"Creating a Sustainable Health Care Program: Eighth Annual Washington Business Group on Health/Watson Wyatt Survey Report"
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Washington Business Group on Health/Watson Wyatt, April 2003.
According to this eighth annual report by the Washington Business Group on Health and Watson Wyatt, the heavy inflation of employer health care costs continued unabated in 2002. Respondents reported a median anticipated increase of 15 percent from 2002 to 2003, and the study asserts that, at this rate, employers’ health care costs will double in five years. In light of these increases, only 32 percent indicated they were willing or able to absorb the added overhead as opposed to 52 percent in 2000.
The crisis appears to have taken a toll on employer confidence. Only 18 percent of the respondents reported feeling very confident about their ability to manage rising health care expenditures. Twenty-five percent expressed no or very little confidence in their ability to manage these costs. More importantly, 7 percent have little or no confidence in their ability to provide coverage 10 years from now.
As a result of rising costs, more and more companies are resorting to short-term cost-saving strategies, with higher premiums (83 percent) and cost sharing (80 percent) being the most common approaches. Companies are also increasingly turning to more consumer-oriented approaches, such as cafeteria and flexible-spending plans. More than half of the respondents report that they intend to pursue these kinds of strategies by the end of 2003.
Perhaps most interestingly, the highest performers in the study– those facing cost increases of 10 as opposed to 15 percent – have been pursuing consumerist strategies in stages with an initial period of increased cost sharing followed by changes to their plans’ design and a greater emphasis on employee communication.
