Deloitte identifies $500B in potential Medicare savings by adding healthy years to life

NEW YORK, Sept. 15, 2025 /PRNewswire/ -- A new Deloitte report, "Safeguarding Medicare's future: Proactive care could unlock more than $500B in annual savings," finds that strategic investments in disease prevention, early detection, and other proactive measures could save the U.S. health care system up to $2.2 trillion annually by 2040. These investments could also help save Medicare more than $500 billion a year on medical and prescription drug claims and strengthen the program's long-term financial outlook —all while helping Americans live healthier, longer lives.

Key findings

• Investments in disease prevention, early detection and proactive health management efforts could potentially save the U.S. health care system $2.2 trillion, Medicare more than $500 billion in annual medical and prescription drug claims and individuals more than $7,000 per person in annual health care costs by 2040.
• More than 62% of total health care expenditures today are for reactive care — treatment of illnesses, injuries, or deteriorating health. This accounts for about $3.0 trillion annually.
• Chronic conditions such as diabetes, heart disease, and cancer represent the largest savings opportunities, with targeted interventions projected to cut more than $700 billion in annual spending.

Why this matters:
As health care costs in the U.S. continue to rise and the population ages, Medicare's solvency is under increasing strain. To achieve the trillions in potential savings Deloitte actuaries identified, report authors suggest stakeholders consider urgent, coordinated action to align financial incentives that prioritize prevention, early detection, and proactive care. A shift from reactive to proactive care not only offers significant economic benefits but also the potential to improve the health and well-being of individuals while helping to protect Medicare's future in its current form.

Prevention and proactive care can pay

Deloitte found that proactive health measures can deliver a clear return on investment. By preventing disease or identifying and managing it early, individuals can experience significantly lower lifetime health care costs. According to Deloitte's analysis, today, only 22% of total health spending is on promoting health care -- claims for preventive services and wellness activities.

The greatest opportunities for savings, according to the analysis, lie in preventing and managing chronic conditions such as diabetes, heart disease, and cancer. These three conditions alone account for a significant share of Medicare spending. Deloitte estimates that targeted prevention and management programs for these conditions could reduce annual expenditures in the US by over $700 billion.

Key quotes

"We have data-driven evidence offering a blueprint on how prevention can deliver savings in aggregate and by disease area. This is an opportunity for stakeholders to come together, invest in prevention and early detection, and enable more Americans to live longer, healthier lives while lowering health care spending."
—   Andy Davis, principal, Actuarial Health Care Leader, Deloitte Consulting LLP

"America's health care system tends to be in a 'break-fix' cycle—waiting until people get sick before investing in their care. It's time to consider flipping the model and focusing on prevention and proactive health management, making longer, healthier lives both achievable and affordable. Our analysis shows that this shift isn't just about good medicine, it's smart economics with the potential to save Medicare $500 billion annually and secure its vitality for future generations. This approach goes to the heart of challenges facing American health care today."
—   Neal Batra, principal, Future of Health Leader, Deloitte Consulting LLP

Who benefits from prevention and proactive health investments?

Ultimately, every stakeholder could benefit from greater investments in disease prevention, early detection, and other proactive measures, according to the report authors. Medicare could see reduced long-term spending, employers could benefit from a healthier and more productive workforce, and individuals could benefit from lower overall health care costs and improved quality of life.

Who can help secure these savings?

Achieving this transformation will involve coordinated action from the government, employers, health plans, and health systems. The authors suggest that government agencies can support this movement by incentivizing commercial health plans, especially employer sponsored plans, and Medicare to invest more in disease prevention, such as driving innovation through new payment models and reimbursement for care.

Employers already contribute significantly to Medicare and health care spending. By redirecting some of these resources toward prevention, early disease detection, and other proactive measures, authors suggest that employers could improve the health of workers and their families, potentially reducing future health care costs and boost productivity.

Health plans have opportunities across all lines of business. In the commercial market—which includes employer-sponsored and individual insurance coverage—health plans could partner more closely with employers to encourage lifestyle changes among employees that help reduce premium costs. Health systems also have an opportunity to move beyond just treating diseases and focus more on helping people, and the communities they serve, stay healthy.

Ultimately, every stakeholder could benefit from greater investments in disease prevention, early detection, and other proactive measures, and each has a role to play to drive this transformational change to create a healthier future for all.

Methodology
Deloitte actuaries examined five years of medical and pharmacy claims data for nearly 60 million individuals from the Komodo Healthcare Map^TM, categorizing claims using Sg2 and MediSpan, scaling the findings to represent the US population. Each claim was categorized by disease state and grouped into four care categories: treating conditions, managing or delaying symptoms, restoring health, and promoting health. The analysis also incorporated health and wellness-related expenses paid by consumers and government funded health-related activities to provide a comprehensive view of health care spending and potential savings. For more information about how these spending categories were projected, please request the full methodology.