Press Releases

WASHINGTON, DC, May 15, 2002 - U.S. workers can expect to take on more responsibility for their own health care needs and costs as companies re-evaluate how they manage and administer their benefits programs, according to a survey of large employers conducted jointly by Watson Wyatt and the Washington Business Group on Health.

More than 70 percent of the 292 large employers surveyed indicated that they made major changes in their health care strategy in the past year. Furthermore, with health care costs expected to rise 14 percent this year, only one-third (34%) of respondents say they are willing or able to fully absorb cost increases, far fewer than the 50 percent who said they could or would absorb increases the previous year.

"There has been a clear shift in employer attitude and approach to containing health care costs within the last year," says Maureen Cotter, global practice director of group and health care consulting at Watson Wyatt. "Employers are indicating that promoting individual responsibility for their own health care is a critical goal of their overall program. Increasingly, they are informing and empowering workers to make cost-effective decisions about the type and amount of health care that is right for them."

Indeed, 43 percent of employers expect to increase the level of "consumerism" in their health plans in the coming year, compared with 19 percent that currently have such systems in place. Moreover, the percentage of employers that are providing employees with access to health care information is expected to double over the next year.

Growth in Access to Health Care Information

Percent of Employers Who Provide Employees With:	Currently in Place	Planned in the Next Year
Information on the cost of health care services	33%	32%
Information on specific health care issues	28%	25%
Information on provider quality	18%	17%
Direct access to purchasing health insurance	1%	8%

"While some equate so-called 'defined-contribution health plans' with consumerism, it is clear that employers see it more broadly - more as a commitment to a philosophy or approach than simply to a particular health plan design," said Helen Darling, president of the Washington Business Group on Health. "As our survey shows, there is considerably more momentum around providing critical health care information and decision support tools to employees than around providing them with direct access to purchasing insurance."

The survey noted that most employers are optimistic about consumer-driven approaches to health care, but acknowledge some trade-offs, as shown below:

Employer Views on Consumer-Driven Health Care

PROs	Percent of Employers	CONs	Percent of Employers
Increases employees' price sensitivity	76%	Employees may forgo necessary care to save money	77%
Provides opportunity for employees to direct their own care	62%	Potential for adverse selection	60%
Employees can be less involved in coverage decisions	44%	Employees have limited time/interest in getting involved in health care	56%

"Employers are addressing concerns that employees may forgo care to save money by encouraging preventive care and providing employees with access to information and tools to help them take control of their own care and become better consumers of healthcare," Cotter said.

Copies of the survey, "New Rules for Managing Health Costs," are available by clicking here.

The Washington Business Group on Health (WBGH), representing 165 large employers, is the nation's only non-profit organization devoted exclusively to finding innovative and forward-thinking solutions to the nation's most important health care and related benefits issues. The Business Group also supports its members in the areas of disability, health/productivity, related paid time off and work/life balance issues. For more information on WBGH, call (202) 628-9320 or visit www.wbgh.org.

Watson Wyatt & Company, the primary subsidiary Watson Wyatt & Company Holdings (NYSE: WW), is an international human capital consulting firm that provides services in the areas of employee benefits, human resources technologies and human capital strategies. The firm is headquartered in Washington, D.C., and has more than 4,200 associates in 62 offices in the Americas and Asia-Pacific. Together with Watson Wyatt Partners, a leading European-based consulting partnership, the firm operates globally as Watson Wyatt Worldwide. Watson Wyatt Worldwide has more than 6,200 associates in 87 offices in 29 countries.

For more information contact Ed Emerman at (609) 452-5967.