Insurers project medical cost growth of 16% in 2025, 2026

INSURERS said the affordability of medical insurance could be at risk with growth in the cost of medical treatment expected to rise 16% in 2025 and 2026.

Mercer Marsh Benefits said the projection was based on the results of a survey of eight insurers.

Growth in the cost of treatment far outstrips the inflation forecasts of 2.6% for 2025 and 2.9% for 2026.

In 2024, treatment costs rose 18%, also exceeding the 3.2% inflation rate.

“Another year of widespread double-digit medical trends across Asia is a wake-up call: cutting benefits may ease budgets now, but it shifts financial risk to employees and undermines retention.

“Employers should partner with insurers on data-driven plan design and targeted funding for high-cost claimants, tackle inefficiency and waste, and prioritize preventive care and mental health to preserve long-term affordability,” Mercer Marsh Benefits Asia Leader Steven Yu said.

In the Philippines, the firm surveyed First Life Financial Co., Inc., Generali Life Assurance Philippines, Inc., Insular Health Care, Inc. (iCare), Maxicare Healthcare Corp., PhilhealthCare, Inc., The Insular Life Assurance Co. Ltd., United Coconut Planters Life Assurance Corp., and Value Care Health Systems, Inc.

The projected rise in medical costs in the Philippines exceeds the average growth projections for Asia of 12.4% for 2025 and 12.5% for 2026.

Globally, medical costs are expected to increase 10.7% this year and by 11% next year, according to 268 insurers across 67 markets surveyed.

The report said insurers expect plan utilization to rise due to ageing populations and the prevalence of chronic health conditions; healthcare staff shortages delaying access to primary care and greater reliance on virtual care, urgent care, or hospital treatment; pressures on public health systems, particularly in Europe, leading more people to use private health plan benefits; higher-cost treatments, notably advanced cancer therapies, adding complexity to care delivery and management; and dependence on imported medical goods and services in many markets, creating delays and disruptions in supply chains.

Trade policy shifts in the US are also a factor in rising medical costs, with more than half (52%) of surveyed insurers expecting tariffs and supply chain disruptions to have a significant or very significant effect on the cost of treatment in 2026.

“On average, insurers are adding between 1.0 to 2.5 percentage points into their trend projections to reflect market uncertainty created by these policy shifts,” the firm said. — Aaron Michael C. Sy