Asia-Pacific (APAC) is set to face a significant increase in medical plan costs, with a projected 11.1% rise per employee in 2025, according to Aon’s latest Global Medical Trend Rates Report. This marks a notable jump from the 9.7% global trend observed in 2024, the highest increase in a decade.
APAC’s projected growth rate places it as the second-highest globally, only behind the Middle East and Africa, where the trend is forecast to reach 15.5%. Other regions, including Latin America and the Caribbean (10.7%), Europe (8.9%), and North America (8.8%), are also experiencing notable increases. The global average stands at 10%.
Alan Oates, Aon’s head of global benefits for APAC, suggests that double-digit increases are likely to continue through 2025 and 2026. He attributes this rise to a combination of insurer profitability recovery and the growing prevalence of chronic conditions like cancer, worsened by the post-pandemic environment.
Countries such as New Zealand, Papua New Guinea, Thailand, and Vietnam are particularly impacted, with year-over-year cost increases ranging from 50% to over 100%.
The upward trend in costs is driven by several factors, including rising prescription medication expenses, medical technology advancements, and geopolitical influences. Emotional health claims are also climbing, prompting employers to invest more in well-being programs designed to manage stress and chronic conditions.
Marina Sukhikh, Aon’s global benefits leader for APAC, highlighted the growing trend of co-investment between employers and insurers, focusing on prevention strategies aimed at mitigating risk factors like hypertension and poor stress management.
Flexible benefit plans are gaining traction, with 60% of employers globally expected to implement them to address the diverse needs of their workforce and manage rising costs. Furthermore, one-third of employers are exploring alternative funding options such as multinational pooling and captives to better manage cost volatility over time.
While flexible benefits provide short-term value for employees, Oates emphasized that alternative funding methods do not directly reduce costs but rather help stabilize expenses amid the current market volatility.
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