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Towers Watson Survey: Employer Health Cost Rate Increases to Slow to 6.5% This Year, Medtipster reports.

March 02, 2010 By: Nadia Category: Medtipster

Medtipster Source: Towers Watson (NYSE, NASDAQ: TW), 2/22/2010, and

NEW YORK — The continuing sluggish economy is forcing a growing number of large U.S. employers to take more aggressive measures to control rising health care costs and motivate workers to take charge of improving their own health, according to a survey conducted by Towers Watson, a global professional services company, and the National Business Group on Health (NBGH), a non-profit association of large U.S. employers.

Survey findings

  • 83% of companies have already revamped or expect to revamp their health care strategy within the next two years, up from 59% in 2009.
  • Costs are expected to increase 6.5% this year, down slightly from 7% in 2009.
  • 67% of employers identify employees’ poor health habits as a top challenge to maintaining affordable benefit coverage.

Employee Engagement

  • 58% of employers indicate the biggest obstacle to changing employees’ health-related behavior is the lack of employee engagement.
  • 31% say there is a lack of sufficient financial incentives to encourage participation
  • 30% say there is a lack of an adequate health management program budget.

Employee Incentives and On-site Health Centers

  • 66% plan to offer incentives for employees to complete a health risk appraisal, up from 61% in 2009.
  • 56% of employers now offer health coaches, and
  • 26% now offer onsite health centers.

Vendors Can Do Better

  • 67% of companies feel that vendors fall short with programs designed to change member behavior to drive more efficient use of health care services.
  • 66% identify vendor programs designed to change member behavior related to making healthy lifestyle decisions as not at all or only slightly effective.
  • 57% of employers also consider vendors not at all or only slightly effective at driving care to high-quality providers.

“The downturn has amplified the pressure on companies to find ways to support effective health management programs under budget constraints,” said Ron Fontanetta, senior consultant at Towers Watson. “For employers, the current environment is a clarion call to adjust their health plan strategy, reassess vendor relationships and aggressively address the challenge to encourage workers to become better advocates for their own health.”¬†

“Even in tight times, employers will continue to encourage healthy behaviors with financial incentives and other initiatives,” said Ted Nussbaum, senior consultant at Towers Watson. “However, there are challenges to changing employee behavior that extend beyond budget constraints and employer-sponsored programs. Inspiring workers to be actively involved in their own health remains an uphill battle for most companies.”

About the National Business Group on Health/Towers Watson Report

The 15th Annual National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care was conducted from November 2009 through January 2010 with 507 employers of 1,000 or more employees that collectively employ 11.5 million workers. The full report will be available in March.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world.  Visit

About the National Business Group on Health

The National Business Group on Health is a non-profit membership organization of more than 280 members, including 60 of the Fortune 100. The National Business Group on Health is devoted to providing practical solutions to its employer-members’ most important health care problems and serving as the voice for large employers on national health care issues and public policy. Its members purchase health and disability benefits for over 55 million people. Visit

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