How can governments stop healthcare inflation from spiraling?

Asia-Pacific medical costs are set to outpace global averages this year.

Patients and insurers across the Asia-Pacific region are bracing for another year of steep healthcare inflation, as rising medical costs threaten access to care and strain budgets.

Willis Towers Watson’s 2026 Global Medical Trends Survey projects that healthcare spending in the region will jump 14% in 2026, well above the projected 10.3% global average. For comparison, North America is forecast at 9.2% and Europe at 8.2%.

After adjusting for general inflation, net medical cost growth globally is expected to reach 7.9%, with healthcare prices continuing to rise faster than other sectors.

Insurers expect the trend to persist: 55% of respondents think medical costs will remain elevated for more than three years, and 56% anticipate further increases.

New medical technologies, declining public health systems, and drug advancements are major drivers of cost growth, cited by 74%, 52%, and 49% of insurers, respectively.

Chronic and high-cost conditions continue to dominate claims. Cancer and cardiovascular diseases are cited by more than half of insurers as the primary sources of high-cost claims, whilst musculoskeletal conditions also contribute significantly.

Drug spending is also increasing, particularly for newer treatments. The survey showed that 68% of insurers expect higher use of GLP-1 receptor agonists—used for diabetes and obesity—and 67% anticipate associated cost increases.

Spending pressures are reinforced by broader industry data: US GLP-1 drug sales hit $71.7b in 2023, six times higher than in 2018, and specialty medicines are projected to make up half of total drug spending in the coming years.

Behavioral health coverage is also expanding. About 61% of insurers offer it, and 21% plan to introduce coverage within three years.

Yet, cost containment remains largely financing-led. Most insurers rely on contracted provider networks and cost-sharing mechanisms such as deductibles and co-payments.

Digital tools could offer relief, but adoption is uneven. Only 8% of Asia-Pacific insurers report significant use of artificial intelligence (AI) in healthcare programs, though 64% of insurers globally expect AI to reduce costs over five to 10 years.

Industry outlooks underscore the structural nature of the challenge. McKinsey & Co., Inc. points to reimbursement strain, workforce shortages, specialty drug growth, and regulatory changes as pressures, whilst Global Healthcare Resource LLC highlights rising demand for chronic care, digital health integration, and stricter payer oversight.

The combination of rapid medical inflation, expanding specialty drug use, and chronic disease burden suggests healthcare systems in the region will face sustained cost pressure.

Stabilising spending may require structural reforms, better access to care, and wider digital adoption—beyond traditional financing solutions.

Questions to ponder

1. What specific healthcare reforms can governments implement to stabilise medical inflation without reducing access to care?
2. Can AI, telemedicine, and digital health solutions meaningfully offset rising costs, or do they risk adding new expenses?