Insurance companies cite technology, the decline of public healthcare and overuse of services as the main drivers of inflation.
According to WTW's 2025 Global Health Trends Survey, health care costs are faster in the Asia-Pacific region than anywhere else in the world, which expects global healthcare inflation to be up to 12.3% this year.
“The rise is quite sharp, but I think there are some expectations,” said Eva Liu, head of strategic development, health and welfare at the Asia-Pacific region. “From the results in 2023, we have seen 73% of Asia-Pacific insurers expect higher health care trends in the next three years. So overall, we know that this will happen.”
According to Liu, the highest driver of medical inflation remains the adoption of new technologies and is under-cost as insurers continue to label these factors as major contributors. However, other structural challenges are exacerbating the problem.
“40% of insurers also use the decline in public system quality and funding as behavioral drivers,” Liu said. “This continues, with 80% of insurers citing overuse and abuse of care caused by doctors recommending too many services, and more than half of them are also worried about poor health habits among members.”
Some markets are getting bigger and bigger. Liu pointed out that medical inflation rates in Indonesia and the Philippines exceeded 18%, higher than the regional average. “The weakening of local currencies further affects the rising costs of raw materials, drugs and medical equipment,” she added.
As medical expenses soar, employers are urged to implement cost control strategies.
“We recommend employers do some quick checks on some of the minimum measures,” Liu said, stressing that companies should leverage supplementary services, improve employee communication, and analyze claim data to identify spending patterns and opportunities for cost optimization.
She noted that while medical inflation is expected to continue, companies can mitigate their impact by tightening policies, preventing abuse of benefits and using case management to improve care for chronic diseases.
