HR Magazine and Hewitt Associates surveyed HR managers and HR directors, in a series of HR Magazine Conferences, to gauge their opinion on medical insurance plans adopted by their organisations. The questionnaire focused on two key areas:
- Top criteria in selecting medical plan providers
- Predictions on spending on medical plans in the short and long term.
The majority of respondents were from finance, securities & banking, transportation & logistics, leisure & entertainment, trading, construction & engineering and FMCG industries. Other industries polled included hi-tech, textile & apparel, education and telecom [see Chart 1].The size of respondent companies was quite evenly spread between different sizes of enterprises [see Chart 2].
Although corporate medical plans are provided in the name of the employer, most programmes are actually one-on-one relationships between the vendor—the medical provider, and the end user—the individual employee. Whether it is clarifying eligible treatments or submitting claims for reimbursement, on a practical level the employer’s responsibility often ends with the selection of the plan and the payment of the annual premiums. Nonetheless, as gatekeeper it is important to look at what the key factors are in driving HR managers when it comes to making decisions over the company’s medical plans.
The so-called war for talent has long moved beyond just cash compensation and into the arena of providing a comprehensive range of workplace benefits, and it is not surprising to see that many companies offer health benefits to ensure market competitiveness, 78%. However, combined with the 54% response rate for companies citing healthcare programmes as a means of ensuring employee productiveness, and it can be seen that private healthcare has evolved from simply being a ‘company perk’, to becoming a key tool to achieving business goals.
When it comes to selecting providers, annual premiums remain, as expected, a paramount consideration, 81% [see Table 2]. But as the cost of private healthcare steadily rises to become a major expenditure, Employers are also placing emphasis on value-for-money; weighing up features of each provider’s offering such as the level of claims allowed, 48%, and the size of the provider’s network, 34%.
Overall, the survey suggests that most companies are satisfied with their current medical provider, 79%. However, almost three-quarters indicate that they plan on reviewing their providers in the next 12 months, 72%. Although this may seem counter-intuitive, it could be explained by the difference in the provider’s relationship with the employer, who buys the policy, and the employee, who uses it. The employees’ experiences with the provider—which should be the key measure of satisfaction—does not always filter back to directly influence the company’s choice of keeping or changing the provider. Conversely, most medical providers fall into the category of vendors and are often reviewed annually by companies as part of the standard procurement policy, regardless of whether there have been any particular service quality issues.
One of the most revealing set of figures from the survey was the question that addressed short and long-term organisational spending plans on medical coverage, Table 7. Only 21% of respondents plan to increase their companies medical plan budgets over the next fiscal year, while almost three-quarters, 73%, stated they have no intention of increasing their healthcare insurance budgets over the same period. Just 2% of organisations said they would consider cutting the budget over the next year.
The Hong Kong Federation of Insurers recent in-principle decision to extend cover to pre-existing conditions and mental illness is likely to increase the cost of company health insurance and the need for HR practitioners to shop around more carefully to find a health insurer that suits their company’s specific needs and offers value for money.
On a scale of 0 to 3.5, most of the medical providers received a satisfaction score around or just below 3.0 [Table 4]. Cigna stood out with the highest satisfaction score of 3.33. AIA and Generali scored next best with ratings of 3.14 and 3.10, respectively.
While Cigna enjoyed a high satisfaction rating, this was not reflected in its recognition as a medical provider—it has a relatively low usage rate in the healthcare market in Hong Kong of just 2% [Table 3]. Of the nine medical providers listed in the survey, the largest market share was held by AXA, 21%, followed by AIA, 16%, Bupa, 13%, Manulife, 12% and Bluecross, 10%.
It will be interesting to see how these percentages shift in the next few years as the Hong Kong Government enters the arena as a healthcare insurance provider. Private medical providers will need to stay on their toes to keep up, in what promises to be a more competitive healthcare insurance landscape. Over 70% of organisations surveyed admitted they are likely to review medical providers in the next two years.
Finally, the reasons that companies provide medical benefits were found to be overwhelmingly market focused—with almost 80% stating market competitiveness was the main driver [Table 1]. While over half of the organisations surveyed recognised that offering effective medical benefits was essential to keeping employees at work and productive.
Paul Arkwright
Publisher
