Insurance, home health driving predicted healthcare spending bump

Modern Healthcare – Tuesday, December 16, 2025
By Tim Broderick

The Centers for Medicare and Medicaid Services Office of the Actuary projects healthcare spending in 2025 will hit $5.6 trillion.

Six months after the independent CMS division’s initial forecast, industry watchers also predict increases.

“It’s hard to generalize, but I think many payers and risk-bearing entities are continuing to see elevated cost growth this year and going into next year with quite a bit of volatility,” said Dr. Jeet Guram, associate partner at McKinsey.

The June report from the independent CMS division predicted spending by U.S. households, businesses and governments would increase 7.1% in 2025 and 5.4% in 2026.

Health insurance and home healthcare expenditures are projected to increase at a higher rate than overall healthcare spending.

CMS actuaries release an annual forecast projecting changes to healthcare spending several years into the future. Limitations include relying on government policies that may unexpectedly shift. The office did not include the effects of Medicaid cuts or other measures in President Donald Trump’s tax law.

Final 2025 percentage changes will be released at the end of next year.

“What we see with these projections — as well as what people are realizing on the ground — is that healthcare in 2026 will go up by quite a bit,” said Dr. Christopher Whaley, associate professor of health services, policy and practice at Brown University.

The June report said the uninsured rate would rise, partially due to enhanced premium subsidies for Affordable Care Act exchange plans expiring at the end of the year. Congress has yet to extend the subsidies.

Actuaries said they also expect a sharp spike in Medicare spending, driven by an aging population and continued demand for services.

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