Inpatient treatment for mental health and substance use accounted for 10% of total commercial inpatient stays in 2023 (or 32 per 10,000 enrollees). The average (mean) total inpatient cost (including the share paid by the insurer and the share paid by the patient) for a mental health admission was $15,900 and for a substance use admission was $15,500.

Using claims data from the 2023 Merative MarketScan Commercial Claims Database, this Peterson-KFF analysis describes the most common diagnoses for inpatient treatment and total associated costs, including patients’ out-of-pocket share.

This brief is available through the Peterson-KFF Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.

According to recent news reports, the families of about 400 children with disabilities who are enrolled in Tennessee’s Children’s Special Services (CSS) program received notices from the state health department in early June stating that if their child continued to remain enrolled in CSS beyond June 30, 2026, their information would be reported to a central state immigration enforcement agency. However, following a lawsuit filed by physicians in the state, a judge issued a temporary restraining order on June 24, 2026, to prevent this data sharing from taking place. Tennessee is one of at least six states that have taken actions as of June 2026 to require state agencies to report applicants or recipients of Medicaid and/or other public benefits whose immigration status could not be verified and/or who were verified to not have lawful presence with immigration enforcement authorities. Under longstanding federal law, Medicaid and other federally funded health coverage are already limited to lawfully present immigrants.

In Tennessee, the legislation requires every state governmental entity, local governmental entity, and local health department to verify that each applicant who is 18 years of age or older and applies for a federal, state, or local public benefit is a United States citizen or lawfully present immigrant. It also requires these entities to report all identifying information for individuals who are not lawfully present and who receive federal, state, or local public benefits to the state’s centralized immigration enforcement division and makes it a criminal offense for an employee or official to intentionally fail to report an individual who is not lawfully present.

Tennessee has interpreted this law to include its CSS program, although Tennessee Representative Steve Cohen wrote a letter to Governor Bill Lee indicating that the law reads as limited to applicants who are at least 18 years old. Tennessee’s CSS program provides care coordination and payment assistance for certain services to people under age 21 whose family income is at or below 225% of the federal poverty level and who have a physical disability, such as cerebral palsy, cystic fibroses, sickle cell anemia or other serious medical conditions without immigrant eligibility restrictions. A recent report indicates more than 4,600 children in Tennessee are enrolled in CSS.

Health care providers and advocates in the state have warned that this data sharing will likely lead families to stop participating in the program, which could lead to disruptions in care that have life threatening consequences. Reporting requirements could also have “chilling effects” that lead to disenrollment and forgone enrollment among a broader group of families than those subject to the new reporting requirements due to confusion and fear. 

A 2025 national KFF survey shows that the share of immigrant adults who said they avoided applying for a government program that helps pay for food, housing, or health care in the past 12 months because they did not want to draw attention to their or a family member’s immigration status rose from 8% to 12% between 2023 and 2025. Further, 11% of immigrant adults say they have stopped participating in such a program since January 2025 because of immigration-related worries, including about four in ten (42%) of those who are likely undocumented and about one in six (17%) parents. Moreover, about half (51%) of immigrant adults overall and about eight in ten (78%) of those who are likely undocumented said they are “somewhat” or “very” concerned about health officials or providers sharing patient information with immigration enforcement officials (Figure 1). These data were collected prior to recent state-level actions to share data on immigrant families with immigration enforcement officials.

Beyond the data sharing actions in Tennessee and several other states, in July 2025, the Centers for Medicare and Medicaid Services (CMS) and U.S. Immigration and Customs Enforcement (ICE) established an Information Exchange Agreement that enables immigration enforcement officials to access the personal data of millions of Medicaid enrollees to help identify and locate “aliens in the United States.” This data sharing represents a reversal in prior policy that asserted CMS would not share such information and ICE would not use such information for immigration enforcement purposes, with assurances made to the public, applicants and enrollees, health care providers, and states that information collected to determine eligibility for health coverage programs would not be used for immigration enforcement. The administration also has directed the Internal Revenue Service to share personal information of individuals for immigration enforcement purposes, although these actions are facing court challenges.

On July 1, 2026, the Centers for Medicare & Medicaid Services (CMS) will roll out a new, temporary program covering GLP-1s for obesity for people with Medicare. The program, known as the Medicare GLP-1 Bridge, provides coverage of GLP-1s used for weight reduction and weight management to eligible beneficiaries enrolled in Medicare Part D, although the program will operate outside of the Part D benefit and payment system. Under the Medicare GLP-1 Bridge, eligible beneficiaries can get Medicare coverage of GLP-1s for obesity for a $50 monthly copayment, which will not count towards the Part D deductible or out-of-pocket spending cap and Part D Low-Income Subsidy cost-sharing assistance will not apply. The temporary program, running from July 2026 through December 2027, does not change the current statutory prohibition on Medicare coverage of drugs used for weight loss but instead is being established using the federal government’s Section 402 demonstration authority.

The Medicare GLP-1 Bridge will provide coverage of three GLP-1s (Wegovy, Zepbound, and Foundayo) that have been approved by the FDA for chronic weight management in adults with obesity (BMI of 30 or more) or adults with overweight (BMI of 27 or more) plus a weight-related comorbid condition. The clinical criteria for determining eligibility for the Medicare GLP-1 Bridge are somewhat more restrictive than the FDA approvals, however, and include Part D enrollees with a BMI of 35 or more; with a BMI of 30 or more and heart failure with preserved ejection fraction, uncontrolled hypertension, or chronic kidney disease stage 3a or above; or with a BMI of 27 or more and pre-diabetes, previous myocardial infarction, previous stroke, or symptomatic peripheral artery disease.

Eligibility for the Medicare GLP-1 Bridge will also be limited to Medicare beneficiaries who have not filled a prescription under their Part D plan for a GLP-1 in 2026, and who do not have a diagnosis with a condition that is a medically accepted indication for a GLP-1 drug that could be covered under Part D (specified by CMS as type 2 diabetes, obstructive sleep apnea (OSA), and noncirrhotic metabolic dysfunction-associated steatohepatitis (MASH)), even if they otherwise meet the clinical criteria. These limits are designed to prevent GLP-1 use that could be covered under Part D from shifting to the Medicare GLP-1 Bridge and will also help to limit the cost of the program to Medicare. As part of the prior authorization process for Bridge, prescribing clinicians will need to attest that the GLP-1 prescription is for weight reduction and weight management and that beneficiaries meet the clinical criteria and do not have a diagnosis of type 2 diabetes, OSA, or MASH that would make them eligible for GLP-1 coverage under Part D.

CMS has not released an estimate of how many beneficiaries could be eligible for the Medicare GLP-1 Bridge, although the director of Medicare at CMS, Chris Klomp, recently stated the agency anticipates the program will start with “single-digit millions” of beneficiaries. This analysis uses 2023 Medicare claims for traditional Medicare, Medicare Advantage encounter data, and Part D prescription drug event data to estimate the total number of Medicare beneficiaries with obesity or overweight, the number of Part D enrollees who met the Bridge eligibility criteria in 2023, and those who met the Bridge clinical criteria but who also had diagnoses recorded in claims or encounter data that would qualify for Part D coverage of GLP-1s (type 2 diabetes, OSA, or MASH) or who had a GLP-1 Part D-covered prescription during the year, either of which would make them ineligible for Bridge (see Methods).

More than 13 million Medicare beneficiaries met the BMI thresholds for obesity or overweight in 2023, but not all are potentially eligible for the Medicare GLP-1 Bridge. In 2023, an estimated 13.3 million Medicare beneficiaries enrolled in Parts A and B had obesity or overweight, based on having BMI of 27 or more recorded in claims or encounter data, or 24% of Medicare beneficiaries overall (Figure 1). (This estimate could be conservative to the extent that not all beneficiaries with obesity or overweight may have a claims-based diagnosis.) However, the potentially eligible population for the Medicare GLP-1 Bridge is not as broad as if the program were targeted to all people with Medicare with obesity or overweight. As detailed below, an estimated 3.8 million beneficiaries could be eligible for Bridge as of 2023, based on meeting all the eligibility criteria.

Among the 47.5 million Medicare Part D enrollees in 2023, 9.7 million enrollees met the clinical criteria for the Medicare GLP-1 Bridge in 2023, but less than half of this group—3.8 million (39%)—is estimated to be eligible for Bridge (Figure 2, Table 1). These 3.8 million Part D enrollees met the clinical criteria, did not have a diagnosis of type 2 diabetes, OSA, or MASH, or a GLP-1 Part D-covered prescription in 2023, and could be eligible for the Medicare GLP-1 Bridge, assuming no changes in diagnosis or GLP-1 use in Part D in 2026. This estimate, which includes Part D enrollees in traditional Medicare and Medicare Advantage, represents 8% of Medicare Part D enrollees and 7% of the total population enrolled in Medicare Part A and Part B for the entire year in 2023. The other 5.9 million Part D enrollees met the clinical criteria but also had claims or encounter data recording a diagnosis of type 2 diabetes, OSA, or MASH, and/or had a GLP-1 Part D-covered prescription, either of which would make them ineligible for Bridge.

The total cost to the federal government of the Medicare GLP-1 Bridge will depend in part on how many beneficiaries are eligible in 2026 and 2027, what share of them participate, how quickly they initiate use under the program after it begins, and how many prescriptions each participating beneficiary fills during the 18-month period. While take-up is uncertain, interest in the program among potentially eligible Medicare beneficiaries is likely to be strong. Based on the estimated 3.8 million Part D enrollees eligible for the Medicare GLP-1 Bridge as of 2023, if 10% to 25% participate in Bridge from when the program launches in July 2026 and fill a prescription each month for the 18-month duration of the program, the cost to Medicare would be $1.3 billion to $3.3 billion (at a net monthly cost of $245 minus the $50 beneficiary copay). Assuming higher participation rates ranging from 50% to 75%, the cost to Medicare would be between $6.7 billion and $10 billion. The ultimate cost to the federal government of the Medicare GLP-1 Bridge will depend on actual participation numbers and adherence during the 18-month program, as well as potential cost offsets from savings that might accrue over time due to beneficiary health improvements from GLP-1 use for weight reduction and weight management.

As of July 30, 2026, seven carriers have announced that they will exit the ACA Marketplaces in plan year 2027, either in some or all states that they are currently offering plans; five carriers have announced they will enter new state Marketplaces. These changes in insurer participation follow the expiration of the enhanced premium tax credits at the end of 2025, which drove sign-ups to fall by over a million from the 2025 to 2026 Open Enrollment Periods—with further membership declines in the ACA Marketplaces expected as the year progresses. ACA Marketplace enrollment declines affect the size of the potential market for insurers, and, potentially, the risk pool—to the extent that healthier than average enrollees are more likely to drop coverage.

As people leave the Marketplace, insurers may reassess the profitability of their Marketplace participation and decide to pull out in the future. Cigna has decided to leave the individual market in 2027 to focus on other segments given the lack of potential to grow their ACA Marketplace business. Cigna, which reported first-quarter on-exchange enrollment of over 350,000 individuals, will exit the 11 states in which it currently participates both on- and off-exchange. In some cases, multiple insurers are announcing exits in the same state. In some states, with fewer insurers participating in the ACA Marketplaces, remaining insurers will have less competition and consumers will be left with fewer choices.

On June 9, 2026, the Medicare Trustees issued the annual report on the financial status of the Medicare program for 2026. The Trustees highlighted that the Medicare Part A trust fund is projected to be depleted in 2033, the same year but one quarter earlier than last year’s projection. In addition to discussing the status of the Part A trust fund, the report also provides substantial additional details on federal spending for Medicare Part B and Part D benefits, the distribution of spending for traditional Medicare and Medicare Advantage, and revenue sources for Medicare, along with updated spending and revenue projections and a detailed discussion of factors that have contributed to changes in the program’s financial outlook. This brief provides an overview of key trends in Medicare spending and spending growth, as well as the impact of these trends on out-of-pocket costs for Medicare beneficiaries and Medicare program solvency, as projected by the Medicare Trustees.

Physician Services and Other Outpatient Services Account for Roughly Half of Total Medicare Benefits Spending

In 2025, Medicare benefit payments totaled $1.2 trillion, up from $666 billion a decade earlier (Figure 1). Spending on Part B services (including physician services, outpatient services, and physician-administered drugs) accounts for the largest share of Medicare benefit spending (48% in 2025), as it has since 2015. In contrast, spending on Part A services (including inpatient hospital services, skilled nursing facility services, and hospice care) has declined as a share of Medicare benefit spending (from 43% in 2016 to 37% in 2025). Over time, this decline has been driven in part by a shift of some services from inpatient to outpatient settings reflecting changes in practice patterns, along with increases in spending on services covered under Part B, including high-cost physician-administered drugs. Spending on Part D prescription drugs has accounted for a relatively constant share of Medicare benefit spending for much of the past decade (12-13%) but rose to 15% in 2025 and is projected to continue growing in the coming years.

Spending on Part A and Part B Benefits in Traditional Medicare Was $481 Billion in 2025

Looking at spending by type of service in traditional Medicare, the single largest category of benefit spending in 2025 was for inpatient hospital services covered under Part A (spending by type of service for Medicare Advantage enrollees is unavailable). Although a relatively small share of beneficiaries use inpatient hospital services, these services accounted for roughly one-third of total benefit spending in traditional Medicare ($159 billion or 33%), followed by outpatient hospital services covered under Part B ($76 billion or 16%) (Figure 2). This means that combined spending on hospital services (both inpatient and outpatient) accounted for nearly half of spending on Part A and Part B benefits in traditional Medicare in 2025. Services covered under the Medicare Part B physician fee schedule accounted for $71 billion (15%), and the remaining $174 billion (36%) consisted of payments for all other Part A and Part B services, including physician-administered drugs (8%), skilled nursing facility services (6%), and hospice care (6%), among others.

Spending on the Medicare Part D Prescription Drug Benefit is Projected to be Significantly Higher Over the Coming Decade Compared to Last Year’s Projections

The Medicare Trustees currently project that Medicare Part D spending will nearly double from 2025 ($181 billion) to 2035 ($346 billion), representing an average annual growth rate of 6.7% compared to the 4.8% that was projected for a similar period last year (Figure 3). The Trustees indicate that higher spending projections for Part D in the 2026 report are due to increased use of GLP-1s and other high-cost specialty drugs. The Trustees also point to other factors that have contributed to changes in Part D spending in recent years, including the pharmacy price concessions policy that lowers point-of-sale prices for beneficiaries but reduces rebate revenue to Part D plans, which leads to higher federal Part D spending; the exemption of more orphan drugs from drug price negotiation in the 2025 budget reconciliation bill (H.R. 1), which will lower federal savings from negotiation; and the redesigned Part D benefit that improved the generosity of coverage while shifting more liability onto plans and increased the level of federal subsidies for coverage. These higher spending trends are offset somewhat by the effect of drug price negotiations and inflation rebates established by the Inflation Reduction Act.

Spending on Medicare Advantage was $534 Billion in 2025, Over Half (53%) of Total Medicare Program Spending

Payments to Medicare Advantage plans under Medicare Part A and Part B nearly tripled as a share of total Part A and Part B spending between 2016 and 2025 (from $189 billion to $534 billion), including payments for the cost of Part A and Part B services, as well as rebates, which must be used to reduce cost sharing, pay for extra benefits, or buy down the Part B and/or Part D premium (Figure 4). This growth is partly due to increased enrollment in Medicare Advantage plans, which rose from 33% to 54% of all eligible beneficiaries over this same period. At the same time, Medicare pays an estimated 14% more per enrollee in Medicare Advantage than it would if the same beneficiary were covered by traditional Medicare, resulting in $76 billion in additional Medicare spending in 2026. Those higher payments largely reflect the impact of higher coding intensity and favorable selection into Medicare Advantage. Growth in Medicare Advantage spending is projected to continue into the next decade, with payments to Medicare Advantage plans under for Part A and B benefits projected to increase to $1.3 trillion in 2035, or 59% of total Part A and Part B spending.

The Medicare Part A Trust Fund is Projected to be Depleted in 2033, Seven Years from Now

The depletion of the reserves in the Medicare Hospital Insurance (Part A) trust fund, which pays for inpatient hospital, skilled nursing facility, home health, and other Part A services, is projected to occur in the second quarter of 2033, based on the latest projections from the Medicare Trustees (Figure 5). This is one quarter earlier than the projection in last year’s report. According to the Medicare Trustees, the earlier depletion date is primarily the result of updated estimates of Social Security tax revenue (one source of Part A funding) that are lower than previously projected due to changes in the 2025 budget reconciliation bill (H.R. 1). If the reserves in the Part A trust fund are fully depleted, Medicare would not have sufficient funds to cover Part A benefit spending for the full year without additional revenues or reductions in spending on benefits or payments to providers.

Projected Increases in Medicare Spending Will Lead to Higher Medicare Premiums and Cost-Sharing Requirements

Medicare’s premium and cost-sharing requirements are determined annually based on expected growth in Medicare benefit costs for the coming year (though the exact approach to determining these amounts is different in each part). For 2027, the Trustees project that the monthly Part B premium will increase from $203 to $210 (3.3%), after increasing from $185 to $203 between 2025 and 2026 (9.7%). Likewise, the Part A hospital deductible is projected to increase from $1,736 to $1,788, and the Part D deductible from $283 to $292 in 2027. Further increases are estimated for the duration of the 10-year projection period in the 2026 Trustees report (Figure 6). These amounts may not reflect the costs that all beneficiaries face, particularly enrollees in Medicare Advantage plans, where cost sharing is generally different from the standard cost-sharing requirements for traditional Medicare beneficiaries. In 2024, seven million Medicare beneficiaries spent more than 10% of their income on the Part B premium alone. Increases in Medicare premiums and other out-of-pocket costs may represent a growing burden for many beneficiaries if income growth does not keep pace.