New Delhi: Healthcare costs in India are projected to increase by 10.1% in 2027, more than twice the country’s expected general inflation rate of 4%, according to a report by global professional services firm Aon. Although the projected medical cost increase is lower than the 11.5% recorded for 2026, healthcare expenses are expected to continue rising faster than the prices of goods and services overall.

The findings highlight the growing financial burden of chronic illnesses on employers, insurers and employees. Cardiovascular disease remains the leading driver of medical claims in India, followed by ear, nose and throat (ENT) conditions, lung and respiratory disorders, and cancer.

The report also identifies high blood pressure, physical inactivity and poor nutrition as important risk factors contributing to future healthcare costs. Rising obesity and diabetes rates are adding to concerns about the long-term demand for treatment and medical benefits.

The projections come at a time when employers are facing pressure to provide adequate health coverage while managing rising insurance and treatment expenses. Aon’s assessment underlines the importance of prevention, early diagnosis and better-designed employee health programmes in controlling the financial impact of chronic diseases.

Medical costs expected to rise faster than inflation

Aon’s 2027 Global Medical Trend Rates Report projects that India’s medical costs will increase by 10.1% in 2027, compared with 11.5% in 2026. The moderation suggests that the pace of healthcare cost growth is slowing, but it does not mean that treatment or hospital expenses are expected to decline.

India’s projected general inflation rate for 2027 is 4%. After adjusting for inflation, the net medical trend rate is expected to be 6.1%, compared with 7.4% in 2026.

Medical trend refers to the anticipated annual increase in the cost of providing healthcare services and treating patients. It takes into account factors influencing medical spending, including treatment costs and the demand for healthcare.

The distinction is important because a lower medical trend rate still represents an increase in expenses. With healthcare costs rising considerably faster than general inflation, households and organisations may continue to face pressure on their budgets.

Ashley D’Silva, Head of Health and Wealth Solutions, India, at Aon, said: “With local medical costs still rising at more than twice the rate of inflation, benefits budgets will remain under pressure.”

India’s projected medical trend rate is also higher than the Asia-Pacific average of 9.7% for 2027. The projection is above China’s 6%, but below Singapore’s 14.7%, Thailand’s 11.7% and Indonesia’s 17.3%.

These differences indicate that medical cost pressures vary considerably across markets. However, India’s projected increase remains significant for employers and employees who depend on health insurance and workplace medical benefits.

Heart disease, respiratory disorders and cancer drive claims

Cardiovascular disease is the leading driver of medical claims in India, according to Aon’s findings. ENT conditions and lung or respiratory disorders follow, with cancer also featuring among the major contributors.

These conditions can involve substantial medical expenses because treatment may require specialist consultations, diagnostic investigations, hospitalisation, procedures and long-term medication.

Cardiovascular diseases, for example, can require continuous monitoring and treatment, particularly when patients have associated conditions such as hypertension or diabetes. Respiratory disorders may also involve repeated consultations and medication, while cancer treatment can require complex and prolonged medical care.

The report’s global analysis similarly identifies cardiovascular disease as the leading driver of employer-sponsored medical costs. Cancer is the second-largest cost driver globally, while hypertension remains a major contributor to healthcare expenses and a risk factor for several serious conditions.

For India, the findings reflect the financial implications of the growing non-communicable disease burden. Conditions such as diabetes, high blood pressure, obesity and cardiovascular disease can remain undetected for long periods or may not receive adequate management until complications develop.

The concentration of claims around these illnesses also highlights why healthcare spending cannot be addressed only by focusing on hospital bills. Preventing disease progression and identifying health risks early could help reduce the need for expensive treatment later.

High blood pressure, inactivity and obesity increase risks

Aon’s report identifies high blood pressure, physical inactivity and poor nutrition as important risk factors expected to contribute to future medical claims.

These factors are closely connected to several chronic illnesses. High blood pressure increases the risk of cardiovascular complications, while a sedentary lifestyle and unhealthy dietary habits can contribute to obesity, diabetes and other metabolic conditions.

The report’s global assessment also highlights the growing influence of obesity on healthcare spending. Obesity has moved from the fifth leading global health risk factor two years ago to the third position in the report’s 2027 assessment.

The rising prevalence of obesity is contributing to higher rates of diabetes and other chronic conditions, increasing the potential demand for long-term treatment and weight-management interventions.

Kathryn Davis, Vice President and Data and Analytics Leader, Global Benefits, at Aon, said cardiovascular disease, cancer and hypertension continue to be leading cost conditions. However, rising obesity and diabetes rates could place additional pressure on employers in the coming years.

For Indian organisations, these trends underline the importance of supporting employees in managing risk factors before they develop into serious health problems. Regular health assessments, healthier food choices and opportunities for physical activity can form part of a broader prevention strategy.

GLP-1 medicines create new healthcare spending challenges

The growing use of GLP-1 receptor agonists and similar medicines for diabetes and weight management is another factor influencing global healthcare spending.

According to Aon’s report, these treatments are available in almost 70% of the countries surveyed. Employer-sponsored medical plans cover them in around half of these markets.

The report estimates that GLP-1 medicines can contribute between 1% and 10% of medical trend rates in some markets, with the average contribution exceeding 3%.

Diabetes is also a significant contributor to medical plan expenses. The report found that 54 markets included the condition among their top five cost-driving illnesses.

GLP-1 medicines can provide important health benefits when prescribed appropriately. However, their growing use raises questions about affordability, insurance coverage and access to treatment over the long term.

Employers and insurers may need to consider how to provide access to clinically appropriate treatments while ensuring that healthcare benefits remain financially sustainable.

Importantly, Aon’s global figures do not provide a separate estimate of the contribution of GLP-1 medicines to medical costs in India. The international findings should therefore not be treated as a direct measure of their impact on Indian employer-sponsored health plans.

Employers turn towards prevention and flexible benefits

The report suggests that employers are increasingly considering preventive healthcare and employee wellbeing initiatives as ways to manage long-term medical expenses.

Globally, 87% of the countries surveyed reported using wellbeing initiatives as a cost-mitigation strategy for 2027. Around two-thirds expect to use flexible benefits to manage expenses while giving employees greater choice.

For Indian employers, this could involve expanding access to preventive consultations, regular health screenings and programmes focused on physical and mental wellbeing.

Screening for hypertension, diabetes and other metabolic risk factors can help identify health problems before complications develop. Employees already managing chronic conditions may also benefit from continued medical support and access to appropriate treatment.

Ariz Rizvi, Head of Health Risk Management, Health Solutions, India, at Aon, said: “India’s workforce is diverse and rapidly evolving, making a one-size-fits-all approach to benefits increasingly ineffective.”

He added that investment in prevention, flexible benefits and employee wellbeing can help organisations develop more sustainable health programmes while supporting productivity and workforce resilience.

Flexible benefits may also allow employers to respond to the different healthcare requirements of employees rather than relying on identical coverage arrangements for everyone.

What the 2027 projection means for employees and insurers

The projected 10.1% increase in India’s medical costs indicates that healthcare expenses will remain under pressure even as the rate of growth moderates.

For employees, rising medical costs could make adequate health insurance and preventive care increasingly important. For employers, the challenge will be to maintain meaningful health benefits without allowing expenditure to become unsustainable.

Insurers and healthcare providers will also need to respond to the growing demand for treatment of chronic conditions. The major cost drivers identified by Aon suggest that cardiovascular disease, respiratory disorders and cancer will continue to require significant healthcare resources.

The report reinforces the importance of a healthcare approach that combines treatment with prevention and early intervention. Addressing high blood pressure, obesity, physical inactivity, poor nutrition and diabetes could help reduce the risk of complications and the need for more expensive care.

India’s medical cost growth may be slowing, but it remains substantially higher than general inflation. As chronic diseases continue to influence medical claims, employers, insurers and individuals will need to place greater emphasis on early diagnosis, sustained disease management and accessible healthcare benefits.

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