Employers’ annual percentage rise in the cost of providing medical services in major talent hubs to rise
[SINGAPORE] The Asia-Pacific’s medical trend rate is expected to moderate in 2027, but in two markets – Singapore and Taiwan – it is expected to continue its upward march.
The region’s medical trend rate – the predicted annual percentage rise in the cost of treating patients and providing healthcare services – is projected to slow to 9.7 per cent in 2027, down from 11.3 per cent this year. The projected average global trend rate for 2027 is 9 per cent.
But employers in Singapore and Taiwan will have no respite from rising benefit costs. In Singapore, the trend rate is forecast to rise by 14.7 per cent in 2027, up from 11.3 per cent this year.
Taiwan’s rate is expected to rise by 10 per cent, up from 8 per cent this year. The rates are gross of domestic inflation rates.
Hong Kong’s rate is expected to be flat at 9 per cent.
The report said in major talent hubs such as Singapore, the medical trend rate is expected to rise, given that medical benefits are seen as a competitive lever to attract and retain talent.
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The decline in the Asia-Pacific’s medical trend rate is largely driven by China and India, where rates are expected to slide by 1.8 and 1.4 percentage points, respectively.
Medical trend rates are also expected to moderate in Australia, Malaysia, New Zealand, the Philippines, South Korea, Thailand and Vietnam. However, five of these markets are still expected to show double-digit rates in 2027.
In the region, ageing populations and the rise in chronic conditions continue to drive healthcare utilisation and costs.
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Aon’s 2027 Global Medical Trend Rates Report is based on surveys conducted in more than 100 locations that broker, administer or advise on employer-sponsored medical plans.
The medical trend rate is the rate at which medical costs are expected to grow. A declining trend means costs are rising more slowly than before, not that they are falling, said the report.
Tim Dwyer, Aon’s head of human capital for the Asia-Pacific, said: “While medical trend growth is slowing, it remains more than three times the rate of inflation.
“Employers need to manage rising costs while protecting the value of employee benefits. To outperform average medical trend rates, organisations should use workforce and claims data to evaluate plan design, provider networks and financing strategies that can help improve long-term outcomes.”
Alan Oates, Aon’s head of global benefits for the Asia-Pacific, said: “The moderation in the region’s medical costs should not be interpreted as uniform relief for employers.
“Employers must analyse their own workforce insights alongside locally relevant data and market benchmarks to make informed decisions about benefits, design and where to invest.
“Insurers are investing at different rates in new technologies to understand and manage utilisation; employers should ensure they compare the fast-developing capability to deliver value.”
Cardiovascular disease remains the leading condition driving claims, followed by ear, nose, throat and respiratory diseases, and cancer or tumour growth. Hospitalisation, clinics and laboratories remain the costliest elements of medical plan cost.
In the Asia-Pacific, the principal risk factors contributing to future claims are high blood pressure, physical inactivity and poor nutrition. High cholesterol and blood glucose have also become more prevalent.
Wellness initiatives remain the most widely expected approach to managing rising medical-plan costs in the region; this strategy was cited by 95 per cent of employers.
Plan design changes are second (70 per cent), followed by cost containment and financing strategies.
Fifty-five per cent of employers said they expect to undertake access and delivery restrictions and flexible benefit plans to curb rising costs.