APAC insurers predict continued cost increases in 2025

Medical costs are set to rise by 12.3% in 2025, WTW says.

Medical costs in the Asia-Pacific (APAC) region are set to rise by 12.3% in 2025, continuing a trend of double-digit increases for the third consecutive year, according to WTW’s Global Medical Trends Survey.

The figure marks a slight uptick from the 11.9% growth projected in 2024. 

Rising health service usage, escalating pharmacy costs, and the adoption of new medical technologies are driving the surge, as highlighted by insurers surveyed by WTW.

In Singapore, medical cost inflation is expected to stabilise at 12% in 2025, mirroring this year’s trend. 

Audrey Tan, head of Health & Benefits for Southeast Asia and Singapore at WTW, noted that whilst inflation appears to be levelling off, the need for preventive care and workforce well-being remains critical to address demographic changes and long-term challenges.

Across the region, 76% of insurers predict medical costs will continue to rise significantly over the next three years, with 62% anticipating greater demand for healthcare services.

The increase in medical costs is attributed to a combination of internal and external factors. Internally, 79% of insurers cite excessive medical recommendations, including overprescription of diagnostics and medications, as key contributors. 

Externally, the adoption of costly new medical technologies (73%) and strain on public healthcare systems, leading to increased reliance on private providers (40%), are notable drivers.

Pharmacy costs are also expected to grow, with 25% of insurers projecting increases over the next three years. 

Ageing populations, rising chronic disease rates, expensive advanced treatments, and inflationary pressures are fueling this growth. 

Mental health care, although in high demand, remains underrepresented in insurance coverage. 

Only 4% of APAC insurers have removed exclusions for mental health conditions in their medical plans in recent years.

Royston Tan, head of Health & Benefits for APAC at WTW, emphasised the challenge employers face in managing rising costs without compromising employee care. 

Employers are urged to focus on preventive care, assess vendor solutions, and enhance well-being programs to balance cost control with improved health outcomes.