Aon Risk Solutions Health & Benefits

Health challenges in EMEA What are the issues for employers? 2016 Edition

Risk. Reinsurance. Human Resources.

Introduction Improving health and preventing disease is a key

workplace should be a key environment to focus

issue for policymakers across Europe, the Middle

on health promotion and disease prevention,

East and Africa (EMEA), whether this is at the

taking advantage of the access to employees and

Government level, driven by European Union

encouraging desired healthy behaviours that will

initiatives or by non-Government bodies, such as

reduce the long-term impact of poor health.

the World Health Organisation, or a combination of all of these. While different countries within the region will face slightly different challenges, the burden of chronic disease is rising at a significant rate globally and this, combined with an ageing population, means healthcare expenditure and existing healthcare systems are unsustainable. Chronic disease is highly prevalent and is increasingly shifting to younger-age workers. This means that employers will have an increasingly crucial role to play, as chronic disease will increasingly affect the employed as well as the retired population. With this change, the cost

Furthermore, the role of the individual employee, or consumer of health, is evolving. They have changing expectations regarding the role of a ‘progressive’ employer and changing requirements in terms of how they access treatment, services and wellness tools. Many leading employers are increasingly integrating health into their core business strategies in recognition of the close relationship between employee wellbeing, a more fully engaged workforce, and improved business results.

of early onset chronic disease is seen not only

This paper offers a high level overview of

in increased healthcare costs but also through

the issues employers across EMEA need

illness-related absence and productivity losses.

to understand if they are to address the

A combination of health data analytics and advances in digital technology means that the opportunity for employers to engage with more individuals to try and influence healthy behaviours has never been greater. Ensuring this engagement is lasting and meaningful, will be vital; the

challenges ahead and be best placed to seize the significant opportunities that result.

Table of Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Key health issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Ageing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The roots of ageing societies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Ageing: both a challenge and an opportunity. . . . . . . . . . . . . . . . . . . . 3 Healthy years and productivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Employer challenge: elderly workforce and multiple generations. . . . . 4 Lifestyle leading to risks for physical and mental health. . . . . . . . . . . . 4 Lifestyle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Physical, mental and financial health . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Employer challenge: encouraging healthy employee lifestyle and monitoring risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Healthcare framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Increasing healthcare costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Social security changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Reduced levels of healthcare coverage . . . . . . . . . . . . . . . . . . . . . . . . . 7 Quality of care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Employer challenge: increasing responsibilities and employee health-related cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Sources. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Key health issues Ageing The roots of ageing societies Across the region, the nature of the workforce is changing. This evolving demographic comes with challenges that impact employers as older employees remain in the workplace for longer. As the concept of a ‘normal’ retirement age changes or gradually disappears, understanding how an effective health promotion and prevention strategy can be best implemented across a diverse workforce will need some thought. Crucially, the employer will need to understand their population’s health risks and how best to engage effectively with their employees. The benefits of getting this right can be significant in terms of higher productivity and reduced absence related costs, and should make this a cost-effective exercise.

Proportion of population aged 60 years or older, by country, 2015 Percentage aged 60 years or older 0-9

10-19 20-24



30 or more

25-29

Proportion of population aged 60 years or older, by country, 2050 projections Percentage aged 60 years or older

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0-9

10-19 20-24



30 or more

25-29

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Ageing: Both a challenge and an opportunity The increasing number of elderly implies a growing demand

Changes in life expectancy from 1950, with projections until 2050, by WHO Region and worldwide

for acute and primary health care, a larger and better-trained health workforce, a need for long-term care and for working environments to be made more age-friendly. Ageing has already started to render many existing pension and social security models obsolete. However, an older workforce also offers countries and businesses a meaningful resource; a repository of knowledge, expertise and experience that the entire workforce can benefit from.

Healthy years and productivity Due to advances in medical treatment and care, we are living longer. However, living longer does not necessarily correlate with living longer in good health. The World Health Organisation (WHO) identifies six key determinants of active ageing; economic, behavioural, personal, social, health and social services, and the physical environment. The societies and businesses that adapt

African Region

to this changing demographic and invest in healthy ageing

Eastern Mediterranean Region

will have a competitive advantage over those that do not.

European Region

Employer challenge: elderly workforce and multiple generations An older workforce is or will be a reality in the near future for many employers across the region. Ageing raises the challenge of productivity and actual performance of older workers and the related cost. For instance, according to the WHO, absenteeism for health-related reasons occur less often in older workers, but

Western Pacific Region Region of the Americas South-East Asia Region World

Investment in and return on investment in ageing populations

when it occurs the duration is often longer. Age-related losses such as strength to endure physical strain, speed of information processing or ability to multitask can not only be balanced by positives such as experience, but also delayed by occupation, type of tasks and age-diversified work teams. With ageing, employers will not only have to manage older employees but may see four or five generations working at the same time in the company. For employers, that means not just a change in management style, but also the need to consider a more complex employee health strategy. They will need to understand and analyse their workforce structure and health risk, an exercise that might result in segmenting health coverage and benefits, adopting a more

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Source: adapted from unpublished information from the World Economic Forum’s Global Agenda Council on Ageing, 2013.

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proactive health promotion or developing a preventative approach. Ultimately, employers anticipating the challenge of ageing and taking action will benefit from higher productivity or reduced absence related cost. The estimated cost of one day of absence can be substantial; in Germany, for example, it is estimated at between €300 and €700 per employee.

Lifestyle leading to risks for physical and mental health Lifestyle Our daily behaviour has a significant impact on our health. In 2010 the WHO addressed eight main risks, all behaviour driven, which cause 15 important chronic diseases accounting for 80% of the total costs for all chronic diseases worldwide. There is, therefore, a strong business case for improving employee behaviours with regard to health. Because governments across the region are not able to continue increasing their healthcare spend at the level required in order to deal with these diseases, tackling the causes is essential. Recognising that a poor state of health will ultimately impact them in terms of absence, long-term disability and loss of productivity, employers will play a key role in positively influencing employees’ behavioural lifestyle risks over the next decade.

Physical, mental and financial health Chronic diseases include both physical and mental conditions, and the most prevalent ones are similar across Europe, the Middle-East and Africa. High blood pressure and physical inactivity are in the top five factors leading to poor health across EMEA. Asia Pacific (% responding)

Europe (% responding)

Latin America (% responding)

Middle east/Africa (% responding)

1

High Blood Pressure 53

High Blood Pressure 76

High Blood Pressure 71

High Blood Pressure 56

2

Obesity

47

Smoking 55

Obesity 62

High Cholesterol

44

3

High Cholesterol

41

Poor stress management

45

Poor stress management

43

Physical inactivity

44

4

Physical inactivity

41

Physical inactivity

41

High Cholesterol

38

Lack of health screening

33

5

Poor stress management

35

Obesity 38

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High Blood glucose 33

Unsafe water, 32 sanitation, hygiene

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Throughout the region, there is a growing awareness of mental health as ‘a state of wellbeing in which an individual realises his or her own abilities, can cope with the normal stresses of life, can work productively and is able to make a contribution to his or her community’ (World Health Organisation). Poor mental health can be generated by, among other factors, rapid social change, stressful work conditions, gender discrimination, and social exclusion and unhealthy lifestyles. It is important that employers view health and wellness in the broadest possible context. The link between financial, physical and mental wellness is widely acknowledged, with more forward-thinking employers starting to join up their approach in these areas. We are seeing a shift towards more employers, and to an extent employees, making an effort to understand their health risks. Supporting employees to understand their current and future financial health is perhaps a natural next step. After all, employees who are distracted by money-related issues are less likely to be productive in the workplace and arguably also suffer poorer health as a result. A truly effective wellbeing model will be one that engages employees to understand ‘current me’ and help them plan for what ‘future me’ looks like and needs to do, in terms of financial, physical and mental health. This should be the aspiration for all employers. Having effective flexible working practices; making health information and education (physical and financial) available; offering access to stress reduction programmes, weight management programmes and access to onsite or virtual general practitioner services, are all examples of good practices supporting a wide-ranging approach.

Employer challenge: encouraging healthy employee lifestyle and monitoring risks If the wellbeing model is effective, it will not only be of great value in terms of employee health, it will also help to reduce the associated risks for the employer. These employeerelated lifestyle risks include: • Reduced productivity; • Increasing absence-related costs; • The need to provide benefits and health support that meet the needs of an increasingly diverse employee population; • Increasing benefit spend; • Addressing the impact of chronic medical conditions; • Having a real understanding of what the actual employee health risks are. Employers are becoming increasingly aware of these challenges. As a result, they are starting to change their position from acknowledging employees’ health risks and using traditional reactive approaches to manage spend, to further analysing these risks and addressing them proactively. This has become possible thanks to available data, reliable methods of projections and cost management. Overall, we are witnessing a growing opportunity for employers to take an active role, defining a clear strategy to monitor health risks as well as encouraging employees to engage better with their health and improve their lifestyle risks.

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Healthcare framework Increasing healthcare costs Scientific innovations powered by research and development and technology have facilitated great progress in medical treatment and wider access to health care and prevention globally. For instance, if we look at the HIV/AIDS epidemic, although Nigeria, South Africa and Uganda remain the most

A massive global expansion of access to antiretroviral therapy has averted millions of deaths Number of people receiving antiretroviral therapy, 2003¬2015, number of deaths from AIDS-related causes and number of people newly infected with HIV, 2001¬2013 (millions)

impacted countries in the region, antiretroviral therapy is now prevalent, with encouraging results globally. Such treatment comes at a significant cost, though, and this is also the case when treating the chronic diseases mentioned previously. All these factors lead to increased expenditure on health-related costs and services in relation to the Gross Domestic Product (GDP). For example, in North Africa and the Middle-East this spend is about 5% of GDP. In South Africa, expenditure on health-related costs is 9% of GDP and in the European Union it is approaching 10%.

People receiving ART UN Political Declaration on HIV/AIDS ART target (15 million) People newly infected with HIV People dying from HIV-related causes

Health expenditure

23

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The World Bank predicts that healthcare expenditure in the EU could rise to 14% of GDP in 2030 and might continue increasing thereafter. If this trend cannot be halted, there will soon be a lack of Government funds for healthcare in the EU and beyond

Average annual growth in per capita health spending, in real terms, OECD countries, 2005-2013

Social Security changes Reduced level of healthcare coverage The EMEA region has a variety of welfare systems, sometimes including payment of sick leave and offering a range of different approaches to financing and organising healthcare. Countries such as France, Germany and the UK have a dedicated national health system with a wide network of professionals, whereas in the Netherlands and Switzerland for instance, the government is only responsible for the legal framework, with healthcare provision mainly carried out by private companies. Today, most social security systems are looking to manage the increasing cost of healthcare by changing their current model or reforming their system. This often results in a reduced level of health coverage or provision of services, and represents a gradual shift from a national social security model to more private health coverage. Alongside these structural changes, another competing objective is emerging in EMEA: universal health coverage (UHC). This is meant to ensure that everyone can access health provision without suffering financial hardship, and is a key objective of international organisations like the United Nations and the World Health Organisation. In time, this can have considerable impact, especially for African countries without a social health system.

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Quality of care Another development that will impact on employers in the long term is the decreasing quality of care resulting of a lack of healthcare workers. This will increase the challenge for employers as it will increase the time it takes to get people back to the workplace. The healthcare workforce – its expertise, competencies, availability and footprint – is the main factor determining the quality of case. EMEA already faces a shortage of health professionals, mostly noticeably in a majority of African and Middle-Eastern countries. In developed countries, it is predicted that 40% of nurses will leave health employment in the next decade, with the nature of their demanding work and relatively low pay no incentive for young health workers to stay in the profession. The World Health Organisation reports that in 2013, the world was short of 7.2 million healthcare workers; by 2035, that figure will stand at 12.9 million. We can expect the implications for the health of billions of people across all regions to be significant.

Workforce to population ratios for 186 countries

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Group 1: density of skilled workforce lower than 22.8/10 000 population and a coverage of births attended by SBA less than 80%

Group 4: density is equal or greater than 22.8/10 000 and smaller than 34.5/10 000

Group 2: density of skilled workforce lower than 22.8 /10 000 population and coverage of births attended by SBA greater than 80%

Group 5: density is equal or greater than 34.5/10 000 and smaller than 59.4/10 000

Group 3: density of skilled workforce lower than 22.8/10 000 population but no recent data on coverage of births attended by SBA

Group 6: density is equal or greater than 59.4/10 000

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Employer challenge: increasing responsibilities and employee health-related cost Because countries are providing less national health coverage, more responsibility is falling on employers and employees. Across EMEA, sick leave is increasingly being taken care of by employers. In tandem, the cost of related medical treatments is no longer supported by national healthcare. In this scenario, employers face two options: financing sick leave and/or the medical treatment to help employees return to health. Responsibility around disability is also shifting. In the Netherlands, for example, employers pay almost 50% of the cost of curative healthcare as well as the cost of disability of their (former) employees for twelve years. It is therefore in the interest of both employers and employees to reduce the level of sick leave and disability and make the best and responsible use of medical treatments. Many employers do not know how to do that and many employees do not see the need to do so. The challenge is to make the issue of sickness-related absence clear for both employer and employee. It is important that employer and employee recognise each other’s role in the wellbeing of the workforce. Ensuring employees are aware of – and appreciate – any healthrelated benefits arranged and paid for by the employer is an important first step. Another challenge employers face across the region relates to data privacy. In many countries, an employee does not have to share information with the employer about the medical condition that causes their sick leave, making it difficult for an employer to support the employee in the most effective way. Having good policies and procedures in this area is imperative if the employer is to address this challenge.

Technology In future, we can expect to see employees focusing on preventing bad health wherever possible, on health information and on allowing more choice around how best to access health services when required. All of this will be underpinned by advances in technology. From larger organisations, such as IBM, Apple and Google, through to start-up ventures, significant investment in health appears set to continue. As we have already seen in this paper, employers have an important role to play in terms of trying to support a workforce in changing behaviour to reduce lifestyle risks. Technological advances that support employees by creating awareness of lifestyle risks and help them avoid the need for care – but can also assist them when they need medical treatment or support – will result in changes to the health and wellness delivery models employers utilise. The use of wearables will generate a great deal of data. Connecting all this data and making the best and safest use of it will be a challenge. On the plus side, this technology will bring health and wellness alive to the individual as well as to employers in a way that has not been seen before. There are many recent developments, whether in digital diagnostic tools, digital platforms that can connect all relevant stakeholders in the health chain (e.g. patients, carers and medical professionals), next generation wearables, concierge services or online support networks for coaching individuals with different needs. Given these advances, the opportunities to re-think the traditional model of health and wellness can appear limitless.

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The fact that technology is not restricted (generally) by geographical boundaries will appeal to many employers as they look to implement a consistent health and wellness framework regionally or globally, albeit tailored accordingly based on local needs. From an employee perspective, the fact that much of this technology will be portable will also be viewed in a positive light; a bespoke health and wellness approach that they can potentially plug and play should they decide to change employer. The challenge for employers is to ensure that they are not left as bystanders in this whole process. Technology will continue to evolve. Employers need to ensure that if they are serious about employee health and wellness, they make the most of the opportunities they can access.

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Conclusion Employers face an ageing population and workforce, an increasing retirement age, a potentially older and less healthy demographic and increasing healthcare costs. This makes improving health and preventing disease a key issue and employers will have an increasingly crucial role to play in this fast moving area. In the future it is not unreasonable to assert that employees will be expecting their employer to provide support in the following areas: • Helping them to be healthy and stay healthy • Giving them access to relevant health benefits and services • Helping them to manage health conditions when they arise and access the best treatment quickly We expect to see a continued interest in wellness programmes as employers look to address the problems caused by many employees’ sedentary lifestyles and the shift in demographics. Many of these programmes will be supported by better and more precise measurement, with greater use of effective communication strategies to increase participation. Technology enabled connectivity for the masses will become the norm. The impact of socio-economics will increasingly become a factor, as employers make the link between an employee’s financial wellbeing and their physical and mental wellbeing. As the health and wellness related technology revolution continues, many employees will expect their employers to adapt their health and wellness strategies accordingly. Accessing consultations, treatments, information or second opinions remotely will become a core requirement for such individuals, both from a personal health perspective or to support them in work, for example with family friendly policies. Some individuals will embrace technology or tests that support health predictions, potentially to the extent of diagnosis prior to the medical event actually happening. However, some or all of these developments will not appeal to all employees, possibly due to concerns around data privacy or general concerns around the role of the employer in this process. If the role of the employee is to engage more in health and wellness, then in return the employer needs to recognise the needs of those employees. Success is very much dependent on strong employer and employee interaction. There are many challenges ahead, but with the right strategies and support employers across the region can give themselves the best possible chance of addressing them. By doing this, employers will take the essential next steps towards a higher level of sustainability.

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Sources • World Health Organisation, Ageing and Health, 2015: http://apps.who.int/iris/bitstream/10665/186463/1/9789240694811_eng.pdf?ua=1 http://www.who.int/ageing/en/ • Aon UK Whitepaper, Health and Wellness in the workplace - a UK perspective on the key health and wellness issues, 2015 • Aon Global medical trend rate survey, 2016 • Aon Netherlands Whitepaper, Healthcare as a foundation for sustainable employability, 2015 • World Health Organisation, Mental Health, 2014 http://www.who.int/mediacentre/factsheets/fs220/en/ • World Bank, Health Expenditure 2011-2015 http://data.worldbank.org/indicator/SH.XPD.TOTL.ZS/countries?display=map • Organisation for Economic Cooperation and Development, Health at a glance, 2015 http://www.oecd-ilibrary.org/social-issues-migration-health/health-at-a-glance-2015_health_glance-2015-en • United Nations Organisation, Millennium Development Goals Report, 2015 http://www.un.org/millenniumgoals/2015_MDG_Report/pdf/MDG%202015%20rev%20(July%201).pdf • World Health Organisation, Universal Health Coverage, 2015 http://www.who.int/mediacentre/factsheets/fs395/en/ • World Health Organisation, A Universal Truth: no health without a workforce, 2013 http://www.who.int/workforcealliance/knowledge/resources/GHWA-a_universal_truth_report.pdf?ua=1 http://www.who.int/mediacentre/news/releases/2013/health-workforce-shortage/en/

While every effort has been taken to verify the accuracy of this information, Aon cannot accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in this report.

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Contacts Mario Hooglugt Health Leader EMEA +31 10 448 7441 [email protected]

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About Aon Aon plc (NYSE:AON) is a leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 72,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United. © Aon plc. All rights reserved. The information contained herein and the statements expressed are of a general nature and are not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information and use sources we consider reliable, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Aon UK Limited is authorised and regulated by the Financial Conduct Authority. For more details, please visit aon.co.uk/professionalservices

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