Despite Lower Inflation, Global Medical Costs Expected to Increase by 10% in 2025
The projected increase is nearly identical to this year’s rate of 10.1%, which represents the highest increase forecasted in 10 years.
U.S. employers are not the only ones looking at steep increases in medical plan costs next year. Costs are expected to increase by 10 percent worldwide, according to the 2025 Global Medical Trends report from Aon. The projected increase is nearly identical to this year’s rate of 10.1 percent, which represents the highest increase forecasted in 10 years.
“Despite inflation projected to decrease in 2025, we expect health and well-being costs will continue to rise,” said Kathryn Davis, vice president of global benefits for the professional services firm. “As a result, medical plans are an important concern for companies, especially those with a global footprint. Rising costs often bring unexpected budget increases and make affordability for employers and employees more difficult.”
The Middle East and Africa are projected to have the highest trend rate of any region, at 15.5 percent. Asia-Pacific and North America will experience the highest year-over-year trend rate increases, at 11.1 percent and 8.8 percent, respectively. Rates in Latin America and the Caribbean and Europe are projected to increase by 10.7 percent and 8.9 percent, respectively—less than the projections for 2024 in both regions.
The top medical conditions expected to drive increases in the trend rate in 2025 are:
- Cardiovascular diseases, which are now the top medical condition anticipated to drive plan costs in 2025. They have been a top condition in every region, with more than 25 countries reporting the diseases as the most impactful condition.
- Cancer and tumors, which are the leading condition in 21 countries.
- High blood pressure and hypertension, which are consistently reported as the top condition driving adverse claims experiences in the Middle East and Arica, and increasingly in Latin America, with 16 countries reporting this as the most impactful condition.
- Obesity, another top global risk factor that is expected to affect future claims, driven by its prevalence in the United States, Canada, Latin America, and the Caribbean. This is particularly relevant as many countries cited prescription drugs used for weight loss as a leading factor in increasing the trend rate.
“As employer-sponsored medical plans become a larger part of total rewards spend, we are seeing businesses leverage trend rate data to inform their budgets and benefits strategies,” Davis said. “Well-being initiatives are again the leading mitigation strategy, as they help to control costs by encouraging utilization of preventive care and by keeping employees engaged in their well-being.”
From: BenefitsPRO