Medical cost growth across Asia Pacific is expected to slow from 11.3% in 2026 to 9.7% in 2027, but healthcare expenses are still rising fast enough to keep insurance affordability and benefit design under scrutiny.

Aon's 2027 Global Medical Trend Rates Report forecasts a second consecutive year of moderating growth, although medical costs are still expected to rise nearly four times faster than general inflation of 2.5%.

Slower growth may ease healthcare budgeting pressures but will not necessarily translate into smaller insurance premium increases, which also depend on claims experience, workforce demographics and coverage arrangements.

“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,” said Tim Dwyer, head of human capital, Asia Pacific, at Aon.

After accounting for general inflation, APAC's net medical trend rate is projected to decline from 8.9% to 7.2%, while the global medical trend rate is expected to fall from 9.8% to 9.0%.

China and India are expected to drive much of the regional slowdown, with medical trend rates falling from 7.8% to 6.0% and 11.5% to 10.1%, respectively. Rates are also projected to decline in the Philippines (14% to 11%), Thailand (14.8% to 11.7%), Malaysia (16% to 14.7%) and New Zealand (18% to 14%).

In contrast, Singapore's medical trend rate is forecast to rise from 13% to 14.7%, Taiwan's from 8% to 10%, and Indonesia's from 16.9% to 17.3%. Hong Kong's rate is expected to remain at 9%.

The differences highlight varying cost pressures across regional insurance markets, particularly for employers managing health benefits across multiple countries.

“The moderation in the region’s medical costs should not be interpreted as uniform relief for employers. Medical trend varies significantly across markets, reflecting different healthcare systems, supply and demand factors, demographic and disease patterns,” said Alan Oates, head of global benefits, Asia Pacific, at Aon.

Cardiovascular disease remains the leading condition driving medical claims, followed by ear, nose and throat and respiratory disorders, and cancer. Gastrointestinal, musculoskeletal and back conditions are also becoming more prevalent.

Hospitalization, clinics and laboratories remain major medical plan expenses, while prescription medications have moved into third place among the costliest components. High blood pressure, physical inactivity and poor nutrition are the leading risk factors for future claims.

To manage rising costs, Aon identifies wellness initiatives as the leading anticipated approach for the third consecutive year, at 95%, followed by plan design changes (70%) and cost containment and financing strategies (65%).

Access and delivery restrictions and flexible benefit arrangements each stand at 55%. The prevalence of flexible benefit plans has increased by 10 percentage points over the past two years.

Separate 2026 Health Trends research from Mercer Marsh Benefits found that 63% of surveyed insurers in Asia anticipated reductions in coverage to manage healthcare costs in 2026.