Medical costs are projected to continue to rise in 2025
The WTW Global Medical Trends Survey reveals that medical costs are projected to remain high at a global average rate of 10.4% in 2025, continuing the double-digit growth from 2024 and 2023, when it peaked at 10.7%.
Medical trend is projected to continue to rise in North America, up from 8.1% in 2024 to a projected rate of 8.7% in 2025, and in Asia Pacific, from 11.9% in 2024 to 12.3% in 2025. Trend is projected to grow most significantly in the Middle East and Africa (MEA), where it's anticipated to increase from 10.4% in 2024 to 12.1% in 2025; however, the trend has been cooling in some regions, such as Europe and Latin America, it is projected to remain elevated over the longer term.
Globally and by region
| Gross | Net [2] | |||||
|---|---|---|---|---|---|---|
| 2023 | 2024 | 2025 (projected) | 2023 | 2024 | 2025 (projected) | |
| Global [1] | 10.7 | 10.4 | 10.4 | 5.5 | 7.4 | 7.8 |
| Latin America [1] | 10.8 | 10.4 | 10.1 | 6 | 7.6 | 7.4 |
| North America | 7.8 | 8.1 | 8.7 | 3.7 | 5.3 | 6.8 |
| Asia Pacific | 10.9 | 11.9 | 12.3 | 7 | 9.1 | 9.8 |
| Europe [1] | 11 | 10.1 | 9.4 | 5 | 7.4 | 7 |
| Middle East and Africa | 10.9 | 10.4 | 12.1 | 5.5 | 5.4 | 8 |
Over the next three years, 64% of insurers anticipate higher or significantly higher medical trends globally. This projection is higher in Asia Pacific, where over three-quarters (76%) of insurers predict higher or significantly higher trends for the region.
Furthermore, two-thirds (67%) of insurers anticipate higher or significantly higher global demand for healthcare services over the next three years. This is especially the case in Europe, where insurers overwhelmingly are predicting significant increases in demand for healthcare.
Increased utilization of mental health services
Advancements in pharmaceuticals
Pressure to continually develop and improve medical technology and delivery infrastructure
Pressure on private healthcare providers
The impact of provider and employee behaviors
The rise in availability of telehealth and other virtual care offerings
A third (33%) of insurers expect substantial increases of 15% or more in costs per person for mental health services over the next three years. This is reported to be highest in Europe, where 44% of insurers expect such increases, followed by about a quarter of insurers in Asia Pacific (25%) and MEA (23%).
Globally, claims for mental and behavioral disorders continue to be the fastest-growing conditions by incidence over the previous 18 months, as reported by about half of insurers (48%). This is reported to be the highest in Europe, where 70% of insurers report it as the fastest-growing condition.
One in five (21%) insurers expects substantial increases of 15% or more in pharmacy costs, while almost half (46%) expect moderate growth (5% to 15% increase).
A prominent driver behind these cost increases is advancements in pharmaceuticals. Over half (55%) of insurers in MEA and the Americas cite advancements in pharmaceuticals as a significant factor driving medical costs.
Globally, about two-thirds (69%) of insurers report the cost of new medical technologies as the top driver of medical costs. This is also reported as the top cost driver in both the Americas (88%) and Asia Pacific (73%). The demand to make healthcare cost-efficient and sustainable in the long term, while not compromising on patient care, is fueling medical technology development worldwide.
More than half (57%) of insurers report the decline in quality or funding of public healthcare as a top driver of increase in medical costs. Europe stands out as the region where the decline in public health systems is reported as the primary reason for cost increases, as cited by 75% of insurers. In the Americas, half of insurers (49%), and in Asia Pacific, 40% choose it as a top reason.
Globally, three-quarters (72%) of insurers report overuse or misuse of care due to practitioners recommending too many services as a top factor driving costs, which is an increase from 59% in 2023. This is the top behavioral driver of costs in all regions but the Americas.
The biggest change made to medical portfolios in 2024 across all regions is the addition of telehealth and wellbeing services. Insurers continue to add telehealth services and features to their medical portfolios, with almost half of global insurers making these changes in 2024 — an increase from 41% in 2023. This is especially the case in MEA, with 58% of insurers reporting adding these benefits, and in Europe (50% of insurers).
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In addition to the submissions from insurers on 75 markets, we received input for 55 markets from WTW brokers. The combined data covers 90 markets.
