Insurers Project Another Double-Digit Increase in Global Health Care Costs in 2025

Global health care costs are expected to rise by double digits for the third consecutive year, new data finds.

Insurers are projecting global medical costs to increase by 10.4% in 2025, matching this year’s hike, according to the WTW Global Medical Trends Survey. In North America, costs are projected to rise 8.7% in 2025, up from an 8.1% increase in 2024. Meanwhile, insurers expect costs in the U.S. to rise by 10.2%, up from last year’s 9.3% increase. Costs are also projected to accelerate in Asia Pacific, the Middle East, and Africa, while Europe and Latin America will see slower increases.

And there’s no end in sight to health care cost increases. Overall, WTW’s survey of 348 health insurers representing 75 countries found that 64% of insurers anticipate higher or significantly higher medical trends globally over the next three years. Additionally, two-thirds (67%) of insurers anticipate higher or significantly higher global demand for health care services over the next three years.

A rise in new medical technologies and pharmaceuticals is among several factors contributing to increasing global health costs—which peaked in 2023 at a 10.7% increase, according to WTW data.

An increase in health care utilization since the onset of the COVID-19 pandemic in 2020—particularly the growing utilization of mental health services, which continues to add to the overall cost of care—is another main factor. More employees are dealing with mental health issues, with ComPsych data finding that employee leaves of absence for mental health issues—including anxiety and depression—are surging in the workplace, up a whopping 300% from 2017 to 2023.

A third of insurers (33%) expect substantial increases of 15% or more in costs per person for mental health services over the next three years, the WTW survey found. This is reported to be highest in Europe, where 44% of insurers expect such increases, followed by about a quarter of insurers (25%) in Asia Pacific and 23% of insurers in the Middle East and Africa.

Linda Pham, global health and risk leader of integrated and global solutions at WTW, said the “seemingly never-ending” rise in costs is a constant challenge for employers and puts pressure on them to act.

“With medical cost increases remaining at double-digit levels, employers will need to manage budget expectations and balance cost increases with data-driven business and health outcomes,” she said.

Although some factors may be out of employers’ control, several strategies can be helpful. Courtney Stubblefield, managing director of health and benefits at WTW, said that employers can evaluate vendor and digital health solutions that expand well-being resources and reduce unnecessary utilization; she said another possible step is to review their markets to ensure efficient sourcing of private health care coverage.

See also: Health Care Costs Are Frightening Employers—but These Strategies Can Make Them Less Scary

WTW’s report mirrors other findings about rising health care costs for U.S. employers. Inflation has been an ongoing factor, as have mental health conditions, pricey GLP-1 drugs, and catastrophic medical claims.

An analysis from Aon earlier this summer found the average cost of employer-sponsored health care coverage in the U.S. is expected to increase by 9% in 2025, surpassing $16,000 per employee. That’s significantly higher than the 6.4% increase in health care budgets that employers experienced from 2023 to 2024, which had an average cost of $14,823 per employee after cost-saving strategies.

Meanwhile, a survey from the International Foundation of Employee Benefit Plans predicted a slightly lower—but still high—increase for 2025, finding that U.S. employers project a median health care plan cost increase of 8%. This is an increase over similar surveys conducted in 2022 and 2023, which projected a 7% rise for those years, according to the nonpartisan group with more than 31,000 members.