Patients on company-sponsored insurance covers are bearing a higher cost of their hospital bills through co-payment after medical bills jumped 13 percent last year, surpassing the global average.
The workers are also being asked to shoulder an additional part of the insurance premiums as employers race to curb a rise in medical costs.
Findings from Aon’s Global Medical Trend Rates Report 2026 forecast that medical costs in Kenya will be stiffest this year at 13.5 percent, outpacing the global average of 9.8 percent.
The reasons include higher labour costs for health care workers, higher charges from doctors and hospitals, and more demand for care and costly new drugs.
The rising costs are now forcing employers to rethink the structure of medical cover.
Aon says many firms in countries experiencing double-digit medical inflation are shifting part of the burden to employees through higher deductibles, co-payments and caps on benefits, effectively reducing the value of health insurance packages.
“To mitigate rising costs and the risks they bring, employers are focusing primarily on hard negotiations with insurance carriers and other vendors. About three-quarters of companies plan to negotiate with existing vendors, and about two-thirds plan to go to RFP (request for proposals).
Firms use RFP to solicit competitive bids from potential vendors or contractors, especially when they feel the current service providers are expensive or not delivering quality services.
Companies in Kenya spend millions of shillings on employee medical schemes annually, making it a key component of staff costs.
For instance, KCB Group medical costs rose to Sh2.37 billion last year from Sh1.94 billion in 2024.
That of NCBA went up to Sh727.76 million from Sh632.36 million while that of Co-operative Bank of Kenya hit Sh962.12 million from Sh849.92 million amid medical inflation and increased staff size. Insurers usually revise premiums upwards on higher claims from employees as well as pressure from hospitals seeking higher fees on medical services.
Last year, Nairobi Hospital proposed a new pricing structure that would have pushed patient charges up by as much as 61.3 percent. However, insurers pushed back saying the increase had not been anticipated in their renewed cover terms with clients.
Aon says other cost containment measures being looked at by local firms as well as multinationals include implementing well-being initiatives, offering flexible benefits, introducing or increasing employee cost-sharing, reducing high-cost benefits and tightening benefit eligibility rules.
“As with multinationals, local companies are looking to mitigate increased costs and are using a similar set of strategies that are unchanged from last year. While these strategies to contain costs haven’t changed much year over year, the number of companies employing these strategies has gone up,” said Aon.
Kenya’s situation is better than that of several African countries such as Nigeria where the rise is projected at 43 percent this year, Ethiopia (42 percent), Angola (30 percent), Malawi (27.1 percent), Zimbabwe (22.5 percent) and Ghana (21.6 percent).
By comparison, Europe is expects to record about 8.2 percent, while Latin America and the Caribbean averages 10.3 percent, showing that emerging markets like Africa are experiencing steeper cost escalations.
Aon says the medical trend is used as a tool to forecast rising healthcare expenses by considering factors like inflation, service utilisation, prescription drug costs, and advancements in medical technology.
“We asked Aon professionals for their insights on how they expect medical rates to change, based on their consultations with clients and the carriers represented in their medical plan portfolio,” says Aon in the report.
Aon, a London-headquartered professional services firm, says the estimates in the report are based on interviews with its team of brokers, administrators and advisors of employer-sponsored medical plans across more than 100 countries and locations around the world.
The projections on Kenya’s medical inflation were based on an assumed general inflation rate of 4.9 percent this year.
However, recent developments including the escalation of tensions in the Middle East have already pushed the country’s inflation to a 28-month high of 6.7 percent in May, suggesting that healthcare cost growth may overshoot initial estimates.
The widening gap between medical inflation and general inflation is particularly concerning for employers, as it directly impacts the affordability of comprehensive health cover. For many firms, especially small and medium-sized enterprises, sustaining medical benefits is becoming increasingly untenable.
Many workers are bearing the brunt of these adjustments, with the reduced inpatient and outpatient limits and narrower provider networks increasing their out-of-pocket expenses.
Globally, firms are becoming proactive in controlling medical costs by investing in preventive care programmes and promoting wellness initiatives.
“These initiatives help to control costs in a couple of ways. First, by encouraging utilization of preventative care, they can avoid more expensive care down the road,” said Aon.
“Second, by keeping employees engaged in their wellbeing, they can reduce the stress that can exacerbate other health conditions. Eighty-six percent of countries report this as the most prevalent cost mitigation measure.”
Aon expects cost-containment measures, including higher deductibles, co-payments and tighter referral requirements to remain widely used this year.
“More significant plan design changes such as the use of flexible benefit plans to cap overall benefit costs and access and delivery restrictions are all measures designed to incentivise plan members to seek care in a cost-effective manner,” said Aon.
