Insights from Aon’s 2026 Global Medical Trend Rates Report: Strategies to Rein in Health Costs

   

Across Asia Pacific (APAC), the medical inflation rate trend is moderating, bringing a degree of cost relief to employers in the region. The 2026 Aon Global Medical Trend Rates Report shows the global medical trend returning to single digits (9.8 percent) for the first time since 2023. Here in APAC, the average trend remains considerably higher at 11.3 percent.

 

In a recent webinar, five members of the Aon APAC team explored the implications for cost containment strategies and discussed how their clients are using a variety of tools and approaches to deliver better health outcomes and value for employers and employees alike.

 

Opening the webinar, Shikha Gaur, Chief Commercial Leader, Health Solutions for Aon in Asia observed that while there is light at the end of the tunnel, employers need to address ongoing cost pressures that are structural in nature. “Some employers across the region are seeing a degree of stabilisation in medical costs,” she said, “The universal challenge is finding strategies that will be effective in spite of continued uncertainty.”

 

The Data Behind the Headline Rate

 

APAC is the only global region where the medical inflation rate is expected to rise slightly above 2025 levels, reaching 11.3% — 20 basis points higher than last year. This is notable given general inflation across the region is down 40 basis points. The widening of the net medical inflation gap, by 60 basis points to 8.9%, suggests that underlying cost drivers remain strong.

 

Around one-third of markets — including China, Singapore, the Philippines and India — are seeing modest decreases in medical inflation rates, helped by a slight decline in utilisation and stronger uptake of wellbeing initiatives. But in most other markets across the region, ageing populations, chronic disease and advances in medical technology continue to exert upward pressure.

   

Teoh also pointed to other cost drivers that are broadly consistent across the region — higher use of private healthcare as public systems strain, imported technologies and pharmaceuticals exposed to currency risk and a rising chronic disease burden. As the report notes, these structural factors are driving up medical costs faster than overall inflation, widening the affordability gap for employers.

 

Cost Containment Moves to the Top of the Agenda

   

For many APAC organisations, this shift is visible in everyday renewal discussions. But the panellists noted that employers are looking beyond annual rate negotiations to craft a more comprehensive approach that combines analytics, plan design and wellbeing.

 

In a live poll during the webinar, 63 percent of attendees identified employee feedback as the biggest barrier to implementing cost containment measures. Aon’s Industry Practice Leader, (Pharma and Life Science) for Global Benefits in APAC, Sahil Batra said he was ‘not surprised’ by the poll result. “Managing employee reactions and perception can make change difficult,” he said. “Cost containment is becoming more of an art than a science, requiring tailored solutions and careful sequencing to protect both budgets and employee trust. A strong communication strategy, backed by data, is essential.”

 

Smarter Renewal Negotiations, Backed by Data

 

According to Aon data, many employers are continuing to rely on renewal negotiations to keep costs in check without cutting benefits and putting employee engagement at risk. Todd Dore, Regional Director, Data and Analytics, Health Solutions for Aon in APAC explained how analytics can help employers build a strong case for less aggressive premium increases. He shared an example from a Philippines-based client who took up Aon’s Fair Value Assessment (FVA) as an objective benchmark for renewal pricing.

 

“The insurers’ initial offers accounted for an average premium hike of 32 percent, while the FVA estimated a fair market rate of 23 percent,” he said. “After negotiations grounded in these analytics, final renewal offers averaged 13 percent, a 19 percent improvement compared with insurers’ opening positions.”

 

For clients seeking cost certainty, Aon’s analytics can also support a strong position for multi-year rate guarantees. In one example, an insurer initially proposed a 13 percent increase for year one with no second-year commitment. Aon’s modelling projected 5 percent and 15 percent for the two consecutive years. The negotiations that followed secured a 5 percent increase in year one and 10 percent in year two, creating cost certainty over the next two years and 13 percent total cost avoidance.

 

Batra noted that timing on forward-looking pricing matters. “If the trend is falling, locking in too early may mean overpaying,” he said. “We recommend building in exit clauses and thresholds to maintain flexibility.”

 

Adjusting Plans to Moderate Utilisation

 

Beyond renewal negotiations, data can also be an important input for cost-effective plan design. Dore shared modelling for several cost-containment scenarios that help employers forecast their financial impact. He shared the example of a client with 9,000 employees, facing steep premium increases. Introducing modest co-payments for inpatient, outpatient and emergency services at the most expensive hospitals reduced per-member claim costs by 10%, resulting in savings of approximately PHP 30 million (USD 515 000) despite overall medical inflation. “This approach enabled the employer to strike a balance between cost relief and member experience,” he said.

 

Wellbeing as the Foundation of Cost Containment

 

The 2026 report reinforces that wellbeing initiatives continue to be a leading cost-mitigation measure, reported by 86 percent of countries worldwide.

   

Krystal Tang, Wellbeing Director for Aon in APAC, shared the example of a luxury retail client with 1,000 employees across Singapore and Malaysia. Aon designed targeted wellbeing initiatives — addressing musculoskeletal health, nutrition and flu vaccination — alongside psychological safety and Mental Health First Aid training. “The client experienced a 11.2 percent reduction in health claims and a 3.7 percent improvement in overall health outcomes,” she said. “They also reported strong employee engagement and retention outcomes off the back of these activities.”

 

Teoh linked these outcomes back to medical trend drivers. “Lifestyle-related risks such as stress, inactivity and poor nutrition are fuelling cardiovascular disease, hypertension and cancer, the very conditions that drive claims,” he says. “Taking steps to address these risks is a critical part of cost containment strategies.”

 

A Roadmap for HR Leaders

 

To conclude the session, the panel outlined practical next steps for employers across the region:

   

Batra shared a final reminder that cost containment is about planning for sustainable change that focuses on enhancing value — for the business and workforce. “This comes from combining analytics, engagement and communication, so that employees feel supported, not penalised by changes in their health plan,” he said.

 

When strategic wellbeing program design is based on data and analysis from claims and employee health conditions and needs, it can positively impact employee health and demonstrate an employer’s genuine commitment to workforce wellbeing.

 

View the on-demand recording of our APAC webinar:

     

^[1] Aon 2025 Global Benefits Trends Study