Understanding local coverage is key to attracting and retaining global workers
Changes in immigration laws and policies, technological advancements and a growing skills shortage are affecting the way companies do business. More organizations are becoming multinational, with employees as well as clients around the world.
The global movement is getting stronger. According to the Accenture/Economist Intelligence Unit 2006 Global Merger and Acquisition Survey, the majority of companies around the world (58 per cent) indicated their most recent acquisition was a cross-border one and businesses in the United States expect revenue generated outside of the U.S. to account for 42 per cent of total revenue in three years’ time.
As companies extend beyond borders, they will increasingly hire global employees. According to the article “Decoupled: Companies’ and countries’ prosperity” in the Feb. 25, 2006, issue of The Economist, the world’s 40 biggest multinational companies now employ, on average, 55 per cent of their workforce in foreign countries.
But the global population is aging, which is increasing the profile of health-care issues. In the next five to 10 years, people over 65 will outnumber children under the age of four, according to the 2007 report Why Population Aging Matters: A Global Perspective from the National Institute on Aging, the National Institute of Health and the U.S. Department of Health and Human Services.
As different as health-care programs may be around the globe, the impact of these trends on employers is universal. As fewer employees are available to contribute to social security systems, governments are shifting more of the responsibility for health-care funding to employers and employees.
Supplemental or extended health-care premiums are rising faster than inflation. This is due to several factors: An increase in the average age of the working population, longer lifespans and a growing middle-class in some developing economies.
To manage the cost to employees, employers should help them become better health-care consumers by providing materials and tools that allow them to assess benefits and providers, where choice is available.
To manage their own costs, employers should re-examine how to maintain a healthy workforce by considering programs that empower employees to manage their own health, provide greater workplace health and safety and offer better work-life balance.
As a result, multinational employers should consider implementing global health-risk management programs to address both increasing costs and decreasing productivity. Expanding awareness and knowledge of the health-care systems in the countries in which they operate, of local health-care markets and employees’ needs is an important first step in developing and applying strategies to manage their exposure.
The sidebar (on the right) summarizes the public and private health coverage in the United Kingdom and the U.S., where many Canadian organizations are already doing business, along with two emerging markets: Brazil and China.
Armed with the relevant health-care knowledge, employers can take the following steps to implement a global health-risk management strategy:
• Establish guiding principles regarding health and wellness, absences, productivity and education. These principles should provide clarity and specificity for local offices around corporate expectations, while ensuring there is sufficient flexibility to accommodate local legal and cultural differences.
• Define measures of success for specific programs.
• Implement the program locally.
• Measure results. Determining whether improvements have been made requires knowing where the organization started in terms of employee absences and disability claims. A centralized system should be implemented to gather this data and monitor it.
Susan DeGregorio and Anthony Perlman are senior health management consultants with Hewitt Associates in Pittsburgh and Toronto, respectively. Susan can be reached at [email protected] and Anthony can be reached at [email protected].
Global health care
Public and private coverage in four countries
A look at public and private health-care coverage in Brazil and China, emerging business markets, and in the United Kingdom and the United States where many Canadian organizations already do business.
Brazil
Public Coverage: Under the Sistema Unificado de Saude (SUS), the insured, who typically pays into the system through his place of work, and his dependents are covered.
All clinical, surgical, maternity and dental services in government-approved centers, hospitals and nursing homes are covered. There is no limit on the duration of care. Prescription drugs may be subject to a co-payment.
The availability and quality of medical services vary by state and municipality. Limited care is available in rural areas.
Private Coverage: About 20 per cent of the population is covered by private health-insurance or group medical plans. Most individuals with private insurance are covered by employer-provided plans.
Health plans and insurance companies are permitted to offer outpatient, inpatient, dental and comprehensive health plans. The government establishes a minimum level of coverage for each plan.
China
Public Coverage: The urban system consists of individual medical savings accounts and a social pooled account for expenses specified by the Ministry of Health and local health authorities, such as hospitalization, extended emergency care and treatments for serious illnesses on an outpatient basis.
Employers contribute six per cent of pay, distributed between the pooled account and individual accounts; employees contribute two per cent of pay, all of which is deposited in their individual account. The percentage of the employer contribution allocated to individual medical accounts varies by the individual’s age.
Individual medical accounts cover the employee’s outpatient and emergency care and pharmaceutical drugs. In some cities, the employee is also responsible for a deductible before payment begins from the social pool.
Private Coverage: Nearly 90 per cent of employers in China provide some kind of supplemental health-insurance benefit to employees. Almost all plans are paid completely by the employer. The typical plan covers 80 per cent to 90 per cent of outpatient and 100 per cent of inpatient costs. Supplemental benefits vary from a single benefit to comprehensive coverage.
In the short-to-medium term, China’s “one child” policy is likely to put pressure on employers to provide dependent coverage for spouses and parents, as each child is culturally and financially responsible for two parents and four grandparents.
United Kingdom
Public Coverage: The National Health Service (NHS) provides comprehensive coverage including: general medical services; inpatient services; outpatient services; dental care; vision care; medical supplies and appliances; and prescription drugs.
All services are free of charge with the exception of dental and vision care. Patients are required to pay 80 per cent of the cost of NHS dental treatment. NHS eyesight tests are free to children, pensioners and those on income support or with a history of vision problems.
A co-payment is required on prescription drugs. However, more than 80 per cent of the population is exempt from prescription charges.
Private Coverage: About 15 per cent of the adult population is covered by private medical insurance. Due to the added expense, private medical insurance coverage is much more common among the highest income brackets. Approximately 35 per cent of adults in the 90th income percentile or higher are covered by private medical insurance.
United States
Public Coverage: The United States does not have a comprehensive national health insurance program.
Medicare provides medical benefits for individuals age 65 or older and for the disabled. Medicaid helps finance medical care for people with low incomes.
Private Coverage: Employers in most states are not required to offer health-care coverage to their employees, although most medium- to large-sized employers do so.
The majority of U.S. families rely on group health-insurance plans provided by employers or insurance they have purchased individually. An estimated 40 to 50 million people have no health insurance.
Private funding accounts for 55 per cent of all health-care costs —36 per cent by private insurance, 14 per cent paid directly by individuals and five per cent by other private sources.
The global movement is getting stronger. According to the Accenture/Economist Intelligence Unit 2006 Global Merger and Acquisition Survey, the majority of companies around the world (58 per cent) indicated their most recent acquisition was a cross-border one and businesses in the United States expect revenue generated outside of the U.S. to account for 42 per cent of total revenue in three years’ time.
As companies extend beyond borders, they will increasingly hire global employees. According to the article “Decoupled: Companies’ and countries’ prosperity” in the Feb. 25, 2006, issue of The Economist, the world’s 40 biggest multinational companies now employ, on average, 55 per cent of their workforce in foreign countries.
But the global population is aging, which is increasing the profile of health-care issues. In the next five to 10 years, people over 65 will outnumber children under the age of four, according to the 2007 report Why Population Aging Matters: A Global Perspective from the National Institute on Aging, the National Institute of Health and the U.S. Department of Health and Human Services.
As different as health-care programs may be around the globe, the impact of these trends on employers is universal. As fewer employees are available to contribute to social security systems, governments are shifting more of the responsibility for health-care funding to employers and employees.
Supplemental or extended health-care premiums are rising faster than inflation. This is due to several factors: An increase in the average age of the working population, longer lifespans and a growing middle-class in some developing economies.
To manage the cost to employees, employers should help them become better health-care consumers by providing materials and tools that allow them to assess benefits and providers, where choice is available.
To manage their own costs, employers should re-examine how to maintain a healthy workforce by considering programs that empower employees to manage their own health, provide greater workplace health and safety and offer better work-life balance.
As a result, multinational employers should consider implementing global health-risk management programs to address both increasing costs and decreasing productivity. Expanding awareness and knowledge of the health-care systems in the countries in which they operate, of local health-care markets and employees’ needs is an important first step in developing and applying strategies to manage their exposure.
The sidebar (on the right) summarizes the public and private health coverage in the United Kingdom and the U.S., where many Canadian organizations are already doing business, along with two emerging markets: Brazil and China.
Armed with the relevant health-care knowledge, employers can take the following steps to implement a global health-risk management strategy:
• Establish guiding principles regarding health and wellness, absences, productivity and education. These principles should provide clarity and specificity for local offices around corporate expectations, while ensuring there is sufficient flexibility to accommodate local legal and cultural differences.
• Define measures of success for specific programs.
• Implement the program locally.
• Measure results. Determining whether improvements have been made requires knowing where the organization started in terms of employee absences and disability claims. A centralized system should be implemented to gather this data and monitor it.
Susan DeGregorio and Anthony Perlman are senior health management consultants with Hewitt Associates in Pittsburgh and Toronto, respectively. Susan can be reached at [email protected] and Anthony can be reached at [email protected].
Global health care
Public and private coverage in four countries
A look at public and private health-care coverage in Brazil and China, emerging business markets, and in the United Kingdom and the United States where many Canadian organizations already do business.
Brazil
Public Coverage: Under the Sistema Unificado de Saude (SUS), the insured, who typically pays into the system through his place of work, and his dependents are covered.
All clinical, surgical, maternity and dental services in government-approved centers, hospitals and nursing homes are covered. There is no limit on the duration of care. Prescription drugs may be subject to a co-payment.
The availability and quality of medical services vary by state and municipality. Limited care is available in rural areas.
Private Coverage: About 20 per cent of the population is covered by private health-insurance or group medical plans. Most individuals with private insurance are covered by employer-provided plans.
Health plans and insurance companies are permitted to offer outpatient, inpatient, dental and comprehensive health plans. The government establishes a minimum level of coverage for each plan.
China
Public Coverage: The urban system consists of individual medical savings accounts and a social pooled account for expenses specified by the Ministry of Health and local health authorities, such as hospitalization, extended emergency care and treatments for serious illnesses on an outpatient basis.
Employers contribute six per cent of pay, distributed between the pooled account and individual accounts; employees contribute two per cent of pay, all of which is deposited in their individual account. The percentage of the employer contribution allocated to individual medical accounts varies by the individual’s age.
Individual medical accounts cover the employee’s outpatient and emergency care and pharmaceutical drugs. In some cities, the employee is also responsible for a deductible before payment begins from the social pool.
Private Coverage: Nearly 90 per cent of employers in China provide some kind of supplemental health-insurance benefit to employees. Almost all plans are paid completely by the employer. The typical plan covers 80 per cent to 90 per cent of outpatient and 100 per cent of inpatient costs. Supplemental benefits vary from a single benefit to comprehensive coverage.
In the short-to-medium term, China’s “one child” policy is likely to put pressure on employers to provide dependent coverage for spouses and parents, as each child is culturally and financially responsible for two parents and four grandparents.
United Kingdom
Public Coverage: The National Health Service (NHS) provides comprehensive coverage including: general medical services; inpatient services; outpatient services; dental care; vision care; medical supplies and appliances; and prescription drugs.
All services are free of charge with the exception of dental and vision care. Patients are required to pay 80 per cent of the cost of NHS dental treatment. NHS eyesight tests are free to children, pensioners and those on income support or with a history of vision problems.
A co-payment is required on prescription drugs. However, more than 80 per cent of the population is exempt from prescription charges.
Private Coverage: About 15 per cent of the adult population is covered by private medical insurance. Due to the added expense, private medical insurance coverage is much more common among the highest income brackets. Approximately 35 per cent of adults in the 90th income percentile or higher are covered by private medical insurance.
United States
Public Coverage: The United States does not have a comprehensive national health insurance program.
Medicare provides medical benefits for individuals age 65 or older and for the disabled. Medicaid helps finance medical care for people with low incomes.
Private Coverage: Employers in most states are not required to offer health-care coverage to their employees, although most medium- to large-sized employers do so.
The majority of U.S. families rely on group health-insurance plans provided by employers or insurance they have purchased individually. An estimated 40 to 50 million people have no health insurance.
Private funding accounts for 55 per cent of all health-care costs —36 per cent by private insurance, 14 per cent paid directly by individuals and five per cent by other private sources.
