SINGAPORE, December 3, 2024 — For the third consecutive year, medical costs in Asia Pacific (APAC) are projected to increase by double digits, with little relief in sight. That’s according to a survey of health insurers conducted by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company. Survey respondents cited increased use of health services, rising pharmacy costs, and new medical technologies as the primary drivers of overall medical costs.
The WTW Global Medical Trends Survey found that insurers in APAC are projecting medical costs will increase by 12.3% in 2025 up from 11.9% this year. The projected growth in medical costs varies by markets in APAC. In Singapore, medical insurance costs increase is expected to be stable at 12% in 2025, similar to 2024. While the trend may be slightly cooling, it is projected to remain elevated over the longer term.
“Singapore’s medical inflation rate seems to be moving into a stable trend in 2025. The government also remains invested in improving the health of its population. It is therefore important for companies to focus on workforce wellbeing and with high emphasis on preventive care. The focus is to build a future-ready workforce that is ready for challenges ahead, especially to cater for the varying demographics in today’s workplace,” said Audrey Tan, Head of Health & Benefits, Southeast Asia and Singapore at WTW.
| 2023 | 2024 | 2025 projected | |
|---|---|---|---|
| Global+ | 10.7% | 10.4% | 10.4% |
| North America | 7.8% | 8.1% | 8.7% |
| Latin America | 10.8% | 10.4% | 10.1% |
| Asia Pacific | 10.9% | 11.9% | 12.3% |
| Europe | 11.0% | 10.1% | 9.4% |
| APAC markets with higher percentages than regional average in 2025 (projected) | |||
| Indonesia | 12.4% | 15.6% | 19.4% |
| Philippines | 17.9% | 19.3% | 18.3% |
| Malaysia | 16.6% | 14.9% | 16.4% |
| New Zealand | 11.0% | 16.0% | 16.0% |
| Thailand | 12.3% | 15.2% | 14.2% |
| India | 10.4% | 12.5% | 13.2% |
| APAC markets with lower percentages than regional average in 2025 (projected) | |||
| Singapore | 13.7% | 12.0% | 12.0% |
| South Korea | 11.7% | 11.6% | 11.9% |
| Vietnam | 4.8% | 20.5% | 11.2% |
| Australia | 9.2% | 8.5% | 11.1% |
| Taiwan | 8.0% | 9.0% | 11.0% |
| China | 8.7% | 10.5% | 10.8% |
| Hong Kong | 10.3% | 10.3% | 9.8% |
Nevertheless, more than three-quarters (76%) of insurers in APAC anticipate higher or significantly higher medical trends over the next three years. The demand for medical care is also expected to remain elevated in the near future. Close to two-thirds (62%) of insurers in the region anticipate higher or significantly higher demand for healthcare services over the next three years.
Globally, insurers are facing heightened increases in both utilisation and unit prices as primary cost drivers. In APAC, nearly three in five insurers attribute the increase to an even spilt between unit cost and utilisation.
Internal drivers of medical costs are perpetuated by behaviours of healthcare providers and insured members. The top factor reported is medical practitioners recommending too many services (79%), including overprescription of both medications and diagnostics, which results in unnecessary and excessive costs.
External factors that insurers cite as healthcare cost drivers this year include higher cost of new medical technologies (73%); the continued pressure being placed on private healthcare providers as public healthcare systems are overwhelmed (40%) which leaves many employees to turn to and rely on private medical providers; as well as the lack of cost sharing in plan design (39%).
Mental health costs and pharmacy are also expected to grow significantly in the region. One quarter of the insurers in APAC expect pharmacy costs to grow over the next three years. “High pharmacy costs can be attributed to the ageing population and increase in chronic diseases among the population in many of the Asian markets, such as Singapore; high cost of new pharmaceuticals and biologics for advanced therapies treatments; adoption of expensive medication that is perceived as branded and more superior to generic medicines; and issues with supply chain and inflation,” added Audrey.
Furthermore, the need for mental healthcare continues to exist and grow. However, only 4% of insurers in APAC have removed exclusion of the condition in their medical portfolios in the last one to two years.
“Mental and behavioural health conditions remain the fastest growing conditions globally, except in APAC. In many markets here, it is still a standard exclusion in medical plans and considered a stigma where employees are not seeking help. Although more insurers in Hong Kong and Singapore have included mental health or removed exclusions of the condition in their medical portfolios, more needs be done,” said Royston Tan, Head of Health & Benefits, Asia Pacific, WTW.
The double digits trend of medical cost increases remains and is expected to rise in the near future. “The seemingly never-ending rise in costs poses a constant challenge for employers to manage their medical programmes in a sustainable manner. Employers will need to brace themselves for higher expenses without compromising care for their employees,” added Royston.
“While recognising that some factors influencing costs may be out of their control, employers can hone-in on key initiatives to help control costs while boosting the value of their health benefits. These include but are not limited to promoting preventive care, evaluating vendor solutions and continuing to expand wellbeing offerings. The objective is to provide employees more resources to understand the importance of taking care of their own health, supported by quality patient-centric care at an affordable price.”
WTW conducted its 2025 Global Medical Trends Survey between June and August 2024. A total of 348 leading health insurers representing 75 countries participated in our survey. In addition to submissions from insurers, we received input from WTW local brokers representing 55 countries. The combined data covers 90 countries, including markets in Asia Pacific.
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