The Medicare Payment Advisory Commission (MedPAC) recently released its 2025 Data Book on Health Care Spending and the Medicare Program, providing a comprehensive overview of national and Medicare-specific spending, beneficiary demographics, access to care and utilization patterns. Rather than offering specific policy recommendations, the data book offers a useful reference point to assess how Medicare policies and trends may affect care delivery, reimbursement and patient populations in the coming years. Key takeaways include the continued growth of Medicare Advantage (MA) and the need to manage spending for high-need patients.  

There is increased fiscal pressure on the Medicare program due to less people contributing to the Medicare Trust Fund. The number of workers per Medicare beneficiary has declined from 4.5 in 1967 to 2.8 in 2023; this is projected to fall further to 2.5 by 2029. This trend has long-term implications for Medicare financing and reinforces broader concerns about the sustainability of current spending patterns. 

Individuals with chronic disease are driving most of the spending. MedPAC reports that the top 5% of Medicare fee-for-service beneficiaries account for 46% of total spending; the top 25% of beneficiaries are responsible for 85% of all spending. This means that a relatively small group of high-need patients are driving a large portion of Medicare costs, a trend consistent with other payer environments. This reinforces the importance of targeted care management strategies aimed at individuals with complex or chronic health needs. 

Although dual-eligibles – those who qualify for both Medicare and Medicaid – represent roughly 20% of the Medicare population, they account for a disproportionate share of spending, making up approximately 26% of total fee-for-service Medicare expenditures. These patients often interact with multiple systems of care and hospitals may need to coordinate closely with Medicaid-managed care plans and community-based services to manage costs and support outcomes for this group. 

The MA program continues to grow in both enrollment and financial impact. As of February 2025, MA enrollment reached 34.4 million individuals or approximately 55% of all Medicare beneficiaries. Total payments to MA plans in FY 2024 amounted to $494 billion. This shift means more beneficiaries are subject to managed care rules, prior authorizations and network arrangements that differ from traditional Medicare. Because of this growth in the MA population, CMS is trying to integrate MA patient data in existing quality programs like the Hospital Readmission program and looking to address concerns related to prior authorization.  

Other chapters of the data book address utilization and spending across major care settings, including acute inpatient care, ambulatory services, post-acute care and prescription drugs. For example, the data shows variation in service use by setting and beneficiary characteristics, which can help inform hospital resource planning and service line investments.  

The chapter on acute care shows that in FY 2023, operating margins continued to be much higher among for-profit hospitals than nonprofit hospitals. Hospitals’ revenue from traditional Medicare also continued to slowly shift toward outpatient services – the share of hospitals’ Medicare revenue in outpatient services has grown from 34% in FY 2019 to 38% in FY 2023.  

The chapter on ambulatory care shows that high expenditures are concentrated in a few services (Chart 7-7). Both Congress and CMS have used this MedPAC list to inform site neutral payment discussions. Procedures (such as endoscopies, surgeries, and skin and musculoskeletal procedures) accounted for the greatest share of payments (47%) in 2023, followed by separately paid drugs and blood products (26%), E&M services (12%), and imaging services (10%).  

The chapter on alternative payment models provides updated figures on ACO participation and shared savings distributions, offering insight into where value-based care models may be gaining traction. Among the 62.5 million Medicare beneficiaries with both Part A and Part B coverage in 2025, more than three-fourths (79%) are in Medicare managed care or ACO models. Only 21% of Medicare beneficiaries remain in traditional Medicare. These figures show how value-based care is here to stay.  

Finally, the data book includes updated information on beneficiary out-of-pocket costs and financial liability, including spending on premiums, deductibles and coinsurance. These figures are relevant in understanding the financial pressures patients face and how those pressures might affect care-seeking behavior, compliance with discharge plans or ability to pay for non-covered services.