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Medical Cost Increases to Accelerate Worldwide Over Next Five Years, Watson Wyatt Poll Finds

Thursday, February 7, 2008 General News
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WASHINGTON, Feb. 6 Medical cost increases foremployers throughout the world are expected to accelerate over the next fiveyears, according to a poll of insurance companies conducted by Watson WyattWorldwide, a leading global consulting firm. The poll also found that, in avast majority of countries, medical cost increases are outpacing the generalrate of inflation.
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Nearly three-fourths (71 percent) of respondents expect higher orsignificantly higher medical cost trends over the next five years.Additionally, more than eight of 10 (81 percent) report that medical costs areeclipsing the general rate of inflation in their country. The results arebased on a Watson Wyatt survey of 85 insurance companies that provide medicalinsurance to employers throughout Asia, Africa, Europe and the Americas.
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"Rising medical costs have rapidly become a global issue that reaches farbeyond 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 significantincreases in their health care costs -- such as increased utilization,expensive medical technology and an aging population -- are having comparableeffects throughout the world."

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

"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 engageworkers and improve their health and productivity."

About Watson Wyatt Worldwide

Watson Wyatt (NYSE, Nasdaq: WW) is the trusted business partner to theworld's leading organizations on people and financial issues. The firm'sglobal services include: managing the cost and effectiveness of employeebenefit programs; developing attraction, retention and reward strategies;advising pension plan sponsors and other institutions on optimal investmentstrategies; providing strategic and financial advice to insurance andfinancial services companies; and delivering related technology, outsourcingand data services. Watson Wyatt has 7,000 associates in 32 countries and islocated on the Web at www.watsonwyatt.com.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 %
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