Human Resources: Employers Focus on Improving Employee Health

WASHINGTON, February 21, 2007 – 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.

Little Change Expected in Health Care Cost Increases

(median percentage cost increase for active employees)

“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.”

Many employers are implementing creative solutions in an effort to improve
employee health and stem costs long-term. More than three out of four of
the surveyed companies (78 percent) offer a nurse line, while 72 percent
offer health risk appraisals. Additionally, 42 percent are implementing
programs that focus on reducing obesity among employees. Some employers are
seeking to improve employee health by also providing easy access to health
care. For example, 23 percent have opened on-site clinics at some
locations, and 14 percent have opened on-site pharmacies.

“It goes without saying that easing access to health care and encouraging
employees to choose healthy lifestyles are beneficial to an organization as
a whole,” said Helen Darling, president of the National Business Group on
Health. “But employers need to go beyond mere implementation to see
results. Communicating clear information about these programs and providing
incentives that motivate employees to take the necessary steps to improve
their own health are also necessary while we move from being a country of
very unhealthy lifestyles to one with much more attention to better eating
habits, much more physical activity, less tobacco use and other health
improvement and disease prevention activities.”

About the Survey

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.

About Watson Wyatt Worldwide

Watson Wyatt (NYSE: WW) is the trusted business partner to the world’s
leading organizations on people and financial issues. The firm’s global
services include: managing the cost and effectiveness of employee benefit
programs; developing attraction, retention and reward strategies; advising
pension plan sponsors and other institutions on optimal investment
strategies; providing strategic and financial advice to insurance and
financial services companies; and delivering related technology,
outsourcing and data services. Watson Wyatt has 6,000 associates in 30
countries and is located on the Web at www.watsonwyatt.com.

About the National Business Group on Health

The National Business Group on Health, representing 266 large employers —
including 64 of the Fortune100 — is the nation’s only nonprofit
organization devoted exclusively to finding innovative and forward-thinking
solutions to large employers’ most important health care and related
benefit issues. The Business Group, located in the nation’s capital,
identifies and shares best practices in health benefits, disability, health
and productivity, related paid time off and work/life balance issues.
National Business Group on Health members provide health coverage for more
than 50 million U.S. workers, retirees and their families.
www.businessgrouphealth.org

Contact

Ed Emerman, 609/452-5967, eemerman[at]eaglepr.com
Emily Rieger, 703/258-7634, emily.rieger[at]watsonwyatt.com