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Medical Cost Increases to Accelerate Worldwide Over Next Five Years, Watson Wyatt Poll Finds
Date:2/6/2008

WASHINGTON, Feb. 6 /PRNewswire-FirstCall/ -- 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 http://www.watsonwyatt.com.


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