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News Release

CHICAGO — May 10, 2007 — U.S. employers continue to be concerned about reducing health care costs, however, there is a growing focus on improving workforce health, creating incentives to change employee behavior and adoption of consumer driven approaches. These are among the findings in a nationwide survey of more than 160 U.S. employers released today by the non-profit Midwest Business Group on Health (MBGH) during its 27th Annual Conference being held May 10-11.

Addressing more than 200 employers and health care stakeholders today at the Midwest's leading employer-focused health benefits conference, MBGH President and CEO Larry Boress announced the results of the Midwest Business Group on Health's Readiness to Change Survey. The survey revealed that employers are now thinking differently about health care. While disease management continues to play a critical role, employers are increasingly focusing on efforts to prevent employees from becoming sick.

The survey was developed to determine employer understanding, use of and readiness to adopt value-based benefit design (VBBD) strategies and to identify which strategies and experiences are currently being promoted or utilized by employers. Key survey components included employer demographics, positions on benefit philosophies and data activities.

"Employers are realizing that a good health care strategy includes health benefits and programs that incentivize employees to manage their own health," said Larry Boress. "If employers offer benefits that help keep employees healthy, in the long run, the individual and the company profits. And, our survey results clearly show that leading edge employers are almost twice as likely to provide incentives to employees to obtain preventive services and to choose doctors and hospitals based on quality."

Highlights of the MBGH Readiness to Change Survey findings include:

• 95% of employers agree that there is a link between an employee's health and their productivity
• 62% of employers who view themselves as "leading edge" will provide cash or other incentives to motivate employee use of preventive services; compared to 40 percent of other employers
• 77% of employers agree that using drugs proven effective for a condition will reduce other services for that condition
• 60% of employers believe employees would change to better performing providers if they understood how quality varies and affects outcomes
• 70% of employers believe they should not pay hospitals or be billed for services provided due to preventable medical errors or infections, not related to the admission of a patient

Employers were asked to rate their organizations' benefit design philosophy as leading edge (22 percent), careful watcher (54 percent) or conservative (25 percent). The employers that defined themselves as leading edge plan to offer more programs to prevent illness and complications from illness in the next one to two years. Benefit strategies for these types of employers will rely more heavily on making employees aware that quality matters.

"We're encouraged to see 'enlightened' employers increasingly instituting worksite health and productivity and value based purchasing programs to continuously improve health care and demand quality to keep employees and dependents well," said Andrew Webber, president and CEO of the National Business Coalition on Health and a conference speaker.

Move from cost-shifting towards more strategic value-based benefits?
Nearly 50 percent of all employers and 68 percent of leading edge employers reported that employee cost-sharing reduces doctor visits. Employer strategies for the next one to two years point to moving away from cost-shifting and towards implementing value-based benefits such as waived employee cost-sharing for chronic disease drugs, waived employee cost sharing to get employee to participate in a disease management program, and mandated generic use where generic is available.

No longer willing to pay for poor care or medical mistakes
Results from the survey indicate that employers are concerned about the lack of quality information on hospitals and doctors made available to employees as well as the need to educate employees about what constitutes a quality provider. Employers are no longer willing to pay for poor care, unnecessary care or medical mistakes.

About the MBGH Employers' Readiness to Change Survey
MBGH developed the survey questions based on analysis of current VBBD strategies and programs. Survey questions were reviewed by a Project Advisory Council composed of leading employers, coalitions, researchers, health plans and consultants. The survey was disseminated to 14 business coalitions to distribute to more than 400 employers throughout the country. Results were received from 163 employers representing a cross-section of industries, with a majority, 32 percent, in manufacturing. Thirty percent of companies had greater than 5,000 employees, 33 percent had 500 to 5,000 employees and 37 percent had fewer than 500 employees. Cost trends among the companies were consistent with national trends between 2003 and 2005, averaging nine to 14 percent cost increases. Data analysis was conducted by MBGH staff with funding and research support provided by GlaxoSmithKline.

About the Midwest Business Group on Health (www.mbgh.org)
The Chicago based, Midwest Business Group on Health (MBGH) was founded in 1980 by a small group of large Midwest employers to help all types of purchasers — employers and their employees — obtain more value from their health care benefit dollars and improve the health status of their constituents. Today, MBGH is one of the nation's leading coalitions of private and public employers. MBGH's 80+ members employ over 2 million workers, spending more than $2.3 billion on health care benefits on an annual basis. Organized as a nonprofit, tax-exempt corporation, MBGH offers employers a variety of health benefit educational seminars, networking opportunities, quality and community initiatives, demonstration projects and group purchasing programs. MBGH is a member of the National Business Coalition on Health.