Aon plc, a global professional services firm, has released its 2025 Global Medical Trend Rates Report, forecasting a 7.4 percent increase in Canada’s medical trend rate.
The data represents a significant rise from 5.0 percent in 2024, reflecting heightened pressures on medical plan costs due to inflation, technological advancements, and shifting utilization patterns.
The medical trend rate measures the annual percentage change in medical plan costs, considering factors such as price inflation, advances in medical technology, usage trends, and cost transfers from social programs. According to Aon’s projections, these costs will continue to climb despite forecasts that inflation in Canada will stabilize.
"In 2025, we anticipate a return to more typical inflationary conditions, with the Bank of Canada projecting inflation will be well under control," said Joey Raheb, senior vice president at Aon’s Health Solutions division in Canada. " While we have yet to witness a full-scale pullback on spending, employers are exercising caution and continuously reviewing their plans for efficiency in delivery and optimal medical efficacy. "
The report identified key medical conditions driving rising costs in Canada, including diabetes, autoimmune diseases (excluding diabetes), mental health issues, lung disorders and respiratory conditions, and cardiovascular challenges linked to weight loss. Raheb noted that effective plan designs will be essential in addressing these conditions while meeting the diverse needs of Canadian workforces. He emphasized that employers are seeking to balance cost containment with ensuring employee health.
Globally, Aon forecasted a 10 percent rise in medical plan costs for 2025, slightly below the 10.1 percent increase projected for 2024, which was the highest in a decade. Kathryn Davis, vice president of global benefits at Aon, observed that rising costs will continue to create challenges for employers and employees. "Despite inflation easing, we expect health and wellbeing costs to rise. These increases often lead to unexpected budget pressures, making affordability more difficult for both employers and employees," Davis said.
The report highlighted the importance of leveraging medical trend rate data to guide budgeting and benefits strategies. Davis added that employers are increasingly focusing on wellbeing initiatives to encourage preventative care and improve employee health, which can help mitigate costs.
The report is based on survey responses from 112 countries and reflects Aon’s experience in brokered, administered, and advised employer-sponsored medical plans. As employers face mounting healthcare costs, the report underscored the need for tailored strategies to ensure sustainable and effective benefits.