Medical Rate Trends and Mitigation Strategies Across the Globe

Medical Rate Trends and Mitigation Strategies Across the Globe
December 13, 2024 13 mins

Medical Rate Trends and Mitigation Strategies Across the Globe

Medical Rate Trends and Mitigation Strategies Across the Globe

Rising medical costs are a global phenomenon. Aon’s 2025 Global Medical Trend Rate Survey found that costs are projected to rise 10 percent in 2025.

Key Takeaways
  1. Costs in multiple regions are being driven by advances in cancer treatments that provide better outcomes but are also expensive. Similarly, GLP-1 drugs for diabetes and obesity management are driving up costs.
  2. The fact that trend rate increases are somewhat lower in many countries with public or combination public and private healthcare systems shows there is a role for governments to play in controlling costs.
  3. Organizations have been using the same mitigation strategies for a decade, which suggests that customization and flexibility will be important going forward.

The rapid rise in healthcare costs is a familiar story. Over the past decade, the medical trend rate has fluctuated, while still remaining well above the general inflation rate. According to Aon’s Global Medical Trend Rate Survey 2025, the trend rate for 2025 is projected at 10 percent — the third double-digit increase in the past decade. Even with some variation in the overall trend rate, however, the risk factors and conditions driving the trend rate globally have remained remarkably consistent over time.

Employers looking for ways to mitigate these costs will need to recognize that some of the larger factors may be beyond their scope of control. For example, an aging population and macroeconomic conditions can affect costs just as much as any particular risk factor or disease. 

That said, employers also need to consider a long-term view of the issue. Mitigating cost increases is an ongoing project — and one with progress that may not be linear. Designing strategies to lower costs demands that companies allow time for the program to work, as well as a commitment to analyze results and tweak programs to be more effective.

Despite the consistency in risk factors and conditions year-over-year, there are significant regional differences to consider when developing cost mitigation plans. 

Asia Pacific

  • Overview

    Asia Pacific is one of two regions with the highest projected increase in medical trend rate versus last year. This increase is being driven by persistently high utilization, as well as price inflation, particularly in ASEAN countries. Given these rising numbers, employers are becoming more open to exploring plan design changes to contain cost. Wellness initiatives remain a key focus area among employers looking to improve employees’ wellbeing and health outcomes.

  • Why Costs are Higher in Asia Pacific

    There are a few factors at work in the region that explain how and why the trend rate has grown. Several countries in the region removed COVID-19-related restrictions later than other regions, meaning there is still some catch-up effect in play. High utilizations are observed across all benefit provisions — from inpatient and outpatient to ancillary benefits. Apart from pandemic claim recovery, the high utilization is also driven by increasing health consciousness among insureds, resulting in higher diagnosis, more severe illnesses due to delayed treatment, as well as a maturing private healthcare system supporting an aging population. High blood pressure, high cholesterol and poor stress management are the top three risk factors, while cardiovascular, gastrointestinal and cancer are the top three medical conditions. 

    There are a few countries in the region with below average trend rates, specifically Hong Kong, Australia and Japan, which are more mature markets. Additionally, Australia and Japan have larger government-funded healthcare than many other countries in the region, accounting for the lower trend rate.

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With utilization slowing back toward the long-term trend and lower inflation, we are seeing signs of exiting the hard market. Insurers who took more drastic price actions in previous renewals now have improved risk appetite and can compete again.

Daniel Teoh
Senior Data and Analytics Consultant, Global Benefits, Asia Pacific

Europe

  • Overview

    Lower annual general inflation may be contributing to the fact that three in four European countries are projecting either a flat or lower rate in 2025. Cardiovascular and cancer remain the top medical conditions for the past decade. High blood pressure, poor stress management and physical inactivity have also held onto the top three spots for risk factors since 2019. Before then, smoking and high cholesterol made the list. Leading costs have remained stable since 2019 as well, with hospitalization followed by clinics/labs and physician services rounding the top three.

    Mitigation strategies have been mostly the same, with wellness initiatives leading for the past seven years. For the past two years, plan design changes and cost containments have been in the second and third spot, respectively. 

  • Bringing Down Costs in Europe

    Addressing rising health costs while maintaining a relevant employee health benefit program in Europe requires a multi-faceted approach. Employers need to understand the regulatory landscape of the region. Understanding the variations in laws surrounding health benefits is vital to navigating cost and compliance. 

    Additionally, careful monitoring and analysis of health metrics can help organizations better understand specific risks and cost drivers. By recognizing the causes, behaviors and trends, employers can identify areas for intervention and anticipate future costs.

    Customization is a crucial part of plan design. Focusing investment on what matters to the organization and its people and using the voice of employees to understand what employees value and need can serve as a guide. Sharing plan design and financing, along with giving employees the flexibility to choose and complement a base plan with the options that best suit their needs, can also help organizations provide better benefit options. Consider using technology as an ally to promote healthy behaviors, facilitate access to healthcare and potentially reduce the need for more costly medical interventions.

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A broad, tailored plan is necessary and should consider the needs of employees, as well as the market in which it operates. Make sure to have quality data for decision making and involve employees in promoting their health and wellbeing.

Joana Coelho
Regional Consultant, Health Solutions, Europe, the Middle East and Africa

Latin America and the Caribbean

  • Overview

    Latin America and the Caribbean (LAC) is one of two regions in our survey projecting a decrease in the medical trend rate this year. The overall one percentage point decrease for the region is in line with its decrease in the annual general inflation rate. Hospitalization continues to be the top cost driver, followed by prescription drugs and clinics/labs. Wellness initiatives and cost containment remain the top two mitigation strategies consistently for the past nine years. 

  • Wellness Initiatives in Latin America and the Caribbean

    As the top mitigation strategy in the region, wellness initiatives are an important part of keeping costs at bay. That means, among other things, a robust program of screenings, which are a basic component of any physical wellbeing strategy. This is especially important, given that the top risk factor for the past decade has been high blood pressure, which is both easy to screen for and relatively inexpensive to treat. 

    Where employers in the region run into issues is the provider networks in the wellbeing space. There are simply not enough providers to meet the demand. In turn, this drives up costs and eats into the savings a wellbeing strategy would ordinarily provide.

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In the U.S., companies are accustomed to having many providers with services that will accommodate them. Contrastingly, some countries in Latin America lack even a small network of providers — a shortage that can drive up costs and diminish potential savings.

Carlos Ferreyra
Head of Advisory and Specialty, Health Solutions, Latin America

Middle East and Africa

  • Overview

    The Middle East and Africa is the only region with a projected increase in the annual general inflation rate. Therefore, it’s not surprising to see it has the highest medical trend of any region. High blood pressure is both the top risk factor and the top condition driving costs — and has been for many years. The top three cost drivers have remained fairly constant for the past seven years: hospitalization, prescription drugs and clinics/labs. Physician services have shown up a couple of times on the list in the past decade, but fell off this year. 

    Similar to Latin America, this year was the first time flexible benefit plans to cap overall benefit costs made the top three list for mitigation strategies, along with cost containment and wellness initiatives. 

  • Middle East Specifics

    The primary factor driving costs in the Middle East is increased demand for healthcare services, driven by both population growth and higher incidence of chronic diseases. Additionally, there are shortages among clinical workers that have contributed to labor costs. As in other regions, advanced therapies and more expensive prescription drugs like GLP-1s have raised costs as well. 

  • Africa Specifics

    Reflecting the diversity of the region, trend rate forecasts for countries in Africa vary widely. While several countries predict a decline in the trend rate for 2025, Nigeria, the fourth largest economy in the region, is experiencing a large increase (from 22 percent to 34.2 percent). This then offsets any decreases. The largest decrease in Africa is expected in Ghana, which is projecting a still-above average 20 percent trend rate, down from 35 percent in 2024, as the Ghanaian economy has grown substantially in 2024.  

  • The Way Forward in Africa

    Encouraging employees to take greater accountability for outpatient benefits, such as routine checkups and minor treatments, can significantly help manage healthcare costs. By shifting the responsibility to employees through mechanisms like health savings accounts and co-payments, companies can promote cost-conscious decision making and encourage healthier behavior, while also safeguarding the sustainability of medical insurance programs. Businesses could also consider carving out self-insured programs and adapting coverage to mitigate specific business-related risk factors. 

    Finally, the model of covering healthcare costs for employees’ entire families may need to be reevaluated. Striking a balance between offering meaningful healthcare benefits and ensuring employment is essential. Employers should consider options that align with their financial capacity and the expectations of their workforce. A new approach to healthcare benefits will be crucial to fostering fairness, sustainability and adaptability in response to the evolving healthcare landscape.

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It has become imperative for employers across Africa to reassess healthcare benefits, with a focus on high impact, insurable risks like inpatient care, critical care, evacuation and dread diseases. This ensures efficient resource allocation.

San Singaravelloo
Regional Leader, Global Benefits, Africa

North America

  • Overview

    North America is one of two regions where the medical trend rate is higher for 2025. In Canada and the United States combined, it is expected to be 8.8 percent in 2025 versus 7.6 percent in 2024. 

  • Canada Specifics

    The increase from 5 percent to 7.4 percent in Canada is happening despite an expected decrease in general inflation. Increased utilization, advances in technology and more costly prescription drugs are cited as the main reasons for the increase. 

    Canada has historically reported different trend rate factors than other areas. For example, autoimmune disease is among the chief conditions driving costs, and genetics is listed as a top risk factor, unlike most other places. Flexible benefit plans that cap overall costs are a more popular cost mitigation strategy than wellbeing programs and dental treatment has been listed as the first or second biggest cost element since 2019. Those are unique factors driving the trend rate, which may reflect the country’s combined public and private insurance system. 

  • United States Specifics

    It is nearly impossible to discuss the increasing cost of healthcare in the U.S. without mentioning cancer care and the rise of GLP-1 prescription drugs. Cancer treatment costs will likely double in the next few years, as more effective yet expensive therapies are more widely used. The rising costs are also driven by higher rates of cancer, as more and younger people are diagnosed. 

    GLP-1 drugs are expected to add a full percentage point to the medical trend rate by themselves. Intuitively, it would seem as though the high cost of these drugs could be offset by savings downstream as a result of the person using the drugs to improve their health. However, there is no data yet that suggests this is the case, meaning the decision of employers to select insurance plans that cover GLP-1s needs to be made on its own merits. 

    Mitigation strategies have fluctuated. The core strategic approach has evolved over the past several years from cost shifting to optimization of service delivery to using flexible benefit plans that address cost, affordability and provider steerage. This could mean that companies have tried a variety of strategies to lower costs with limited results. Further optimization efforts include adding incentives, for example, for patients who follow navigators’ recommendations for care. Tiered co-pays, meaning members pay less when using high-quality providers, or virtual care are examples of emerging plan models. 

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Cancer costs will double in the next five years. That’s because we’re seeing some very effective, very expensive treatments being developed. It means better outcomes, but it also means that screening and early detection are more important than ever.

Charles E. Smith
MD, Chief Medical Officer, Health Solutions, North America

Medical Trend Rates Will Continue to Rise 

Many employers and analysts used to describe high trend rates as “unsustainable.” Unfortunately, this doesn’t seem to be true. In the last 10 years, the trend rate has only dipped below 8 percent three times. Meanwhile, three other years in that time frame show the trend rate has been 10 percent or more. The current high-trend environment is expected to continue, as the underlying issues are unlikely to be solved in the short term. Companies looking to save costs should:

  1. Take a long-term view. These challenges have built up over time, so it stands to reason that they will take some time to resolve.
  2. Be willing to challenge the status quo. If current mitigations aren’t holding costs down, more bold actions may be necessary.
  3. Constantly reevaluate existing strategies. Finding what works and amplifying it is as important as finding what doesn’t work and eliminating it.

The reality is that there is currently no one solution to high medical trends. Rather, employers need to take an “all of the above approach,” while also communicating honestly with employees by letting them know how much they are investing in the issue, and what they are doing to try to ensure the health of workers and their families. 

Aon’s Thought Leaders
  • Charles E. Smith
    MD, Chief Medical Officer, Health Solutions, North America
  • San Singaravelloo
    Regional Leader, Global Benefits, Africa
  • Carlos Ferreyra
    Head of Advisory and Specialty, Health Solutions, Latin America
  • Daniel Teoh
    Senior Data and Analytics Consultant, Global Benefits, Asia Pacific
  • Joana Coelho
    Regional Consultant, Health Solutions, Europe, the Middle East and Africa

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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