In October 2024, Aon forecast a 10.0 percent global increase in medical-plan unit costs for 2025, compared with its 10.1 percent forecast for 2024. The release and report describe projections for employer medical plans. For benefits teams revisiting that period, the figures should remain labelled as forecasts rather than measured 2025 outcomes or individual renewal quotations.
Read the regional comparisons carefully
The report put the Middle East and Africa at the highest projected regional level, 15.5 percent. Asia-Pacific and North America showed the largest year-on-year increases in trend, reaching 11.1 percent and 8.8 percent respectively. The highest level and the largest change are different comparisons. A small reduction in a positive trend also means costs were still projected to rise.
The report covered insured and self-insured employer plans across 112 locations, using expectations from Aon professionals informed by client and carrier interactions. Such a projection can provide a planning reference, but it does not establish the claims experience of a particular workforce. An employer should examine the relevant country assumptions before applying a global average to its own budget.
Build a budget from the actual population
This editor recommends combining the external forecast with the employer’s own membership, benefit design and available claims information. A change in headcount can alter total expenditure even where per-person costs follow a different path. The budget record should show which inputs describe unit costs and which describe the size or composition of the covered population.
The review should also distinguish anticipated medical costs from an insurer’s quotation. Pricing can reflect the programme’s own circumstances and the contract under discussion. A headline global forecast is therefore an input to the renewal conversation, rather than a promise about the price an employer will receive. Unresolved assumptions should be visible to the people approving the budget.
Preserve the forecast for later comparison
A dated forecast can be compared with subsequent experience when suitable data become available. The comparison should use compatible measures and identify material changes in population or cover. Otherwise, a difference between projection and expenditure may be attributed to medical inflation when it partly reflects a different benefits programme or workforce.
The October 2024 report illustrates the value of retaining the publication date, forecast year and geographic assumptions together. A later newsletter repeating the figures does not make them a new forecast. Clear dating supports a useful retrospective review and prevents old projections from being described as current results. Benefits and finance teams can then discuss what changed in the employer’s own programme with an agreed basis for the comparison.
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