Male doctor counting money.

Health insurers expect global medical costs to increase by double digits for the third consecutive year, according to a survey conducted by WTW. Survey respondents cited increased utilization of health services, rising pharmacy costs and new medical technologies as the primary drivers of overall medical costs.

“With medical cost increases remaining at double-digit levels, employers will need to manage budget expectations and balance cost increases with data-driven business and health outcomes,” said Linda Pham, global health and risk leader, Integrated & Global Solutions, for WTW. “The seemingly never-ending rise in costs poses a constant challenge for employers to take action in order to mitigate these unsustainable increases.”

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Insurers expect global medical costs to increase by 10.4% in 2025, which mirrors this year’s rate. The projected growth in medical costs varies by region:

  • In North America, costs are projected to rise from 8.1% in 2024 to 8.7% in 2025.
  • In the United States, insurers project a 10.2% increase in 2025, up from 9.3% this year.
  • Costs also are projected to accelerate in Asia Pacific, the Middle East and Africa, while Europe and Latin America will see slower increases.
Moreover, no cost relief is on the immediate horizon. Although the trend may be slightly cooling in some regions, it is projected to remain elevated over the longer term. Over the next three years, nearly two-thirds of insurers anticipate higher or significantly higher medical cost trends globally. The demand for medical care also is not expected to decline in the near future. Two-thirds of insurers anticipate higher or significantly higher global demand for health care services over the next three years.

Several major factors are contributing to continued high medical costs. The rise in new medical technologies and pharmaceuticals has greatly contributed to the increased cost of care globally. Public health care systems around the world have been overwhelmed because of high demand and limited available resources, leaving members to turn to and rely on private medical providers. Additionally, there has been a surge in health care utilization over the past few years (including a growing trend in utilization of mental health services), which continues to add to the overall cost of care.

“While recognizing that some factors influencing costs may be out of their control, employers can explore initiatives that may help control costs while boosting the value of their health benefits,” said Courtney Stubblefield, managing director, Health & Benefits, for WTW. 

“These include but are not limited to evaluating vendor and digital health solutions that expand wellbeing resources and reduce unnecessary utilization as well as reviewing their markets to ensure efficient sourcing of private health care coverages.”

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Alan Goforth

Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.