Addressing rising medical costs with a captive
My journey with employee benefits captives began around the same time as my company’s journey. In 2011, our captive began reinsuring employee benefits through a collaboration from finance, treasury and human resources.
We now reinsure a variety of employee benefits, but my focus has always been medical insurance. Over the years, as the captive matured and my responsibility grew with it, I couldn’t help but see all the opportunities to provide even more value to our company.
Our captive is a sort of microcosm of our employee and patient value propositions. From a human resources perspective, the benefits go far beyond savings. The increased control over plan design allows us to remove barriers to care and eliminate hindrances to medical access in markets where this wouldn’t otherwise be possible. One example of this includes the removal of pre-existing condition and HIV/AIDs exclusions.
Beyond that, I saw the most potential in the improved access to claims data. Getting my hands on this information excited me more than I’d probably like to admit. Access to this level of information meant we could tailor our wellness strategy to ensure we are offering timely and relevant programmes. It also means we can bring or provide access to services or vaccines to markets who need it most.
About three years ago I was slated to talk at a captive user group about our flagship health and wellbeing programme, Partnership for Prevention (P4P). The goal of this programme is to provide equitable access to a core set of preventive services across our entire company. I was set to talk about how we leveraged the captive in our design and implementation phases.
DHL was slated to present its wellness initiative earlier that same day. Not only was it offering data-driven wellness programmes, it was incentivising them through premium reductions. I remember being very impressed, and having many immediate thoughts and questions.
Next steps
We had already laid the groundwork for a global minimum standard level for health benefits with P4P; now we could build on that and provide employees with access to the necessary and appropriate health and wellbeing initiatives designed to address our population’s greatest needs.
I was certain this was the next step for our health and wellness journey and I endeavoured to make it happen. We completed a review of our captive medical claims spend and the rationale was clear: we had to address the issue of medical inflation, which is forecast to be a major challenge in many countries in the future.
Global trend on our medical premiums at the time was around 9 percent. A commissioned study illustrated the cost of doing nothing: a potential doubling of our premiums in about seven years. The analysis proved that even a small reduction in claims year on year could yield a substantial impact on our healthcare costs.
Given our access to claims data and our company’s increased emphasis on employee health and wellbeing, there was, and is, a significant opportunity to focus on managing healthcare spend globally while enhancing our employees’ health and wellbeing. With that in mind, we developed a programme to help mitigate cost increases in three pilot markets.
We developed a prevention strategy in partnership with our health and wellbeing group, global benefits, local benefits, our captive advisors and our brokers. We worked with our fronting networks to gather the data in each pilot and understand not only our biggest cost drivers, but also how best to address them and where we could make the biggest impact. We developed a tailored plan for each market and the pilot went live on January 1, 2020.
Due to the impact of COVID-19, we have had to pivot and adapt our plans to accommodate virtual working. We are currently in the process of assessing the impact and 2021 planning but are very optimistic.
We are almost 10 years into our captive insurance journey and there is still so much we can do. We have a great model in place operated by a great team with continuous improvement always in mind.
Strategically, the captive provides a solution to work more creatively and interactively with our regional and local country human resources teams. I will be looking to take more advantage of that in the near future. Our aim is to continue to find even more ways to share these benefits with our local operating companies, and the possibilities are endless.
Anthony Tropea is global strategic benefits leader for employee health and wellbeing at GSK. He can be contacted at: anthony.x.tropea@gsk.com
