Survey says Canadian employers now face medical plan costs rising more than four times faster than inflation, driven by chronic conditions, pricier drugs, and heavier use of care
Canadian group health costs are set to rise more than four times faster than inflation in 2026, even as global medical inflation finally drops back into single digits.
Aon’s 2026 Global Medical Trend Rates Report projects a 2026 medical trend of 8.3 percent for Canada, up from 7.4 percent in 2025, while general inflation edges up only slightly from 1.9 percent to 2.1 percent. That leaves a net medical trend of 6.2 percentage points above inflation in 2026.
Globally, Aon pegs the average medical trend at 9.8 percent in 2026, just below 2025’s 10.0 percent and still far ahead of the projected 2.7 percent global inflation rate.
North America as a region (Canada and the US) sees trend rising from 8.8 percent to 9.3 percent, with inflation moving from 2.0 percent to 2.4 percent, making North America the region with the largest year‑over‑year increase in gross medical trend.
What is driving the pressure
Aon links the persistent cost pressure to both macro and clinical forces.
The report says global inflation is cooling overall, but some parts of Latin America, Africa and the Middle East still face higher inflation, especially import‑dependent markets that feel currency swings and tariffs more sharply.
On the health side, Aon points to higher utilisation, growing demand for private healthcare, ageing populations in Europe, Asia‑Pacific (APAC) and Latin America, and rapid adoption of advanced medical technologies as key drivers of elevated medical inflation compared with historical norms.
Clinically, three condition areas dominate.
Cardiovascular disease remains the top condition expected to drive claims in 2026 across all regions.
Cancer/tumour growth ranks second and appears in the top five in every region, with lung, breast, colon and rectum, and prostate cancers cited as the most common cancers, based on World Cancer Research Fund International data referenced in the report.
High blood pressure/hypertension ranks third and acts both as a major condition and as a key risk factor behind other costly diseases.
Musculoskeletal conditions have also moved into the global top five, reflecting more people struggling with these issues.
On risk factors, Aon identifies hypertension as the leading driver, followed by physical inactivity and poor nutrition, with obesity now in fourth place.
Many countries specifically link prescription drugs used for weight loss to higher medical trend.
GLP‑1s and prescription drugs
Aon singles out GLP‑1 therapies as a major emerging cost pressure.
The report notes that diabetes is the fourth major condition expected to drive medical plan costs, while poor nutrition and obesity sit among the top five global risk factors and contribute directly to diabetes.
At the same time, prescription drugs have become the third‑costliest component of medical plan costs globally.
GLP‑1s and similar drugs are available in more than 60 percent of surveyed countries, and in many of those markets employer‑sponsored plans may cover them.
As utilisation rises, so do plan costs.
In several markets, employers only cover GLP‑1s for diagnosed diabetes or blood sugar management, excluding weight‑loss claims, which dampens but does not remove the impact.
Aon reports that some countries already attribute roughly 10 percent of medical trend to GLP‑1s and related drugs on average, with others reporting contributions as high as 25 percent.
The report concludes that GLP‑1s “are not appropriate for every workforce” and argues that plan sponsors need to weigh coverage decisions against other evidence‑based options that support sustainable lifestyle change and long‑term health outcomes.
How employers are responding
Employers are shifting firmly into cost‑containment mode.
Drawing on Aon’s 2025 Global Benefits Trends Study, the report says Global Benefits professionals overwhelmingly cite high medical inflation as the primary driver of benefit costs and that about 70 percent of companies now list cost management as their top strategic priority.
The most common response is tougher pricing pressure: about three‑quarters of companies plan to negotiate hard with existing insurers and vendors, and roughly two‑thirds intend to go to RFP.
Beyond pricing, three levers stand out in the report:
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Wellbeing initiatives are the most prevalent tool. Aon says these initiatives help control costs by driving preventive care, which can avoid more expensive interventions later, and by keeping employees engaged in their wellbeing, which can reduce stress‑related complications. Eighty‑six percent of countries report wellbeing initiatives as the leading cost mitigation measure.
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Traditional plan design controls such as higher deductibles and copays, referral requirements and other utilisation management measures remain central and are expected to keep playing a significant role in 2026.
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Flexible benefit plans are gaining traction structurally. Two‑thirds of surveyed countries expect to use flexible benefits in 2026, making them the third‑most common cost mitigation mechanism globally, up from fourth last year. Aon attributes much of this rise to an almost 10 percent increase in use in APAC and notes that flexible plans allow tighter cost control, support behaviour change and enable more tailored, competitive benefit packages.
