NU Online News Service, April 16, 2003, 12:16 p.m. EST – Corporate America’s best chance for handling increasing health care costs is a staged, planned defined-contribution approach, says Watson Wyatt, Washington.
Such an approach would allow companies to take immediate action to achieve short-term savings while resolving the fundamental problems of today’s health care system, the company says.
Escalating health care costs are expected to double in the next five years, says Maureen Cotter, global director of Watson Wyatt’s group and health care consulting practice.
In an article published on its Web site, Watson Wyatt outlines a defined contribution-type approach that it says strikes at the underlying problems of the employer-sponsored health care system by bringing to bear three economic forces: choice, competition and efficiency.
Watson Wyatt says this approach retains the advantages of employer-sponsored group insurance but provides the freedom to customize coverage, options and price.
A primary objective of this approach is to sensitize employees to the true cost of care so that they buy only what they need at a price they can afford.
The approach seeks to create competition in the health care market based on cost, quality and service, Watson Wyatt says.