U.S. health spending hits $5.7Tn in 2025: CMS
NEW YORK, UNITED STATES — United States health spending reached $5.7 trillion in 2025 — a 7.3% increase that outpaced projections and positions health spending to consume more than one-fifth of the nation’s economy within a decade.
According to a report from Healthcare Dive, the figures, from the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary, point to GLP-1 medications and accelerating utilization — not price inflation — as the primary growth drivers.
GLP-1 drugs drive healthcare spending surge
Prescription drug spending is the lead culprit. One in eight Americans now report taking GLP-1 — glucagon-like peptide-1 — medications, which carry an average monthly cost of approximately $1,000, creating a compound effect as adoption expands across obesity, diabetes, and emerging cardiovascular indications.
“A big, big part of this is GLP-1s, and that is pushing growth rates up,” said John Poisal, Deputy Director of the National Health Statistics Group at the CMS Office of the Actuary.
GLP-1 demand compounds an already-accelerating utilization trend: hospital services expansion and rising post-pandemic healthcare consumption are each contributing to growth — suggesting the spending engine is structural, not a one-time pharmaceutical spike.
Hospital services expansion and rising post-pandemic healthcare consumption reinforced the overshoot, supporting CMS’s finding that utilization acceleration — not price increases — is the primary driver.
Healthcare nears one-fifth of U.S. economy
The 2025 figures are a checkpoint on a steeper trajectory. Healthcare’s share of GDP stood at 18% in 2024 and is projected to reach 20.6% by 2034 — the year total spending is expected to hit $9 trillion.
Jacqueline Fiore, Economist at the CMS Office of the Actuary, said “spending growth continued to grow more rapidly for 2025 than we had expected” — a notable admission from the agency’s own forecasters.
Medicaid and private insurance are each projected at 5% growth annually through 2034, with Medicare leading payer-category growth at 7.7% — and hospital services identified alongside prescription drugs as the secondary utilization driver behind the 2025 overshoot.
Insurance coverage is projected to narrow alongside the spending surge: the covered rate is expected to decline from 91.8% to 90.5% by 2034, driven by ACA subsidy expiration and Medicaid enrollment restrictions under the One Big Beautiful Bill.
The federal government’s share of healthcare costs is projected to reach 33% by 2034 — a rising public obligation arriving as Medicaid enrollment tightens, coverage gaps widen, and GLP-1 adoption continues to outpace actuarial forecasts.
For healthcare outsourcing providers supporting revenue cycle management, pharmacy benefit administration, and Medicaid compliance operations, the $5.7 trillion baseline signals growing administrative complexity.
As GLP-1 prior authorization, appeals, and coverage disputes multiply, offshore teams specializing in clinical documentation and drug benefits management are increasingly central to managing that volume. The spending curve is not flattening. The systems managing it need to scale.
