For the third consecutive year, global medical costs are projected to increase by double digits, according to a recent survey of health insurers conducted by Willis Towers Watson (WTW), a global advisory and commercial insurance brokerage services company.
The 2025 WTW Global Medical Trends Survey found projected growth in medical costs would be 10.4% globally in 2025 but vary by region. In North America, costs are projected to rise from 8.1% in 2024 to 8.7% in 2025, while in the U.S., insurers project a 10.2% hike in 2025, up from 9.3% this year.
Costs are projected to accelerate most in 2025 in the Asia Pacific region (+12.3%) and in the Middle East and Africa (+12.1%), while Europe (+9.4%) and Latin America (+10.4%) will see relatively slower increases, the survey found.
Survey respondents cited increased utilization of health services, rising pharmacy costs and new medical technologies as the primary drivers of overall medical costs.
The demand for medical care is not expected to decline in the near future. Two-thirds (67%) of insurers surveyed anticipate higher or significantly higher global demand for healthcare services over the next three years.
“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, WTW. “The seemingly never-ending rise in costs poses a constant challenge for employers to take action in order to mitigate these unsustainable increases.”
Several major factors are contributing to continued high medical costs, WTF said in a statement about the survey results on Nov. 21. The rise in new medical technologies and pharmaceuticals has greatly contributed to the increased cost of care globally. Public healthcare systems worldwide have been overwhelmed by high demand and limited resources, leaving some to rely on private medical providers.
Additionally, a surge in healthcare utilization over the past few years (with a growing trend in utilization of mental health services), 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, 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 healthcare coverages.”
