of U.S. personal healthcare spending
Medicare paid approximately $1 trillion of the $4.5 trillion spent on personal healthcare in 2024.
PHARMAARMS FEDERAL WATCH INTELLIGENCE BRIEF
MedPAC’s July 2026 Data Book: What Access Professionals Need to Know
A practical, field-focused summary of the Medicare spending, beneficiary, access, Medicare Advantage, provider, and prescription drug trends most relevant to Access & Reimbursement Managers, Field Reimbursement Managers, healthcare-office stakeholders, specialty pharmacies, providers, and the patients they serve.
PRIMARY SOURCE AND SCOPE
Health Care Spending and the Medicare Program: A Data Book, July 2026
This intelligence brief summarizes selected findings from the 224-page publication by the Medicare Payment Advisory Commission, published . Consult the original figures, definitions, methodologies, limitations, and source notes before relying on a statistic.
Important distinction: The Data Book is primarily descriptive. It should not be read as though every trend is a new law, final CMS rule, coverage mandate, or confirmed future payer policy. “PharmaARMs Perspective” sections are independent synthesis, not MedPAC statements.
Source publication: July 2026 · Local migration review: · Qualified statistical review: Pending
EXECUTIVE SUMMARY
The Medicare environment in five numbers
The report’s central message is the growing scale, financial pressure, clinical complexity, and operational importance of Medicare.
of U.S. gross domestic product
Medicare spending represented 3.9% of GDP in 2025 and is projected to approach 5% within roughly a decade.
annual Part B drug growth per FFS beneficiary
Physician-administered Part B drugs were the fastest-growing category of inflation-adjusted FFS Medicare spending per beneficiary from 2015 through 2023.
of FFS spending concentrated in 5%
The costliest 5% of FFS beneficiaries accounted for 45% of annual FFS Medicare spending in 2023.
paid to Medicare Advantage plans
Estimated Medicare payments to MA plans for Part A and Part B services in 2025.
NATIONAL SPENDING AND PROGRAM SUSTAINABILITY
Medicare is becoming a larger part of the economy
Medicare covered about 16% of the U.S. population in 2024 but paid 23% of national personal healthcare spending, reflecting the older age and generally higher healthcare needs of its population.
What the data show
- Medicare paid approximately $1 trillion toward personal healthcare in 2024.
- Medicare spending represented 3.9% of GDP in 2025.
- Spending is projected to rise from approximately 4% to 5% of GDP within about one decade.
- The Medicare population is projected to continue growing as the baby-boom generation reaches eligibility age.
- Medicare Part A financing faces long-term pressure as the number of workers per beneficiary declines.
What appears to be driving growth
- Beneficiary growth and changes in the volume and intensity of services and items furnished are major drivers.
- The cited “other” category includes growth in the average amount Medicare pays for Part B drugs.
- Projected pressure is not explained solely by Medicare payment-rate updates.
Why this matters in access and reimbursement
- Spending growth sustains attention to payment adequacy, utilization, product pricing, diagnostic coding, alternative payment models, care setting, avoidable services, and administrative efficiency.
- Benefit and authorization requirements remain dynamic and must be checked against current controlling sources.
PHYSICIAN-ADMINISTERED DRUGS AND BIOLOGICS
Part B drugs are the clearest field-relevant spending signal
Physician-administered Part B drugs had the fastest inflation-adjusted growth in FFS spending per beneficiary among the service categories examined from 2015 through 2023.
Where 2024 Part B spending was concentrated
- Total FFS Medicare payments for Part B drugs, biologics, and related products were reported at approximately $65.5 billion.
- Antineoplastics represented approximately $22.7 billion and 35% of total Part B drug spending.
- Skin substitutes represented approximately $10.1 billion after exceptionally rapid growth.
- Ophthalmic agents represented approximately $6.2 billion.
- The 10 leading therapeutic classes accounted for roughly 90% of Part B drug spending.
Field and provider relevance
- FRMs and ARMs need precise benefit-channel identification, coverage verification, coding-resource awareness, and documentation readiness.
- Providers face acquisition cost, payment timing, claim accuracy, denial, inventory, and care-setting pressures.
- Payers continue evaluating medical necessity, utilization, preferred products, biosimilar competition, networks, and site of care.
Do not overinterpret the 8% figure
- It describes historical inflation-adjusted growth per FFS beneficiary; it is not a forecast for every drug, class, or product and does not establish coverage or reimbursement policy.
MEDICARE ADVANTAGE
Managed care now shapes a large share of Medicare access
The Data Book documents Medicare Advantage enrollment, plan availability, payments, coding, selection, special-needs plans, and prior-authorization activity.
Scale of the program
- Medicare paid MA plans an estimated $537 billion in 2025 for Part A and Part B services.
- Estimated payments more than doubled from 2019 through 2025 on a nominal basis.
- Managed care was the main coverage arrangement for a majority of beneficiaries in the cited 2023 supplemental-coverage analysis.
- Special-needs and employer group plans are important MA submarkets with distinct profiles.
Operational relevance
- Plan-specific medical policies and authorization rules
- Network and site-of-service requirements
- Plan-directed specialty pharmacy arrangements
- Differences among HMO, PPO, SNP, and employer plans
- Appeal, reconsideration, and escalation processes
- Annual plan changes and beneficiary transitions
Prior authorization data require context
- Aggregate volumes or denial rates do not describe every plan, service, therapeutic area, or patient. Plan-level criteria and case facts remain essential.
MEDICARE PRESCRIPTION DRUG COVERAGE
Part D redesign is changing costs, premiums, and plan behavior
The Data Book documents Part D enrollment, premiums, low-income subsidies, benefit design, spending, rebates, pharmacy fees, product mix, and postlaunch price trends.
Spending trend
- Gross Part D spending per enrollee per month rose from approximately $290 in 2015 to $442 in 2024.
- That is approximately 4.8% average annual nominal growth, or about 53% cumulatively.
- Gross spending includes point-of-sale payments but excludes certain postsale manufacturer rebates and pharmacy fees.
Benefit-design considerations
- Medicare policies materially affected reported Part D premiums.
- Coinsurance is increasingly used for some brand-name and nonpreferred tiers.
- Low-income subsidy benchmarks and qualifying-plan availability vary by region.
- Rebate and pharmacy-fee dynamics can separate point-of-sale prices from net program costs.
BENEFICIARY COMPLEXITY, AFFORDABILITY, AND EQUITY
A relatively small population accounts for most spending
High spending is concentrated among beneficiaries with complex medical, functional, financial, or coverage needs, the same populations that often need intensive access support.
Concentration of FFS spending
- The costliest 1% accounted for approximately 17% of FFS spending in 2023.
- The costliest 5% accounted for approximately 45%.
- The costliest 25% accounted for approximately 84%.
- The least costly 50% accounted for only about 4%.
Populations associated with higher spending
- Beneficiaries with multiple chronic conditions
- Beneficiaries using inpatient hospital services
- People eligible through disability or ESRD
- Dually eligible Medicare and Medicaid beneficiaries
- Beneficiaries in the final year of life
Dual eligibility and access differences
- Dually eligible beneficiaries are more likely to experience poor health, disability, lower income, and complex Medicare–Medicaid coordination.
- Cost-sharing exposure varies with Medicaid, Medigap, employer coverage, managed care, other public coverage, or Medicare alone.
- The cited survey indicates lower-income beneficiaries reported obtaining less care than higher-income beneficiaries.
PROVIDERS, FACILITIES, AND CARE SETTINGS
Financial conditions differ sharply across provider sectors
Provider financial performance cannot be described with one universal Medicare margin; it varies by category, service line, ownership, geography, cost structure, case mix, payer mix, and setting.
Hospital environment
- All-payer operating margins improved in fiscal year 2024, while aggregate FFS Medicare hospital margins remained substantially negative with meaningful variation.
- FFS Medicare hospital revenue continued shifting toward outpatient services.
Post-acute care environment
- Results varied across skilled nursing, home health, inpatient rehabilitation, long-term care hospital, and hospice sectors.
- Some sectors reported relatively high aggregate FFS Medicare margins; others faced declining use, changing case mix, or payment growth below cost growth.
Provider-office and stakeholder relevance
- Provider economics affect willingness and ability to acquire, store, administer, and financially carry physician-administered therapies.
- Issues include acquisition cost, reimbursement timing, patient cost sharing, denial risk, coding uncertainty, staffing, capacity, network participation, sourcing, wastage, and care-setting requirements.
Coverage does not always equal operational access
- A covered therapy can remain difficult to initiate because of authorization conditions, incomplete documentation, networks, sourcing, financial exposure, capacity, affordability, or coordination failures.
PHARMAARMS FEDERAL WATCH
What access professionals should monitor next
These are practical areas to monitor because they intersect with the documented trends. They are not confirmed outcomes from the Data Book.
Part B drug payment, coding, and average-sales-price policy
Biosimilar payment incentives and utilization
Medicare Advantage prior-authorization standards and reporting
MA network adequacy and provider participation
Site-of-care policies for infused and injected therapies
Specialty pharmacy sourcing and distribution requirements
Part D redesign, premium stabilization, and coinsurance
Low-income subsidy plan availability and regional differences
Alternative payment models and accountable care participation
Provider payment adequacy and outpatient capacity
Affordability and access for dual-eligible beneficiaries
CMS rules, subregulatory guidance, and contractor updates
TURNING INFORMATION INTO FIELD READINESS
Practical actions for access and reimbursement teams
The value is not memorizing every number; it is strengthening compliant access processes.
1. Confirm the exact benefit and plan before mapping the pathway
Determine the benefit channel, Original Medicare or Medicare Advantage status, supplemental coverage, network status, and proposed site.
2. Build documentation readiness before submission
Review current criteria and confirm the healthcare-office team has the required clinical, treatment-history, dosing, site-of-care, and supporting documentation.
3. Separate administrative barriers from clinical-policy barriers
Missing records, invalid codes, network status, authorization gaps, and submission errors require different responses from medical-necessity denials.
4. Understand the provider’s operational and financial workflow
Coverage verification alone may not address acquisition, sourcing, reimbursement lag, cost sharing, claim risk, infusion capacity, wastage, or site-of-care requirements.
5. Avoid guarantees and use current authoritative sources
Use current payer, CMS, Medicare Administrative Contractor, plan, and program resources. Do not guarantee coverage, approval, reimbursement, coding outcomes, or cost.
6. Protect privacy and remain within role boundaries
Do not share PHI in public forums or unsecured communications. Work within approved role, organizational, legal, and compliance parameters.
SOURCE ATTRIBUTION
MedPAC remains the controlling source.
Primary source: Medicare Payment Advisory Commission. Health Care Spending and the Medicare Program: A Data Book. July 2026.
No MedPAC seal, logo, chart, or graphic is reproduced. PharmaARMs is independent and is not affiliated with or endorsed by MedPAC, CMS, HHS, Congress, or another government agency.
EDUCATIONAL AND ACCURACY DISCLAIMER
Condensation, interpretation, transcription, source updates, data revisions, formatting, or human error may result in omissions or inaccuracies. Current official government, payer, plan, contractor, and program materials control.
This page is not legal, regulatory, clinical, coding, billing, financial, reimbursement, coverage, compliance, or patient-specific advice. Do not submit PHI, identifiers, screenshots, private documents, or confidential information.
ARIA retrieval: Not approved for these statistics, interpretations, or perspective statements pending qualified review.