Global Medical Inflation Gap Widens, Indonesia in Focus

Global healthcare cost pressures are expected to persist through 2026, though the rate of increase is beginning to slow. A latest report from Aon indicates that the global average medical trend is projected at 9.8% for 2026, down marginally from 10% the previous year and returning to single-digit levels for the first time since 2023.

Despite this decline, global medical trend remains far above general global inflation of around 2.7%, meaning healthcare costs are rising approximately three to four times faster than economic inflation overall.

Indonesia remains among countries experiencing high medical inflation pressure. Aon estimates Indonesia’s medical trend at 16.9% for 2026, significantly above the global average despite general inflation running at only around 2.5%.

Medical trend represents the projected annual healthcare cost increases influenced by medical inflation, increased service utilisation, drug prices, and healthcare technology innovation. In recent years, these factors have continued to sustain high healthcare costs across many countries.

Regionally, the Middle East and Africa record the highest healthcare cost increase projections with a medical trend of 15.3%, followed by the Asia-Pacific region at 11.3%, whilst Europe has the lowest projection at around 8.2%.

From an epidemiological perspective, cardiovascular disease, cancer, and hypertension remain the primary contributors to global healthcare claims. Risk factors including poor diet, physical inactivity, and obesity further increase healthcare cost burdens across many countries.

Additionally, the report highlights the growing role of innovative drugs such as GLP-1 used for diabetes and weight management. In several markets, use of this drug has contributed up to one quarter of drug cost increases within corporate health programmes.

Facing these trends, global companies are increasingly aggressive in cost control. Strategies employed include strengthening wellness programmes, negotiating rates with insurance companies, and implementing flexible benefit designs and employee cost-sharing schemes.

Despite the rate of cost increases beginning to moderate, Aon believes structural pressures such as population ageing, adoption of medical technology, and rising demand for private healthcare services will keep medical inflation a major challenge for companies and healthcare benefit administrators in coming years.

High medical inflation in Indonesia is triggered by a combination of three main factors. First, the rising burden of chronic diseases such as cardiovascular disease, cancer, and hypertension, driving demand for long-term and high-cost care.

Secondly, a surge in healthcare service utilisation accompanying middle-class growth, expansion of commercial health insurance, and private hospital expansion, causing claim volumes to increase rapidly.

Thirdly, escalating service and medical technology costs, including use of innovative therapies and expensive medicines, further driving per-episode treatment cost increases.

Unlike several ASEAN countries (Singapore and Thailand) with stronger cost control mechanisms, Indonesia remains in a healthcare system transition phase. The combination of rising demand, private service tariffs, and changing disease profiles makes national medical inflation grow faster than neighbouring countries.

This condition is expected to continue pressuring commercial health insurance premiums whilst driving the industry to adjust benefit designs in coming years.

Consistent high-level medical inflation increases are projected to have direct implications for commercial health insurance premiums.

Insurance companies are projected to become increasingly aggressive in product design adjustments through co-payment schemes, deductibles, provider network strengthening, and health management programmes.

More broadly, this trend also signals that controlling medical inflation will become a strategic agenda for Indonesia’s healthcare industry in coming years, as the private sector’s role in healthcare financing expands.