The projected medical trend rate remains substantially above the forecast for APAC general inflation rate of 2.5%. After accounting for inflation, the net medical trend rate is expected to decline from 8.9% in 2026 to 7.2% in 2027. Globally, the medical trend rate for 2027 is projected to decrease from 9.8% in 2026 to 9.0% in 2027.
"While medical trend growth is slowing, it remains more than three times the rate of inflation," said Tim Dwyer, Head, Human Capital, Asia Pacific, Aon. "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."
Medical Cost Trends Vary Across APAC Markets
The outlook varies considerably across markets. The decline in the regional trend rate is driven largely by China and India, which are projected to see medical trend rates decrease by 1.8 and 1.4 percentage points, respectively. Medical trend rates are also expected to moderate in Australia, Malaysia, New Zealand, Philippines, South Korea, Thailand and Vietnam, although five of those markets are still projected to record double-digit trend rates in 2027.
These declines are partly offset by higher projected trend rates in Singapore and Taiwan, while Hong Kong is expected to remain flat at 9%. Across the region, ageing populations and the growing prevalence of chronic conditions continue to influence healthcare utilisation and costs.
"The moderation in the region's medical costs should not be interpreted as uniform relief for employers," said Alan Oates, Head, Global Benefits, Asia Pacific, Aon. "Medical trend varies significantly across markets, reflecting different healthcare systems, supply and demand factors, demographic and disease patterns. 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 and employers should ensure they compare the fast-developing capability to deliver value."
| 2026 | 2027 | |||||
| Annual General Inflation Rate (%) | Annual Medical Trend Rates (%) | Annual General Inflation Rate (%) | Annual Medical Trend Rates (%) | |||
| Gross | Net | Gross | Net | |||
| AsiaPacific | 2.4 | 11.3 | 8.9 | 2.5 | 9.7 | 7.2 |
| Australia | 3.5 | 5.2 | 1.7 | 3.2 | 4.9 | 1.7 |
| Bangladesh | 5.2 | 10 | 4.8 | 6 | 10 | 4 |
| China | 0.6 | 7.8 | 7.2 | 1.5 | 6 | 4.5 |
| Hong Kong | 2.2 | 9 | 6.8 | 1.8 | 9 | 7.2 |
| India | 4.1 | 11.5 | 7.4 | 4 | 10.1 | 6.1 |
| Indonesia | 2.5 | 16.9 | 14.4 | 2.6 | 17.3 | 14.7 |
| Japan | 1.7 | 2.7 | 1 | 2.3 | 3.1 | 0.8 |
| Kazakhstan | 9.4 | 29 | 19.6 | 10.1 | 32 | 21.9 |
| Malaysia | 2.2 | 16 | 13.8 | 2 | 14.7 | 12.7 |
| Mongolia | 9.1 | n/a | n/a | 7.2 | 10 | 2.8 |
| New Zealand | 2 | 18 | 16 | 2.3 | 14 | 11.7 |
| Pakistan | 7.7 | 23.5 | 15.8 | 8.4 | 24.4 | 16 |
| Papua New Guinea | 4.6 | 15 | 10.4 | 4.4 | 5 | 0.6 |
| Philippines | 2.9 | 14 | 11.1 | 3.2 | 11 | 7.8 |
| Singapore | 1.5 | 13 | 11.5 | 1.9 | 14.7 | 12.8 |
| South Korea | 1.8 | 11.5 | 9.7 | 1.9 | 10.5 | 8.6 |
| Sri Lanka | n/a | 6.5 | n/a | n/a | 14.3 | n/a |
| Taiwan | 1.6 | 8 | 6.4 | 1.6 | 10 | 8.4 |
| Thailand | 0.9 | 14.8 | 13.9 | 1 | 11.7 | 10.7 |
| Vietnam | 2.5 | 12.2 | 9.7 | 4.6 | 9.9 | 5.3 |
Chronic Conditions Continue to Drive Claims
Cardiovascular disease remains the leading condition driving medical claims in the region, followed by ENT/lung and respiratory diseases, and cancer or tumor growth. Hospitalisation, clinics and laboratories remain the most costly elements of medical plan costs, while prescription medication has moved into third place compared to last year. Gastrointestinal, musculoskeletal and back conditions are also becoming more prevalent in the region.
In APAC, the principal risk factors contributing to future claims are high blood pressure, physical inactivity and poor nutrition, while high cholesterol and blood glucose are also increasing in prevalence.
Wellness initiatives remain the most widely expected approach to managing rising medical plan costs in the region, retaining the top rank for the third consecutive year with 95% of employers expected to use this approach. Plan design changes ranked second at 70%, followed by cost containment and financing strategies at 65%. Fifty five percent of employers are expected to undertake access and delivery restrictions and flexible benefit plans to curb medical cost escalation and promote a healthy workforce. While both increased slightly over the past year, the prevalence of flexible benefit plans has risen by 10 percentage points over the past two years, indicating the emphasis that employers are placing on flexible benefits on managing overall costs.
About the 2027 Global Medical Trend Rates Report
The 2027 Global Medical Trend Rates Report is based on insights from over 100 Aon offices that broker, administer or advise on employer-sponsored medical plans. The findings reflect the expectations of Aon professionals based on their interactions with clients and carriers across the region. Medical trend represents the anticipated annual percentage increase in the cost of treating patients and providing healthcare services. A lower trend rate means that healthcare costs are increasing more slowly, not that total costs are decreasing.
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Disclaimer
The information contained in this document is solely for information purposes, for general guidance only and is not intended to address the circumstances of any particular individual or entity. Although Aon endeavours to provide accurate and timely information and uses sources that it considers reliable, the firm does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of any content of this document and can accept no liability for any loss incurred in any way by any person who may rely on it. There can be no guarantee that the information contained in this document will remain accurate as on the date it is received or that it will continue to be accurate in the future. No individual or entity should make decisions or act based solely on the information contained herein without appropriate professional advice and targeted research.
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