Out-of-Pocket Costs: How Much Do Americans Pay for Care?

In 2025, out-of-pocket healthcare costs in the USA remain a significant concern for millions of Americans, shaping how they access and afford medical care. With rising health insurance deductibles, copayments, and uncovered services, understanding these expenses is critical for households navigating the complex U.S. healthcare system. This article explores the latest data on out-of-pocket costs, key drivers behind their growth, and their impact on Americans, supported by expert insights from McKinsey, PwC, and government sources.

What Are Out-of-Pocket Healthcare Costs?

Out-of-pocket healthcare costs refer to expenses individuals pay directly for medical services, excluding insurance premiums. These include deductibles, copayments, coinsurance, and payments for services not covered by insurance, such as certain prescription drugs or elective procedures. In the USA, these costs are a substantial part of healthcare spending, driven by the structure of private insurance plans, high-deductible health plans (HDHPs), and gaps in public coverage like Medicare and Medicaid.

How Much Do Americans Pay Out-of-Pocket in 2025?

According to the Centers for Medicare & Medicaid Services (CMS), out-of-pocket spending in the U.S. reached $505.7 billion in 2023, accounting for 10% of total national health expenditures (NHE). Per capita, this translates to approximately $1,514 per person, a 7.2% increase from 2022. For 2025, CMS projects out-of-pocket spending to grow at a similar rate, potentially exceeding $550 billion due to inflationary pressures and rising utilization of healthcare services.

A 2024 Peterson-KFF Health System Tracker report notes that out-of-pocket costs per capita have risen steadily, with hospital care, physician services, and nursing care facilities driving 33% of these expenses in 2023. The average American spent $1,425 out-of-pocket in 2022, compared to $764 in the United Kingdom, highlighting the U.S.’s outlier status among high-income nations.

Key Drivers of Out-of-Pocket Costs

Several factors contribute to the high out-of-pocket healthcare costs in the USA:

• Rising Health Insurance Deductibles: The average deductible for single coverage health insurance has more than tripled over the past two decades, reaching $1,787 in 2024, up from $584 in 2006, per ConsumerShield data. High-deductible health plans, which offer lower premiums, shift more costs to consumers, requiring them to pay thousands before insurance coverage begins.
• Prescription Drug Costs: PwC’s 2025 Medical Cost Trend report highlights the growing utilization of glucagon-like peptide-1 (GLP-1) agonists, such as those for weight loss and diabetes, as a key driver of healthcare costs. Patients often face 20% of drug costs out-of-pocket, compared to 5% for hospital care, due to insurance benefit designs.
• Inflationary Pressures: McKinsey’s 2025 healthcare outlook notes that providers are negotiating higher reimbursement rates with commercial insurers to offset rising labor and supply costs, increasing out-of-pocket expenses for insured individuals.
• Administrative Complexity: The U.S. spends $1,055 per person on healthcare administration, compared to $194 in peer countries, per a 2023 Peterson Foundation analysis. This complexity contributes to billing errors and unexpected costs for patients.
• Underinsurance: The Commonwealth Fund’s 2024 Biennial Health Insurance Survey found that nearly one in four insured U.S. adults are underinsured, facing high deductibles or out-of-pocket costs that exceed 5% of household income, particularly for low-income households.

Impact of High Out-of-Pocket Costs

High out-of-pocket costs create significant barriers to care, particularly for low- and middle-income Americans. A 2024 KFF poll revealed that 48% of insured adults worry about affording monthly premiums, and 41% report medical or dental debt. About half of adults say they cannot pay an unexpected $500 medical bill without going into debt, underscoring the financial strain.

The Commonwealth Fund reports that 57% of underinsured adults and 70% of those without continuous coverage skipped needed care in 2024 due to costs. This includes not filling prescriptions, skipping follow-up visits, or avoiding specialist care, which can lead to worse health outcomes and higher long-term costs. For example, up to one-third of adults with chronic conditions like diabetes skip medication doses due to cost.

Trends in Health Insurance Deductible Costs

Health insurance deductible costs are a major component of out-of-pocket expenses. The shift toward high-deductible health plans has been a defining trend. According to ConsumerShield, the average deductible for single coverage rose from $1,735 in 2023 to $1,787 in 2024. PwC’s 2025 report projects an 8% medical cost trend for the group market, driven by higher deductibles and increased utilization of services like behavioral health.

Employers are increasingly adopting HDHPs to manage premium costs, but this transfers financial risk to employees. A 2022 McKinsey survey found that 95% of employers plan to increase cost-sharing or shift to HDHPs if costs rise by 4% or more. This trend disproportionately affects lower-income workers, who may delay care due to unaffordable deductibles.

Data on Out-of-Pocket Costs: A Closer Look

The following table summarizes out-of-pocket spending trends from 2019 to 2024, based on CMS and Peterson-KFF data:

Expert Insights: McKinsey and PwC Perspectives

McKinsey’s 2025 healthcare report emphasizes the shift toward non-acute care settings, such as ambulatory surgery centers, which may reduce hospital-based out-of-pocket costs but increase expenses for outpatient services. The report also notes that the Inflation Reduction Act’s $2,000 cap on Medicare Part D out-of-pocket drug spending, effective in 2025, will alleviate costs for seniors but not for those with private insurance.

PwC’s 2025 Medical Cost Trend report underscores the role of innovative therapies, like gene therapies and central nervous system drugs, in driving costs. It suggests that employers and insurers adopt holistic cost-management strategies, such as leveraging biosimilars, to offset out-of-pocket expenses for patients.

Policy Efforts to Address Out-of-Pocket Costs

The Inflation Reduction Act of 2022 introduced measures to curb out-of-pocket costs, including a $35 monthly cap on insulin and a $2,000 annual cap on Medicare Part D drug spending starting in 2025. However, these provisions do not extend to privately insured individuals, who face rising costs. The Consumer Finance Protection Bureau is also addressing medical debt by proposing to remove it from credit reports, which could ease financial burdens but does not reduce upfront costs.

Conclusion

In 2025, out-of-pocket healthcare costs in the USA continue to challenge affordability, driven by high health insurance deductibles, prescription drug expenses, and systemic inefficiencies. With per capita spending projected to exceed $1,580 and deductibles averaging $1,787, Americans face significant financial barriers to care. Policymakers, employers, and insurers must prioritize transparency, cost-sharing reforms, and innovative cost-management strategies to ensure equitable access to healthcare.

Sources

National Health Expenditure Data
https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data
Provides comprehensive data on U.S. healthcare spending, including out-of-pocket costs, from the Centers for Medicare & Medicaid Services.

Inflation Reduction Act and Medicare
https://www.cms.gov/inflation-reduction-act-and-medicare
Details the Inflation Reduction Act’s provisions to reduce out-of-pocket drug costs for Medicare beneficiaries.

Health System Tracker
https://www.healthsystemtracker.org
Offers insights into U.S. healthcare costs and affordability, including out-of-pocket spending trends, from Peterson-KFF.

KFF Health Care Costs
https://www.kff.org/health-costs
Provides polling data and analysis on healthcare affordability and out-of-pocket expenses in the U.S.