Healthcare is evolving rapidly, and medical costs are rising with it. According to the 2025 Global Medical Trends Survey by WTW, global medical costs are projected to increase by an average 10.4% in 2025. China is expected to rise slightly faster, at 10.8%. The pressures reflect new treatments and technologies, demographic change, changing patient expectations and persistent inefficiencies in healthcare delivery.

New medical technologies and innovative drugs - including treatments for diabetes, weight management and cancer - are improving outcomes but increasing expenditure. Overuse and misuse of healthcare services also remain significant cost drivers, particularly where unnecessary treatment is recommended. Mental-health claims are growing as awareness increases and stigma falls. Regional pressures differ: Asia Pacific is seeing stronger demand for preventive care and advanced technology; North America faces high prescription-drug prices and labour shortages; and Europe continues to manage ageing populations and healthcare funding gaps.

China’s ageing population is increasing demand for treatment of chronic and age-related disease. Preventive care is also becoming more common as public-health campaigns and online information encourage earlier intervention. The lingering effects of the COVID-19 pandemic include higher respiratory-disease burdens and more cancer diagnoses as screening and early detection improve. Government initiatives such as centralised drug procurement and Diagnosis Related Group (DRG) payment are intended to control costs, although structural challenges limit their immediate impact.

Insurers can encourage preventive care through regular check-ups and wellness programmes, expand accessible mental-health cover, and use telemedicine and AI-supported services to improve efficiency. Product design can become more flexible through modular benefits and value-based care. Pharmaceutical expenditure can be managed through procurement, formularies and greater use of appropriate generic medicines. Data analytics can identify high-risk populations earlier, support intervention and help create coverage that is more closely matched to customer needs.

Medical inflation is ultimately a shared challenge for insurers, employers, healthcare providers and policymakers. In China, ageing, post-pandemic pressures and rapid technological change make that challenge particularly visible. Sustainable solutions will depend on prevention, better use of technology, appropriate product design and collaboration that balances innovation with affordability.