Global Medical Costs Projected to Rise 10.4% in 2025, Challenging Employers and Healthcare Systems

The healthcare industry has been facing escalating medical costs globally, and new data suggests that this trend is set to continue for the foreseeable future.

A recent survey from WTW, the Global Medical Trends Survey, reveals that insurers around the world are forecasting a 10.4% increase in medical expenses for 2025. This marks the third consecutive year of double-digit growth, following similar increases of 10.4% in 2024 and 10.7% in 2023.

“With medical costs continuing to rise at double-digit rates, employers must manage budget expectations while balancing cost increases with data-driven business and health outcomes,” said Linda Pham, global health and risk leader at WTW. “The ongoing escalation of costs presents a continuous challenge for employers to take proactive steps to manage these unsustainable increases.”

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WTW, a global advisory, broking, and solutions company, conducted the survey between June and August 2024, gathering responses from 348 health insurers across 75 countries, with additional input from WTW brokers in 55 countries. The survey spans a total of 90 countries.

Regional variations in projected medical cost increases are notable. For example, costs are expected to rise by 8.7% in North America, 10.1% in Latin America, 12.3% in Asia Pacific, 9.4% in Europe, and 12.1% in the Middle East and Africa.

Several factors are contributing to the global increase in medical costs. These include the development of advanced medical technologies and pharmaceuticals, which significantly raise care expenses. Public healthcare systems are also struggling with high demand and limited resources, pushing many individuals to seek private healthcare. The demand for healthcare, particularly mental health services, has also surged in recent years, further driving up costs.

These trends are expected to persist long-term, with 64% of insurers forecasting “higher or significantly higher” global medical trends over the next three years. Additionally, 67% anticipate an increased demand for healthcare services globally during the same period.

However, employers can take steps to mitigate the impact of rising healthcare costs. According to Lindsey Loy Blau, associate director at WTW, “Employers should brace for higher healthcare costs and demand in 2025 and beyond. While some factors are beyond their control, employers can focus on actions that enhance the value and efficiency of their healthcare plans, such as promoting preventive care, considering targeted behavioral health programs, and optimizing benefit spend with measures like pharmacy coverage and utilization reviews.