Global cover that counts - Aetna supplement part 1

15 November 2011

In mature health insurance markets, health cover has become the most important employee benefit, say Aetna managers.

In regions like the US and Europe, where the health insurance market is mature, health cover has become the most important employee benefit, second only to remuneration. It is a powerful tool for attracting and retaining top talent, and this trend is spreading fast to the world's developing economies.

"In Latin America, China, South-East Asia and the Middle East, health insurance is rapidly becoming the golden ticket among employee benefits."

In Latin America, China, South-East Asia and the Middle East, health insurance is rapidly becoming the golden ticket among employee benefits, not only for expatriates, but also for the employees of rapidly expanding domestic companies. Healthcare costs in mature markets are high, and in developing economies they are rising fast, so companies are realising that health benefits are essential in order to look after their most important assets - their employees.

For CEOs, the paybacks on health insurance programmes are employees that are more engaged with the company, increased productivity, lower rates of absenteeism and fewer incidents of presenteeism, where an employee is at work but is less productive because of a health issue. This has a demonstrable effect on the bottom line, which shows the sound commercial sense of providing health benefits.

"What makes Aetna unique is its understanding of the needs of employers and employees when it comes to accessing healthcare globally."

It is not only the cost of health insurance to cover medical expenses that can be justified in this way, but also investment in well-being programmes to educate employees in how to be more engaged in looking after their own health. Building on its more than 150 years' experience in the US, Aetna International now provides insurance cover and well-being programmes around the world.

What makes Aetna unique is its understanding of the needs of employers and employees when it comes to accessing healthcare globally. No matter where the assignment, Aetna can provide expatriates - and employees of domestic businesses in key emerging markets - with bespoke health insurance and well-being solutions to help CEOs keep their workforce healthy, productive and fully engaged with corporate strategy.

Europe: controlling the cost of customised health cover

With health cover one of the most important employee benefits and therefore key to retaining top talent, the challenge is to provide broad, flexible health insurance at competitive prices, says Deborah Williams, Aetna's managing director for Europe.

"CEOs need to challenge their staff to become more involved in their healthcare."

Finding, hiring and keeping the best people has always been a challenge for any company and the quality of health insurance is a very attractive option to many employees. In the current economic climate, however, health cover needs to come at the right price, because companies are particular about controlling their costs.

As well as economic pressures, companies must find health cover at a time when there is consolidation among insurers and intermediaries, and when their own corporate strategy may be looking at a more diverse range of needs because of international expansion. What CEOs require is flexible and affordable health plans.

"CEOs need more plan flexibility, they want a one-stop shop for global health cover and they want to implement medical management in a way that contains costs," says Williams. "Healthcare cover is part of a total competitive package for attracting and retaining talent. Some vertical health benefits may play a key role in remaining competitive, but health cover that promotes good employee morale, engagement and loyalty is just as important."

Within Europe, economic pressures have placed additional strain on health systems and demand for some private medical insurance has increased in certain market segments. So, it is more important than ever to get value from any spend on healthcare cover. When judging value, however, it is important to remember the positive effect health insurance has on the productivity of employees, which in turn directly affects the bottom line.

"CEOs need to challenge their staff to become more involved in their healthcare," says Williams. "People have to ask more questions about outcomes and costs for treatment, and employees need to start understanding their 'numbers' or biometrics to work towards a healthy lifestyle."

Beyond insurance

As Williams suggests, improving employees' health and productivity is not just about providing insurance cover: it also means educating and engaging with the workforce about healthcare issues. Health and well-being programmes, which Aetna can design, are an important part of any business strategy.

"In Europe, there is likely to be a move by insurers to meet the changing demand of CEOs who need to balance the many factors of healthcare cover."

"This is clearly the right approach in the medium to long term," says Williams. "These programmes help to raise awareness of a healthy lifestyle and encourage employee engagement and participation.

"We have incorporated an Aetna International Health Check with a health risk assessment called Wellness Checkpoint into our new International Healthcare Plan. The plan offers a range of optional benefits that can be used to tailor the assessment to a company's needs, along with available preventive care options that motivate staff to have routine checks."

In Europe, there is likely to be a move by insurers to meet the changing demand of CEOs who need to balance the many factors of healthcare cover, whether it be cost, range of cover or options for educating and encouraging employees to look after their own health.

Aetna already offers flexible plans, which can cover a minimum of three employees, and be tailored to meet both the specific health needs of employees and the budget of their employer.

"The market will certainly demand more flexibility in plan options and will expect greater value from insurers and intermediaries," says Williams. "It will require more information on utilisation patterns and on the insurer's ability to manage costs, and there will be more regional differentiation to meet diverse employee needs."

A mature market with changing priorities

Expatriates heading abroad from the US need health benefits that cover the specific health risks of their destination. Toby Dobbs, managing director of North America for Aetna International, believes that only a global health programme can provide the necessary flexibility.

The US is a highly developed market for healthcare cover and medical treatment, and has a sophisticated approach to the design of insurance packages and wellness programmes because of their importance in encouraging talented people to choose a job. For US employees on outbound assignments, comprehensive cover is essential, while inbound expatriates need insurance to meet the high cost of US healthcare.

"For outbound workers, a global healthcare programme is essential to attract talent and maintain productivity."

"The US is consistently one of the top three expatriate destinations in the world and its healthcare landscape can be very complex, so it is vital to have a network plan," says Dobbs. "For outbound expatriates, there are always unique challenges. Foreign systems for accessing healthcare have varying levels of complexity, so it is critical to understand the local compliance regulations in each of the host destinations, as well as have the means and resources to help access quality healthcare."

Aetna provides customised healthcare plans for many US multinationals sending expatriates abroad, but also helps international headquartered employers, the diplomats of foreign governments and international NGOs, with cover for their workforce in the US. This raises very different issues to address, but Aetna's service model treats the US as just another international destination with its own unique requirements.

"For outbound workers, a global healthcare programme is essential for attracting talent and maintaining productivity - it is essential for any US multinational company," says Dobbs.

"When they are paying up to four times as much to send an employee abroad as it would cost them to hire a local employee, then it is critical that the assignment is successful. You need to hire the right people and then look after them.

"With our solutions we try to make it easy to access healthcare, wherever you are. Global healthcare programmes take away the headache. We have to understand the destinations expatriates are going to, what the norms of healthcare are and also the cultural factors involved; for example, if someone is on assignment in Asia, we have to ensure that acupuncture is covered as a standard element of medical treatment."

Towards a global model

US multinationals are increasingly recognising the appeal of global health programmes, having learnt from experience the pitfalls of sending expatriates abroad without global cover.

"The US healthcare market is very mature, but even some large US companies don't have global healthcare programmes," says Dobbs. "They sometimes keep people on US programmes, which means less coverage in an overseas destination and the service team is in the US, so they are on differing time zones. You need a member-service model that 'follows the sun' and provides support to help access the best local resources in your destination market."

"US multinationals are increasingly recognising the appeal of global health programmes."

Dobbs cites the example of a US expatriate in Thailand, covered by a US health plan, who pays medical expenses on a corporate credit card. Issues such as currency conversion and the timelines for effective reimbursement mean that there is a strong possibility that an outstanding balance may remain on the card, which could - in a worst-case scenario - lead to that employee's job coming under threat as HR policy may require the balance to be cleared within a certain timeframe.

"An international plan avoids this kind of situation," he says. "It is important to bring companies towards global healthcare schemes and we can provide tailor-made solutions for all our clients. We look at all the regulatory requirements in the US and abroad, and design customised solutions that are very specific to the needs of employers and their international assignees."

For CEOs concerned about the cost of global programmes, Dobbs can offer some encouragement.

"The cost of an international plan is usually less than that of a US policy," he explains. "Expats are usually healthier and healthcare abroad generally costs considerably less than in the US, so it is a compelling proposition."

China: meeting the need for employee health benefits

China's rapid economic development makes it an attractive destination for multinationals and a hotbed for the growth of large domestic corporations. Its healthcare expenditure has been growing at a rate of 18% for the past 15 years, doubling that of its fastest-growing GDP, according to Hocking Cheng, Aetna's managing director for the Greater China region.

The healthcare insurance market in China is nascent, but it is growing rapidly as China becomes a more important economic power in which foreign companies are more active and where domestic companies are becoming increasingly prominent on the global stage.

"Providing comprehensive healthcare benefits is a relatively new practice for many companies in Greater China," says Hocking Cheng, Aetna's managing director for the Greater China region. "They have started to realise that it can be a powerful and unique way to attract and retain employees - especially senior people. Having healthy top talent is crucial, and this is a market where the prevalence of chronic diseases is growing due to the many environmental factors to combat.

"For CEOs, any decision about healthcare benefits needs to consider the value they bring."

"Stress management, for example, is something that few companies paid attention to before, but which is very important for the HR departments of large multinationals as the pressure on senior people to deliver results is growing. It is all about productivity. In China there is also a lifestyle change, with people having more sedentary jobs in offices, so there are risks from a lack of exercise and a lack of healthy food."

From a health insurance perspective, there is much diversity within the greater China region in terms of the sophistication of medical care. Regulatory regimes are also in a state of flux, which adds more momentum to the push for customised health plans.

Changes are happening that affect how health plans are structured. In Hong Kong, for example, proposed healthcare reforms would make employers more accountable for employees' health. In China, where the main driver for health cover is predominantly the recognition that it is a powerful way to attract talented people to a company, there are state health programmes to consider and insurers must also respond to the rapid changes
in the corporate landscape.

"The range of benefits designed for this region is sporadic," says Cheng. "Some companies have extensive plans for a small proportion of their employees, or benefits for all employees but with poor cover. This is an important issue for CEOs, who want to spend appropriately and get a good return on their investment. That is where Aetna tries to bring value by balancing smart spending with the right benefits. We help companies to make more informed decisions."

Localised expertise

"There is great diversity within the greater China region in terms of the sophistication of medical care."

For CEOs, any decision about healthcare benefits needs to consider the value they bring. This means understanding the impact of health benefits on productivity. This link is becoming easier to demonstrate in specific terms as more detailed data is gathered on absenteesim, insurance claims and presenteeism.

"The challenge is that there is no standard in the region yet, but we are exploring and implementing a measurement scheme," says Cheng. "We need to show a clear ROI and this takes time, but we have had initial success. Employers want their employees to live healthier lives so that they can work more efficiently. This means their money is not wasted and instead supplements government health programmes.

"In the future, you will see a lot more creative solutions to meet the market's need. This will include flexible benefits for employees. We will see more bespoke design of healthcare plans, which may include cover for their dependents, as it is a strong message for employers to send out that they care for their employees' families, too. Aetna focuses on solutions that fit a company's business strategy and its corporate culture. With the economy developing so fast in China we have a tremendous opportunity to create innovative employee benefits solutions for this market."


Deborah Williams, managing director for Europe, Aetna.
Toby Dobbs, managing director of North America, Aetna.
Hocking Cheng, managing director for the Greater China region, Aetna.