"Creating a Sustainable Health Care Program: Eighth Annual
Washington Business Group on Health/Watson Wyatt Survey Report"
No author cited
Washington Business Group on Health/Watson Wyatt, April 2003.
Available Online
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.
