Projected 7.4% rise in Canada’s medical costs shifts focus to chronic conditions and efficiency
Aon plc has released its ‘2025 Global Medical Trend Rates Report,’ highlighting projections for medical cost increases.
In Canada, the report forecasts an average medical trend rate of 7.4 percent for 2025, up from 5.0 percent in 2024.
The medical trend rate reflects the required percentage increase in medical plan unit costs – both insured and self-insured – to address projected inflation, advancements in medical technology, patterns of plan utilization, and cost shifts from social programs.
Joey Raheb, senior vice president and Canadian national leader for growth and client engagement for Health Solutions at Aon, discussed the outlook. He indicated expectations for a return to more typical inflationary conditions, with inflation anticipated to be well-managed according to the Bank of Canada.
However, Raheb pointed out concerns about economic slowdowns that could impact decisions by plan sponsors.
Although no substantial pullback on spending has been observed, employers are exercising caution by continually reviewing their plans for efficiency and medical efficacy.
Raheb noted that discussions among employers will likely focus on GLP-1 drugs and chronic conditions like diabetes.
Additionally, there is an emphasis on creating efficient plan designs that support the needs of a diverse workforce while maintaining cost sustainability.
The report identifies the primary medical conditions contributing to rising medical plan costs in Canada, which include:
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Diabetes
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Autoimmune diseases (excluding diabetes)
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Mental health conditions
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Lung disorders/respiratory issues
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Cardiovascular concerns and weight loss
Globally, Aon’s report projects that medical plan costs will increase by an average of 10.0 percent in 2025, just below the 10.1 percent increase forecasted for 2024, which marked the highest rise in a decade.
Kathryn Davis, Aon’s vice president of global benefits, remarked that, despite a projected decrease in inflation for 2025, health and wellbeing costs are expected to keep climbing, impacting affordability for employers and employees.
As medical plans become a larger portion of overall rewards spending, Davis noted that businesses are increasingly using trend rate data to inform their budgeting and benefits strategies.
Wellbeing initiatives are recognized as a leading mitigation strategy, supporting cost control through preventive care utilization and employee engagement in health programs.
The report’s findings are based on a survey of employer-sponsored medical plans across 112 countries and locations, drawing on input from Aon professionals involved in brokering, administering, or advising on medical plans in each region.
