As businesses across the Asia-Pacific region navigate the complexities of employee health care, the stakes have never been higher.

Aon’s 2025 Global Medical Trend Rates Report reveals an alarming 11.1% increase in medical plan costs, making APAC the second-highest globally after the Middle East and Africa. But beyond the numbers lies a deeper story – one of rising demand, evolving needs, and a call for action.

A region under pressure: The rising cost of care

Healthcare is more than a budgetary concern; it’s a lifeline for employees. In APAC, medical cost inflation is outpacing the global average of 10%, driven by several critical factors:

• A surge in chronic illnesses
• Post-pandemic diagnoses of conditions like cancer
• A notable increase in emotional health claims

These trends are reshaping the future of employee benefits. For instance, Thailand and Vietnam are experiencing cost increases of 50% to 100% compared to last year, reflecting both heightened demand and rapid innovation in healthcare.

Meanwhile, New Zealand and Papua New Guinea are grappling with persistent medical inflation, underscoring the widespread nature of this challenge.

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The global picture: APAC’s distinct challenges

Globally, medical trend rates reveal varying dynamics. While Europe shows a slight decline to 8.9%, regions like the Middle East and Africa face a staggering 15.5% increase, with North America and Latin America hovering near double-digit rates.

The chart below provides a snapshot of how medical trend rates compare across global regions, highlighting APAC's significant rise in costs.

What sets APAC apart isn’t just the numbers – it’s the stories they tell about the region’s unique healthcare landscape. From chronic disease management to mental health awareness, these rising costs mirror the growing complexity of employee health needs.

How companies are addressing rising healthcare costs

The escalating costs of medical plans are prompting employers to rethink how they support employee health. Here’s how businesses are adapting:

1. Wellbeing as a priority

“Wellbeing initiatives are now a shared effort between employers and insurers,” said Marina Sukhikh, Professional Services Industry Leader at Aon. “Employers are investing more in programs targeting physical inactivity, stress, hypertension, and other chronic conditions. These steps don’t just improve health – they reduce future claims.”

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2. Leveraging technology

Technology is playing a transformative role in managing health risks. Tools like Aon’s Health Risk Analyzer enable companies to identify gaps, mitigate risks, and design tailored solutions for their workforce.

“Collaboration with insurers and creative benefit designs are helping employers find cost-effective solutions,” added Sukhikh.

3. Flexibility as a game-changer

Flexible benefits are becoming increasingly popular, with 60% of employers globally offering plans that allow employees to choose what matters most to them.

“Employees value flexibility and choice more than ever,” said Alan Oates, Aon’s Head of Global Benefits for APAC. “While alternative funding may not drastically cut costs, it smooths out unexpected spikes in spending over time.”

The path forward: Supporting employees amid rising costs

As healthcare costs are climbing, innovative strategies are essential for businesses to adapt.

By prioritising wellbeing, embracing technology, and offering flexible benefits, companies can not only manage costs but also foster a healthier, more resilient workforce.

The rising tide of medical costs in APAC is a wake-up call for organisations. The question isn’t whether to act, but how swiftly and strategically they can respond to keep their people supported and confident in the future.