was created in 2005. The index measures the total cost of healthcare benefits, not just the employer's share of the costs, and not just premiums.

Other findings:

• Outpatient facility costs: Outpatient facility costs have quadrupled since 2005, and Milliman said in its report that these cost trends are important to watch in the near term. The drivers of this increase include physician practice consolidation, outpatient-administered drugs, and shifts in the site of care. Specialty drugs, including cancer and CAR T-cell therapies, that are administered in outpatient settings represent a growing part of these costs. Milliman predicts facility cost increases are unlikely to slow in the near term.
• Hospital price inflation and AI billing: Milliman analysts are also watching AI-enabled billing, which they say could influence hospital cost growth. AI tools could capture services that had not been previously billed and raise the proportion of billed services.
• PBM reform: The Consolidated Appropriations Act of 2026 will become effective in August 2028, which will require pass-through rebates and fees from manufacturers and require new transparency reporting. Milliman is also watching state-level reform that could affect employer costs.