Healthcare benefit costs in the UK are projected to outstrip increases across the globe, according to research from Willis Towers Watson (WTW).
The research found that while these costs are projected to increase by double digits for a third year in a row worldwide, in the UK they are expected to grow by 12.6%, outstripping the global average of 10.4%.
WTW conducted its 2025 Global Medical Trends Survey this summer. A total of 348 health insurers representing 75 countries participated in the survey. In addition to these submissions from insurers it also received input from WTW local brokers representing 55 countries. The combined data covers 90 countries.
Survey respondents cited increased use of health services, rising pharmacy costs, and new medical technologies as the primary drivers of overall medical costs.
Medical costs up across the globe
It found that insurers are projecting that medical costs will increase by 10.4% in 2025, mirroring this year’s rate.
The projected growth in medical costs varies by region. In North America, costs are projected to rise from 8.1% in 2024 to 8.7% in 2025. Costs are also projected to accelerate in Asia, the Middle East and Africa while Europe and Latin America will see slightly slower increases.
While the prevailing trend towards escalating costs may lessen slightly in some regions, it is projected to remain elevated over the longer term.
Over the next three years, 64% of insurers anticipate higher or significantly higher medical trends globally.
The demand for medical care is also not expected to decline in the near future. Two-thirds (67%) of insurers anticipate higher or significantly higher global demand for healthcare services over the next three years.
UK PMI costs outstripping global average
In the UK, private medical insurance costs are expected to increase by 12.6% in 2024, higher than the global average, and more than three percentage points higher than the European average.
The report found UK private medical inflation has been consistently higher than the European average for at least the last five years, driven by significant increases in demand for private healthcare services, pressure on public healthcare systems and higher levels of claims.
Globally. several major factors were found to be contributing to continued high medical costs.
The rise in new medical technologies and pharmaceuticals has greatly contributed to the increased cost of care globally. And public healthcare systems around the world have been overwhelmed due to high demand and limited resources available, leaving members to turn to and rely on private medical providers.
Additionally, the report found that there has been a surge in healthcare use over the last few years – with a growing trend in use of mental health services – which continues to add to the overall cost of care.
Managing budget expectations
Linda Pham, global health and risk leader, integrated and global solutions at WTW, said: “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.
“The seemingly never-ending rise in costs poses a constant challenge for employers to take action in order to mitigate these unsustainable increases.”
Kevin Newman, head of health and benefits Europe, WTW, said: “While recognising that some factors influencing costs may be out of their control, employers can hone-in on key initiatives to help control costs while boosting the value of their health benefits.
“These include but are not limited to promoting preventive care, evaluating vendor solutions and continuing to expand wellbeing offerings.”