Medical Cost Increase to Accelerate Worldwide Over Next Five Years, Watson

WASHINGTON, D.C., February 6, 2008 – Medical cost increases for employers
throughout the world are expected to accelerate over the next five years,
according to a poll of insurance companies conducted by Watson Wyatt
Worldwide, a leading global consulting firm. The poll also found that, in a
vast majority of countries, medical cost increases are outpacing the
general rate of inflation.

Nearly three-fourths (71 percent) of respondents expect higher or
significantly higher medical cost trends over the next five years.
Additionally, more than eight of 10 (81 percent) report that medical costs
are eclipsing the general rate of inflation in their country. The results
are based on a Watson Wyatt survey of 85 insurance companies that provide
medical insurance to employers throughout Asia, Africa, Europe and the
Americas.

“Rising medical costs have rapidly become a global issue that reaches far
beyond the United States and other developed economies,” said Francis
Coleman, a senior international health care benefits consultant with Watson
Wyatt. “Many of the factors causing U.S. employers to experience
significant increases in their health care costs — such as increased
utilization, expensive medical technology and an aging population — are
having comparable effects throughout the world.”

Insurance companies in Asia and Africa are expecting double-digit increases
in employer medical costs in 2008, with the exception of companies in Hong
Kong and Singapore, according to the poll. The same is true in Latin
America, except for Brazil and Chile, where costs are expected to increase
by around 7 percent. In Europe, most insurers – except those in Italy – are
projecting increases in the single digits, although respondents in all
European countries said they expect higher trends over the next five years.

Medical Cost Trends Continue to Increase Globally

  2006 2007 2008
(projected)
Asia and Africa      
China 15.2% 21.2% 19.6%
Hong Kong 6.8% 8.8% 9.1%
Philippines 11.6% 11.4% 11.5%
Russia 13.3% 13.7% 15.7%
Saudi Arabia 13.3% 13.3% 16.3%
Singapore 5.5% 6.5% 7.5%
South Africa 7.4% 10.0% 12.6%
       
Europe      
France 5.6% 6.6% 7.3%
Italy 5.5% 11.0% 11.3%
Netherlands 6.0% 5.2% 6.0%
Switzerland 3.8% 7.5% 6.0%
United Kingdom 6.0% 8.0% 8.0%
       
Americas      
Brazil 9.2% 5.9% 7.2%
Canada 12.3% 11.5% 12.0%
Chile 5.8% 6.5% 7.1%
Mexico 12.0% 12.8% 12.6%
United States 8.3% 8.0% 11.0%
Venezuela 31.3% 25.0% 25.0%


“Health care is fast becoming the most desired employee benefit worldwide,
even in countries that support state-sponsored programs,” said Ted
Nussbaum, North America director of group and health care consulting at
Watson Wyatt. “Given the similar factors driving health care costs around
the world, multinationals have an opportunity to develop global solutions
that engage workers and improve their health and productivity.”

About Watson Wyatt Worldwide

Watson Wyatt (NYSE, NASDAQ: 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 7,000 associates in 32
countries and is located on the Web at www.watsonwyatt.com.

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