Trends around US best practices in the benefits arena are being deployed internationally but not all US practices can, or should be, exported. That said, there’s a strong argument that exploring trends and their application in other markets can generate new perspectives on how benefit programmes can be provided and managed internationally. Contributor Mark Sullivan Head of International Workplace Consulting – Fidelity Workplace Consulting.
The US healthcare market is the largest in the world with healthcare expenditure accounting for 17.1 percent of GDP in 2017, and 62.9 percent of the population having private healthcare insurance, often provided through corporate plans. To put the cost of healthcare in context Fidelity estimated that a 65-year old American couple retiring in 2019 can expect to spend £230,000 ($285,000) on healthcare and medical expenses in retirement, a figure which had increased from £200.000 ($245,000) in 2015. With the absolute level of healthcare costs and consistent above-inflation annual increases, companies and consultants have had to explore ways to better control costs whilst supporting the maintenance of a healthy workforce.
The position internationally, although starting from a lower cost base, is similar. According to the World Health Organisation, international health care expenditure is growing faster than GDP, with double digit inflationary rises in countries across Asia, the Middle East and Latin America. Against this backdrop, companies are learning the lessons from healthcare management in the US and are exploring ways to have more effective international benefits management (and expense control) whilst promoting an internationally healthy and productive workforce.
So what practices have been adopted in the US and could these have broader application?
A Focus on Well-being
Originally well-being programmes were deployed in the US to drive lower healthcare claims costs. Whilst this objective has in many circumstances been delivered, we are beginning to see a shift in focus to a total well-being culture being embraced by corporates rather than a programme driven purely by healthcare cost control. The physical wellness programmes focus on educating employees around health issues and encouraging healthier behaviours in areas such as nutrition and activity.
This approach translates very naturally internationally, and a number of multinationals have already developed and implemented global well-being strategies. They are seeing positive benefits in terms of increased productivity and higher levels of employee engagement and retention. The key learnings have been to ensure local implementation of a global programme is broader than just physical health, reflecting local cultural sensitivities and the benefits landscape. The continuing expansion in the global total well-being market is testimony to the positive impact these programmes have on employees and their employers and is a trend that will continue.
The Use of Incentives
In an effort to encourage a healthier workforce and to reduce claims costs, more organisations have employed the use of incentives as part of their well-being programmes to encourage employees to lead healthier lifestyles. The average incentive in the US in 2019 was £620 ($762), according to a survey by the National Business Group on Health and Fidelity. Whilst payment of these incentives was originally dependent on improvements in an individual’s health (e.g. weight, blood pressure etc.), this has changed, partially as a result of discrimination claims, to a focus on encouraging healthier lifestyles by participation in promoted programmes.
Internationally, we have also seen the use of well-being incentives; according to Optum, the average annual international incentive is around £410 ($510). The financial drivers outside the US are not so compelling to fund incentives and there is wide variability in the amount and prevalence. While a number of organisations have deployed incentives internationally, the impact on behaviours is just starting to be assessed to determine cost effectiveness. We have seen a higher use of intrinsic incentives (such as gift cards) outside the US; the goal is primarily to encourage a healthier workforce, with the benefit of better healthcare cost control and better productivity.
Healthcare Saving Funds
In the US, legislators recently made available a tax-efficient way for individuals to save for their medical expenses – Health Savings Accounts. They enable individuals, possibly with a company contribution, to save tax effectively for future medical expenses. These plans are gaining in popularity and are seen as an additional form of savings, rather than as a pure healthcare solution, and are increasingly being incorporated into retirement planning.
Whilst internationally many private health insurance plans are not tax deductible, with escalating costs and increased demand on national health systems, more individuals are looking to make provision for their retirement needs and increasingly this will include provision for access to healthcare to supplement what is available from the state. The emerging trend is for multinationals to educate and provide support to employees to make robust financial plans which address current and future needs including healthcare costs. It will be interesting to monitor whether governments introduce some form of incentive for private healthcare to dampen the demands on state-provided care.
So as is often the case in the global economy, there are indeed some best practices in the US healthcare sector which have application internationally for the benefit of corporates’ expense lines and for the well-being of their workforces. We expect to see innovation continue, particularly in the use of AI and technology, and best practice will continue to be driven by the review and selective deployment of international best practices. We also expect to see a continued drive to a holistic, total well-being approach beyond the healthcare aspects covered above.
 Data extracted from OECD.stat
 Optum: Employee wellbeing: International differences and commonalities