According to recent data released by CMS actuaries, spending on health care in the U.S. jumped to $5.7tn in 2025, the third consecutive year in which spending growth exceeded 7%. The data shows that one of the key drivers of this spike was pricey medications, such as GLP-1s, medications used to treat obesity.
CMS actuaries note that this growth in spending stems from a number of factors that include people seeking more care and the uptake of expensive medications like the weight loss drugs mentioned earlier. Cost increases accounted for just a small fraction of this expenditure spike.
Jacqueline Fiore, an economist working in the actuarial office at the CMS, revealed that the federal agency was taken by surprise by how fast spending on health care increased in 2025. The office had expected health care spend to grow, but not as steeply as it did. This spike in spending is increasing Medicare and private health insurance costs.
According to available statistics, one out of every eight Americans reports using a GLP-1 drug. These drugs, which were developed to treat diabetes, are now being prescribed to treat a variety of conditions, particularly weight loss. The cost of these drugs is very high, going for about $1,000 every month.
The CMS expects health care spending to grow throughout this year, after which it will start leveling off. The agency expects spending to level off because the policy changes that were included in the “Big Beautiful Bill” will start taking a firmer hold on the health care system. These include cuts to Medicaid funding.
While such policy changes are projected to tone down that growth rate of spending on health care, they are also expected to increase the number of uninsured Americans over the coming years.
The data released by the CMS brings into the spotlight how costly health care has become in the U.S. Projections indicate that spending is going to take a bigger and bigger share of GDP from about 18% in 2024 to nearly 21% by 2034, a year in which the total sum will have grown to a mind-boggling $9 trillion.
The actuaries at the CMS say this increasing cost emphasizes and will worsen the concerns of Americans on how much they are having to spend on their health care. Policymakers and Congress need to act fast to come up with measures to curb these escalating costs.
As the midterms approach, lawmakers on both sides of the aisle are likely to use this matter as ammunition to appeal to voters (in the case of Democrats), or to defend themselves, in the case of Republicans. Democrats put up a spirited fight last year to retain Obama-era subsidies but ultimately failed to sway the GOP into retaining those subsidies. Now another showdown is likely to play out during this year’s midterms.
Escalating health care costs are also bound to be of major concern to Astiva Health and other providers of health insurance policies as this directly affects their operations.
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