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Health :: Little relief from health benefit cost increases

Employers do not expect a decline in the rate of health benefit cost increases any time soon. Meanwhile, they continue to invest in on-site medical clinics, call-in medical help lines and employee health appraisals in efforts to control those costs.

These are among the major findings of a forthcoming survey conducted by Watson Wyatt Worldwide and the National Business Group on Health.

The survey of 573 large employers reveals that annual median increases for health care costs will remain at 8 percent in 2007. What’s more, employers expect cost increases to stay at 8 percent through 2008. While costs remain high, they have become more predictable in recent years. Eighty-two percent of employers also said their health care costs came in at or below budget in 2006, as did 84 percent in 2005.

“The rate at which health care costs are increasing may be stabilizing, but it is still three times higher than the annual rate of inflation overall,” said Ted Nussbaum, director of group and health care consulting at Watson Wyatt. “With no reduction in cost increases, it becomes even more important to engage employees to carefully consider health care choices and make the most of health care dollars. And while investing in education programs, communication and infrastructure will not change behavior overnight, it will produce returns in the long run.”

The 12th annual Watson Wyatt/National Business Group on Health Survey is based on responses from 573 large employers that collectively employ 11 million full-time workers. Copies of the survey report will be available in mid-March.

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s leading organizations on people and financial issues. The National Business Group on Health, representing 266 large employers – including 64 of the Fortune100 – is the nation’s only non-profit organization devoted exclusively to finding innovative and forward-thinking solutions to large employers’ most important health care and related benefit issues.

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