Healthcare spending is up, but what exactly is driving the increases? The latest UnitedHealthcare Briefing provided insights into health trends affecting costs now, with insights from the 2026 Health Trends Report.
Hospital and Pharmacy Account for 55% of Healthcare Spending
In 2025, U.S. healthcare spending outpaced inflation. In commercial group plans, medical costs have increased by around 8% or more every year since 2023, while catastrophic claims increased by 12.9% in 2025. Healthcare spending reached $5.6 trillion in 2025, and 30% of this was spent on hospital services.
Prescription spending is also up. Around 25% of all healthcare spending goes to pharmacy costs. Although specialty medications account for less than 2% of utilization, they account for 55% of total pharmacy benefit spending.
Chronic Conditions Account for 57% of Employer Health Spend
Roughly 194 million Americans have at least one chronic condition. Among UnitedHealthcare members, approximately 31% have a metabolic condition, such as diabetes, hypertension or high blood pressure, and these conditions represent around 57% of employer health spend.
Because chronic conditions are a major cost driver, it’s worth seeing how prevalence and costs are changing. The UnitedHealthcare Briefing provided insights into several different categories of health conditions and how they have changed between 2019 and 2025.
- Cancer. Prevalence of cancer is up 13%, and cost is up by 47%. Chemotherapy is driving spending increases, with a 70% increase in costs. Although cancer rates have increased in younger individuals, the 50 to 59 age bracket is still the main source of cancer-related healthcare spend for employers. Only 0.3% of cancer claimants have costs over $500,000, but those individuals represent 21% of all cancer spend. Easy-to-treat cancers, though relatively frequent, are not driving costs; spending comes from preventive care and catastrophic cancer claims.
- Musculoskeletal disorders. Prevalence of these disorders hasn’t changed much, with only a 3% increase in prevalence between 2019 and 2025. However, costs are up 20%. Back-related issues are a driver of costs. Plan members with metabolic conditions have a much higher prevalence of musculoskeletal disorders, with weight being the common denominator. Plan members who are overweight are more likely to experience health issues like diabetes as well as joint and back problems.
- Circulatory conditions. Prevalence for circulatory conditions, such as heart disease and irregular heartbeats, has increased by 10%, and costs are up 31%. Older individuals are more affected, so in the employer group, frequency and costs are highest in the 50 to 59 age bracket. Men are only 5% more likely to experience circulatory conditions, but their costs are 62% higher, largely driven by severity.
- Behavioral health. Prevalence of behavioral health conditions is up 40%, and costs are up 117%. This is largely because more people are seeking help as awareness increases and stigma fades. Anxiety and neurodevelopmental conditions are driving increases; anxiety costs are up 225%, and neurodevelopmental costs are up 202%.
- Digestive health. Prevalence of digestive issues like Chron’s, IBS and gall bladder disease are up 13%, and costs are up 37%. An increase in treatment availability has driven costs up.
- Nervous system health. Prevalence of nervous system issues, which include headaches and migraines as well as epilepsy, sleep disorders, multiple sclerosis, has increased by 17% and costs have increased by 55%. New treatments for migraines have helped drive costs up.
The Factors Affecting Costs
While prevalence has increased to one degree or another across most conditions, cost increases have far outpaced increases in frequency. The reasons behind this trend are complex.
Site of care makes a difference.
The UnitedHealthcare Briefing revealed that Millennials have the highest utilization rates for both ERs and virtual care.
Where members decide to receive care can have a direct and significant impact on costs. For example, musculoskeletal care has shifted to outpatient facilities, and this has helped keep costs down. However, ambulatory surgical centers are underused, and a shift to increase their usage could help bring costs down further.
For behavioral health, expensive out-of-network providers are contributing to higher costs. Some areas have far more providers than others – the northeast has four to ten times more licensed mental health professionals per capita than the south – so telehealth and interstate options can also help improve access to high-value providers and control costs.
Screening and diagnosis have improved.
An increase in prevalence does not always mean the condition is more common. The statistics only show the rates of diagnoses, so if a condition used to be overlooked but is now diagnosed more often, prevalence will appear to go up.
For example, cancer screenings are up. When cancer is caught early, survivability increases and the cost of treatment decreases. Behavioral health conditions are also likely seeing an increase in diagnoses as stigma fades. Interestingly, frequency has increased across age groups, not just in younger age brackets.
More effective treatments are available.
New treatments provide better outcomes but also lead to higher costs. Cancer is a prime example. Cancer patients have access to new treatments, and since 1991, 4.8 million cancer deaths have been prevented. However, costs are much higher. There are also new treatments for digestive disorders such as Chron’s. In the past, people might simply have had to suffer. Today, they can be treated, and costs have increased as a result.
GLP-1 drugs used for weight loss also appear to be contributing to higher costs, and not just in prescription spend. Gall bladder issues are a known GLP-1 side effect, and as utilization of weight loss drugs has surged, there’s been a 140% increase in ER utilization for gall bladder issues.
Specialty drugs are also providing new treatment options but with high costs. As more novel drugs are developed, smaller employers face a greater chance of incurring the high costs of specialty drugs.
How Plans Can Help
If you’re managing a self-insured plan, all these trends are likely affecting your costs. In addition, your members may have trouble navigating their insurance requirements and choosing providers and care resources that deliver the best outcomes.
Innovative Care Management offers a wide range of services to help your members use plan resources wisely. Learn more.