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November 15, 2006

New Yale University Study Shows How Alcoa Encourages Employee Use of Preventive Care Services to Improve Health While Helping Control Costs

PITTSBURGH--(BUSINESS WIRE)--A study conducted by Yale University and published in the November/December issue of Health Affairs journal shows how Alcoa (NYSE:AA) was able to use different cost sharing approaches in its employee benefits plans to encourage employees’ use of preventive care services while at the same time helping control the company’s overall health care costs.

Titled “Effects Of A Cost-Sharing Exemption On Use Of Preventive Services At One Large Employer,” the study examined employee response to a new benefit plan Alcoa launched for some employee groups in 2004. As part of its emphasis on workforce health improvement, the plan provided incentives for employees to use preventive care services--covered 100 percent with no copayment, coinsurance, or deductible--since these services are deemed important for employees’ health and a key way to reduce future health care costs. At the same time, the new plan increased cost sharing for outpatient and hospital services used by employees.

Comparing employees covered under the new benefit plan to other employees, the results showed strong use of preventive care programs. Employees continued to utilize a wide range of covered preventive care services (including cervical and colorectal cancer screenings, well-child visits, and adolescent well care) at the same rate as before the new plan took effect.

Based on the plan’s success, Alcoa now offers 100 percent preventive care coverage in all employee benefit plans and actively encourages employees to take advantage of this benefit. (Due to multiyear union contracts, the 2004 benefit plan changes did not cover a segment of Alcoa’s hourly employees at that time, but similar coverage is now in place for those employees.)

“The goal of Alcoa's health care benefit program is to improve the health and productivity of all employees,” said Tom Mordowanec, Director of Employee Benefits for Alcoa’s North American region. “We are committed to a strategy that will help improve health and that encourages employees to get the care they need--such as 100 percent covered preventive care--while also helping to control rising health care costs. Both clearly are possible.

“Each year Alcoa analyzes health care benefits utilization in an effort to further this goal,” said Mordowanec. “We pay close attention to ensure that employees are getting the preventive and chronic condition care that they need. We believe different plan designs that provide a higher level of benefits for certain services are critical to accomplishing this goal.

“Preventive care coverage is a top priority for us because we know it improves employees’ health and reduces the need for more costly treatments. That’s a win-win for everyone in the long term,” added Mordowanec.

Other parts of Alcoa’s strategy to improve employee health include restrictions on hours worked, introduction of new standards to reduce workplace injuries and occupational diseases, and encouraging employees to complete an annual health risk appraisal.

About Alcoa

Alcoa (NYSE:AA) is the world's leading producer and manager of primary aluminum, fabricated aluminum and alumina facilities, and is active in all major aspects of the industry. Alcoa serves the aerospace, automotive, packaging, building and construction, commercial transportation and industrial markets, bringing design, engineering, production and other capabilities of Alcoa's businesses to customers. In addition to aluminum products and components, Alcoa also markets consumer brands including Reynolds Wrap® foils and plastic wraps, Alcoa® wheels, and Baco® household wraps. Among its other businesses are closures, fastening systems, precision castings, and electrical distribution systems for cars and trucks. The company has 129,000 employees in 44 countries and has been named one of the top most sustainable corporations in the world at the World Economic Forum in Davos, Switzerland. More information can be found at www.alcoa.com.