Global Health Care Update

Transcription

1 Global Health Care Update September/October 2011 This bimonthly Update summarizes recent legislative developments and trends related to health care and highlights recently passed and pending legislation that may require employers to take action to comply with new rules or review existing plans. Action May Be Required China Foreign employees who work in China are required to participate in the Social Insurance system, which includes basic medical insurance. Employers must register existing foreign employees by November 14, 2011 and new foreign employee within 30 days of issuance of the employment certificate. Treatment in private or foreign hospitals is not covered by the Social Insurance system. In a recent survey conducted by Aon Hewitt in China, respondents indicated that the new requirement is not expected to impact the benefits provided to global or regional expatriate employees employers expect to bear the additional cost. However, nearly 60% of respondents expect that the benefits of locally hired employees will be affected. Employers generally purchase high-end medical insurance for these employees to extend their coverage to foreign hospitals due to language barriers. Respondents report they are likely to lower coverage for locally hired employees to offset the cost of Social Insurance contributions. Recent Developments U.S. Health Care Reform The Obama Administration, 26 States and the National Federation of Independent Business (NFIB) have each asked the Supreme Court to rule on the Affordable Care Act. On September 28, 2011, the Department of Justice (DOJ) filed a petition with the Supreme Court, requesting a review of an August decision made by the Atlanta-based Eleventh Circuit U.S. Court of Appeals (Florida v. HHS, 11th Cir., No ), where a panel ruled that the individual mandate provision of the Patient Protection and Affordable Care Act (Affordable Care Act) is unconstitutional but can be severed from the rest of the Act. The individual mandate, scheduled to take effect in 2014, would require all U.S. residents to purchase health insurance or pay a penalty. The petition is the third to ask the high court to review the Eleventh Circuit s decision. Twenty-six states (as a group) and the NFIB also filed their own petitions with the Supreme Court on the same date, indicating that although they agree with the court s Copyright 2011 Aon Hewitt Inc 1

2 ruling on the individual mandate requirement as violating the Constitution, the court should have gone further and invalidated the entire Affordable Care Act. The DOJ released the following statement after filing its petition: The Department has consistently and successfully defended this law in several court of appeals, and only the Eleventh Circuit Court of Appeals has ruled it unconstitutional. We believe the question is appropriate for review by the Supreme Court. Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act, and the Voting Rights Act, and all of those challenges failed. We believe the challenges to Affordable Care Act like the one in the Eleventh Circuit will also ultimately fail and that the Supreme Court will uphold the law. The DOJ petition now increases the likelihood of a court ruling before the 2012 presidential election. Also on September 28, the DOJ filed the United States response to the petition for Supreme Court review in the case, Thomas More Law Center v. Obama, in which the Sixth Circuit upheld the constitutionality of the individual mandate. In its response, the DOJ urged the Supreme Court to delay a decision on whether to review the case pending the outcome of the appeal in Florida v. HHS. The DOJ argued that the Florida v. HHS decision would be a better case for the Supreme Court to take because the Eleventh Circuit opinion discussed congressional powers under the commerce clause and the taxing and spending clause whereas the Sixth Circuit opinion only discussed the commerce clause. In related news, the Internal Revenue Service (IRS) released Notice , which requests public comment on a proposed affordability safe harbor for employers under the shared responsibility provisions included in the Affordable Care Act. The shared responsibility provisions will apply to certain employers beginning in Under the Act, employers with 50 or more full-time employees that do not offer affordable health coverage to their full-time employees may be required to make a shared responsibility payment. Notice asks for public comment on a proposed safe harbor, designed to make it easier for employers to determine whether the health coverage they offer is affordable. The IRS announced that it expects to propose a safe harbor permitting employers that offer coverage to their employees to measure the affordability of that coverage by using wages that the employer paid to an employee, instead of the employee s household income. According to the IRS, the contemplated safe harbor would only apply for purposes of the employer-shared responsibility provision, and would not affect employees eligibility for health insurance premium tax credits. Comments must be received on or before December 13, Americas The Chilean government is studying a proposal to create a Guaranteed Health Care Plan. Chile has a mixed health care system, with the constitution recognizing a person s right to choose between the public system (FONASA) and private insurers (Instituciones de Salud Previsional, ISAPREs) for health care. An ISAPRE typically offers several plans with varying costs and benefit levels (reimbursement rates, deductibles, maximums, exclusions, waiting periods, and other provisions). Although the law stipulates that an employee can receive the minimum benefits (equal to those under FONASA) from an ISAPRE on the basis of a minimum contribution, in practice, the minimum benefit choice is not available through most ISAPREs. Instead, better benefits are available at higher contribution rates. The government maintains that the ISAPREs are not adequately regulated. The Guaranteed Health Plan would forbid ISAPREs from discriminating against individuals with preexisting conditions Copyright 2011 Aon Hewitt Inc 2

3 and setting fees based on age and gender. A single fee would be established for plans. Health care contributions would remain 7% and continue to fund the public and private systems, according to an individual s choice. Asia Health care will be more accessible to many individuals under proposals introduced by Singapore s Ministry of Health. For members of Medisave, the annual withdrawal limit for outpatient expenses will increase from SGD 300 to SGD 400. The Primary Care Partnership Scheme (PCPS) will increase its monthly income ceiling from SGD 800 to SGD 1,500, allowing more middle-income families to participate; it also will lower its age criterion from age 65 to age 40. The PCPS covers primary care, including chronic health conditions. The measures are expected to be effective in To reduce the financial burden on individuals with high health care costs, Japan s Ministry of Health, Labor, and Welfare proposes to introduce a flat JPY 100 surcharge on all hospital visits. Currently, the maximum monthly copayment for patients under age 70 is JPY 80,100 plus 1% of covered expenses. Under the Ministry s proposal, the maximum monthly copayment would be capped at JPY 80,000 for individuals with annual income of JPY 6 million to JPY 7.9 million; JPY 62,000 with annual income of JPY 3 million to JPY 6 million; and JPY 44,000 with annual income of JPY 2.1 million to JPY 3 million. For individuals with income under JPY 2.1 million, the monthly cap would be JPY 35,000 (currently JPY 35,400). For individuals with income equal to or exceeding JPY 7.9 million, the monthly cap would be JPY 150,000 instead of JPY 150,000 plus 1% of total medical bills. The Ministry plans to submit a bill to the Diet next year. Europe In France, the Second Supplementary Bill for 2011, which includes a new tax on health insurance contracts, was passed by the National Assembly. The tax rate on supportive and responsible health insurance contracts increased from 3.5% to 7.0%. The tax rate applicable to standard health insurance contracts increased from 7.0% to 9.0%. The increases are applicable to premiums or contributions paid on or after October 1, Germany s Federal Ministry of Social Affairs expects employee health care costs to increase in The annual contribution ceiling for sickness, maternity, and medical benefits is expected to increase from EUR 44,550 to EUR 45,900. The income threshold for opting for a private health insurance carrier will increase from EUR 49,500 to EUR 50,850. If an employee joins a public health fund, the employer and employee pay the statutory contribution up to the wage ceiling. All wage earners and salaried employees who earn less than the current/projected amount must join a public health fund. The Swiss parliament has approved a bill that would encourage individuals to participate in a managed care system. Patients would have access to a network of doctors through their general practitioner. Individuals who seek care outside of this network would have a 10% to 15% higher copayment for services. For individuals participating in managed care, the maximum annual deductible would be reduced from CHF 700 to CHF 500. Center-left political parties and the Swiss Medical Association have indicated that they may challenge the vote in a nationwide referendum. Copyright 2011 Aon Hewitt Inc 3

4 Spanish doctors and pharmacies must provide generic drugs to national health care system patients whenever possible. Prescriptions written by doctors must describe active ingredients, along with dosage instructions. Pharmacies must provide the most inexpensive version of the drug available. The government estimates that this change will result in savings of EUR 2.4 billion each year. Pensioners in Romania may be granted relief from paying a 5.5% health care contribution. The Committee for Labor Matters in the Chamber of Deputies rejected a government ordinance requiring individuals with high-income pensions (defined as monthly income of at least RON 740) to pay a 5.5% health care contribution in The Chamber of Deputies must now vote on the measure. The coalition government supports the continuation of the payment, which is currently scheduled to expire at the end of Middle East and Africa The Dubai Health Authority (United Arab Emirates) is postponing the implementation of mandatory health care insurance until In 2008, the government of Dubai approved a new mandatory Health Funding System for all residents of Dubai or individuals holding a Dubai residence visa. UAE nationals will continue to be covered by the government. The new system was originally scheduled to be implemented over four years beginning January 1, According to the Dubai Health Authority, the system will be funded by a flat-rate employer contribution, expected to be between AED 500 and AED 800 per employee. The contribution amount will be reviewed annually and will be payable to the Health Benefits Contribution Pool. Unlike the mandatory health care system in Abu Dhabi, employers will not be required to cover dependents; however, they may choose to do so. Recent Market Trends Mexico Medical care in Mexico is available through a national health care system of clinics and hospitals, under social security (IMSS). Coverage is mandatory for virtually all persons in private industry. All necessary medical, obstetrical, surgical, pharmaceutical, dental, hospital, and convalescent home services are provided from the date of illness to a maximum of 52 weeks (which may be extended an additional 52 weeks if the employee continues to contribute to IMSS). Treatment is provided through the facilities of the IMSS. Generally, the system works well for emergencies, for serious illnesses such as cancer, and for costly or complicated technology and is considered adequate coverage for blue-collar workers. Almost all companies offer supplemental medical plans for salaried employees. Once a deductible is met, a plan generally pays either 85% or 90% of the covered expenses. A typical plan sets a maximum coverage amount (usually stated as a multiple of the monthly minimum wage) per illness or per year. Expenses such as hospital room and board, surgical, physician, and ambulance are covered either with limits or with certain restrictions. Coverage usually excludes maternity, alcohol and drug addiction, psychological treatment, dental, and vision care. Coverage for Caesarean section and miscarriage is typically provided but subject to a higher deductible. Copyright 2011 Aon Hewitt Inc 4

5 According to Aon Hewitt data, about one-quarter of companies offer plans only for executives, but such plans would not be tax deductible to the employer. It is very rare to extend a medical plan to hourly or unionized employees. Coverage for dependents is usually offered fully paid by the company. In about one-third of the plans, the employee contributed a nominal charge for family coverage. Typical Supplemental Medical Plan in Mexico Plan Feature Description Comments Participation Coinsurance Maximum Amount Per Illness Deductible Maternity Mental Health Vision Care Employees: compulsory. Dependents: voluntary; includes spouse, children. Typical plan: Major medical. Other types include self-insured or cash flow with stop loss. 95% 90% of covered expenses. Inpatient expenses covered by schedule; surgery covered up to reasonable and customary costs. Prescription drugs typically covered. Dental not commonly included. Executives: 950 x MMW 1 per person. Nonexecutives: 815 x MMW 1 per person. Average amounts 1 2 x MMW 1. Average = 1.5 x MMW 1 30% of plans offer unlimited coverage for executives and 17% of plans offer it for nonexecutives. Separate deductible for maternity. 16 x MMW 1 Caesarean section covered in 100% of plans; natural birth in 36.8%. 81% of plans cover caesarean up to the plan limit plan as well as 6.1% for normal delivery. Covered only in case of accident, Included in 30% 40% of plans. diagnosis of terminal disease, assault, kidnap, or rape. 100% of covered expenses to maximum 1 x MMW 1 Except when provided as additional vision insurance benefit with specific coverage that includes vision care: lenses, frames, contacts. MMW 1 = minimum monthly wage Singapore The health status of Singaporeans and the overall quality of care is considered good and consistent with international standards. The basis of health care in Singapore is western medical science. However, alternative forms of treatment are available and favored by particular ethnic groups. Results from a recent Aon Hewitt Total Compensation Management survey demonstrate that most companies have medical plans cover inpatient (94%) Copyright 2011 Aon Hewitt Inc 5

6 and outpatient (99%) treatments. A layered plan is common, (with different benefits or different maximums) provided for different levels of employees (usually based on job grade or title). Companies finance outpatient benefits through insurance (35% of organizations) or outsource the administration to a third-party administrator (33%). Organizations typically do not require employees to contribute to the cost of inpatient coverage. Typical Medical Plan Design in Singapore Plan Feature Coinsurance Cap Coverage Outpatient General Practitioner (GP) 60% 100% Unlimited 1 Consultations at panel clinics, company doctor, government hospital or clinics, private GP clinics. Dependents 60% 100% SGD 15 50/visit 50% of organizations cover dependents; 46% extend SGD 200 1,000/yr unlimited coverage. Specialists 60% 100% SGD /visit Unlimited coverage in 20% of organizations. SGD 1,000 1,500/yr Dependents 60% 100% SGD /visit 34% of organizations cover dependents; 5% extend SGD 1,200/yr unlimited coverage. Hospital/Surgical 2 Room & Board SGD /day 100 days Misc Hospital SGD 4,000 5,000 Excluding surgery Specialist SGD Offered in 38% of organizations Surgery SGD 5,000 7,000 Surgical schedule Overall Limit SGD 12,000 17,000 43% of organizations Dependents 55% of organizations cover dependents; some require cost sharing (typically 50% of dependent cost). Major Medical 36% of organizations providing inpatient coverage also provide supplementary major medical coverage. Dental SGD /yr Usually routine and preventive services only. 27% cover dependents. SGD 1,500 for normal 37% of organizations include maternity coverage. delivery Maternity SGD 2,250 for caesarean SGD 1,000 for miscarriage Max 4 occasions 1 If coverage is limited, at median level: Cap = SGD 30 per visit; SGD per year; and/or 18 visits per year. 2 Caps usually expressed as monetary amount covered or reimbursement ate with overall cap per disability. Copyright 2011 Aon Hewitt Inc 6

7 * * * * For more information on the impact of U.S. health care reforms on non-u.s. multinational employers, please contact your local Aon Hewitt consultant. For more information on the topic and countries in this newsletter, please refer to the Aon Hewitt Country Profiles eguide. You can learn more about the Country Profiles eguide here. Copyright 2011 Aon Hewitt Inc 7

8 About Aon Hewitt Aon Hewitt is the global leader in human resource consulting and outsourcing solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visit Copyright 2011 Aon Hewitt Inc. This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available information. The content of this document is made available on an as is basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document. Copyright 2011 Aon Hewitt Inc 8