Rising medical claims pressure employers to reduce cover: Mercer Marsh Benefits survey

A DOUBLE-DIGIT rise in medical trend rates is expected to pressure employers into reducing coverage for employees for the first time in four years, a global study by Mercer Marsh Benefits (MMB) has found.

Medical trend rates reflect the year-on-year cost increase in health benefit claims per person. MMB’s latest 2026 Health Trends report finds trend rates of more than 10 per cent in most regions for the sixth consecutive year, driven by inflation, utilisation changes and evolving treatment mixes.

The report is based on a survey of 268 insurers across 67 markets, conducted in June and July.

Insurers are forecasting an average global increase of 11.1 per cent in medical trend rates in 2026. The forecast for Asia is higher at 12.5 per cent. The expected rate for Singapore in 2026 is 14 per cent, unchanged from 2025.

In a statement, Herve Balzano, MMB global leader and Mercer’s health president, said: “For the first time in four years, insurers are anticipating a shift towards employers reducing coverage to manage costs, as opposed to making plan improvements.

“While reducing coverage may deliver employers short-term budget relief, the move can damage the employee experience and their financial security, as well as weaken the company’s ability to attract and retain talent.”

Amy Laverock, MMB global advisory leader, said: “With two-thirds of markets facing double-digit medical trend rates in 2026, organisations must prepare for higher costs and think carefully how to balance cost management with employee wellness. Investing in preventive care and encouraging the use of effective, quality care can address both challenges.”

The financial pressures on employer-sponsored health plans are intensifying due to inflation and more costly treatments. Cancer, diseases of the circulatory system and musculoskeletal conditions remain the top causes of claims by amount spent.

The survey found that organisations worry about the long-term sustainability of their plans, with many having to make benefit cuts that simply shift costs onto employees. It also found that a growing number of employees are reaching the lifetime limits of their health plans.

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Globally, 39 per cent of insurers have seen an increase in the number of members who hit their maximum claim amounts over the past five years, compared to 37 per cent in Asia. “When this occurs, some employers respond by making exceptions for certain individuals. However, this is a risky approach, creating uneven financial risk and setting unsustainable precedents,” said the report.

Insurers’ top affordability concerns over the next three years varied by region. In Asia, the top concerns are high-cost claimants (87 per cent), inefficiency and waste (85 per cent) and an ageing population (77 per cent).

Inefficiency and waste included unnecessary procedures such as duplicative tests and the use of high-cost procedures when lower-cost options are as effective. It also included inefficient use of the site of care, such as the use of luxury hospitals, and inpatient admissions when outpatient was appropriate.

More than two-thirds of global insurers cited the need to manage high-cost claimants as a top priority over the next two years. More than half of insurers plan to introduce programmes to help members manage chronic conditions, in a growing focus on proactive health management.

Separately, Aon also released its 2026 Global Medical Trend Rates Report last week. Employee medical plan costs are expected to rise by 11.3 per cent in Asia-Pacific; the average global medical trend rate is estimated at 9.8 per cent. Singapore’s medical trend rate is expected to moderate to 13 per cent in 2026, compared to 14 per cent this year.

Tim Dwyer, Aon’s head of human capital for Apac, said: “The Asia-Pacific region continues to face double-digit medical trend rates, reflecting both the resilience of healthcare demand and the need for medical insurers to return to profitability in order to deliver sustainable healthcare coverage.

“The challenge and opportunity for employers lies in moving from reactive cost control to proactive health strategy. As employers across the region navigate workforce transformation, building resilient and sustainable employee benefits programmes will be critical to managing the well-being of their workforces.”