HEALTH AND WELLNESS TRENDSPHILIPPINES

Godelieve KroonenbergASEAN Business Leader Talent – Information Solutions

MERCER MARSH BENEFITS

Companies in the Philippines are generally more concerned about thehealth of their employees

1

Asia

Yes - Current and futurehealthYes - Current health

Yes - Future health

Not sure

Philippines

Yes - Current and futurehealthYes - Current health

Yes - Future health

Not sure

MERCER MARSH BENEFITS 22

Philippines’ benefits cost is high compared to the rest of AsiaOn top of a relatively rich statutory program

Percentage of payroll spent on non statutory benefits

28%

27%

21%

11%

13%

Asia

11%

26%

32%

22%

9%

Philippines

0-<2%

2-<6%

6-<15%

>15%

Don't know

MERCER MARSH BENEFITS 3

The cost of benefits continues to increase10-15% increase expected in the Philippines

• The cost of benefits continue to risein particular medical relatedbenefits

• Higher utilization and advances inmedical technology contribute toincreased medical premiums

Country 2014 GeneralInflation1

2014 MedicalInflation2

Expected Change inMedical Premiums2

Australia 2.5% 3.3% - 4.4% 5.5% - 6.5%

China 3% 6.0% - 8.0% 10.0% - 12.0%

Hong Kong 3.6% 8.5% - 9.5% 10.0% - 12.0%

India 8.9% 16.3% - 21.8% 16.0% - 22.0%

Indonesia 7.5% 10.9% - 14.5% 10.0% - 12.0%

Japan 2.9% 3.0 – 4.0% (TBC) N/A

Malaysia 2.6% 10.0% - 15.0% 10.0%

Mauritius 4.7% 7.1% - 9.5% 5.0% - 10.0%

New Zealand 2.1% 8.0% - 9.0% 10.0%

Pakistan 7.9% 14.0% - 18.0% 15.0% - 20.0%

Philippines 3.5% 6.9% - 10.9% 10.0% - 15.0%

Singapore 2.7% 3.4% - 4.6% 4.0% - 8.0%

South Korea 2.3% 2.1% - 2.8% 7.0%

Sri Lanka 6.9% 11.1% - 14.8% 15.0% - 20.0%

Taiwan 1.3% 2% - 3% 4.0% - 6.0%

Thailand 2.1% 18.0% -22.0% 15.0% - 20.0%

Vietnam 7.4% 20.0% - 25.0% 15.0% - 20.0%

Current Situation A combination of medical inflation, utilisation and cost of medicalservices are driving medical costs in APAC

1 Projected IMF estimates, World Economic Outlook Database, Oct 2013(information as extracted December 2013)2 Extracted from Mercer’s Inflation Summary subject to changes due to updates

MERCER MARSH BENEFITS 4

Costliest health problemsWhat is the top 3 for the Philippines?

MERCER MARSH BENEFITS 5

What makes up the bulk of employee health costs?“Hidden cost of presenteeism”

MERCER MARSH BENEFITS

• Increasing number ofcompanies in Asia are findingit difficult to fill jobs

• Problems associated with this:– Reduced productivity– Reduced ability to serve

clients– Reduced innovation and

creativity

6

In a region where the talent shortage is already a big problem

40% 41%

31%

30% 31% 34% 34% 35%28%

33% 31%

32%

41%45% 45%

51%

0%

20%

40%

60%

80%

2006 2007 2008 2009 2010 2011 2012 2013

ASIA PACIFIC: % HAVING DIFFICULTY FILLING JOBS

18%

23%

24%

25%

40%

41%

0% 10% 20% 30% 40% 50%

Higher Compensation Costs

Increased Employee Turnover

Lower Employee Engagement/ Morale

Reduced Innovation and Creativity

Reduced Ability To Serve Clients

Reduced Competitiveness/ Productivity

ASIA PACIFIC: IMPACT ON THE ORGANISATION

*Source: Manpower Group; survey consisted of 40,000 companies across 42 countries.

MERCER MARSH BENEFITS 7

How can Health and Wellness programs help?Addressing the root cause

MERCER MARSH BENEFITS

How prevalent are Health and Wellness programs?Philippines leads the way

8

0%

10%

20%

30%

40%

50%

60%

Fewer programs About the same More programs –employersponsored

More programs –cost share

Don’t know

Asia Philippines

0% 10% 20% 30% 40% 50% 60%

Fully integrated health and wellness strategy

Multiple discrete health and wellness programs (e.g. healthexams, fitness programs etc.)

Supplemental health and wellness education/information

Statutory requirements only

No provision

MERCER MARSH BENEFITS 9

Where to start?Roadmap for a successful Health and Wellness program

MERCER MARSH BENEFITS

Key drivers for introducing a Health and Wellness program

10

0% 5% 10% 15% 20% 25% 30% 35% 40%

Attract and retain talent

Enhance employee engagement

Encourage positive health behaviors

Increase employee's work effectiveness

Reduce absence

Corporate responsibility

Reduce medical claims cost

Reduce other benefits costs (e.g. sick pay)

Reduce health risks (e.g. reduce stress)

Support employer of choice brand

PhilippinesAsia

MERCER MARSH BENEFITS

What are elements of the Health and Wellness program?

11

0% 20% 40% 60% 80% 100%

Chronic disease management

Smoking cessation

Weight control

Health risk assessment (HRA)…

Absence management

Stress management

On-site food service improvements

Employee assistance programs (EAP)

On-site clinic/medical services

Routine cancer screenings

Web-based information resources

Exercise programs

Health talks/health fairs

Bio-metric screening (

Annual employee health checkups

Philippines

Asia

MERCER MARSH BENEFITS

Incentives for employees to participate in the program

12

0%

5%

10%

15%

20%

25%

30%

35%

40%

AsiaPhilippines

MERCER MARSH BENEFITS

How do you know your program is successful?

13

0% 20% 40% 60% 80% 100%

Employee physical check-up reports

Medical/health plan - claims history reports

Employee absence data

Employee assistance program (EAP)

Employee feedback

Employee health risk surveys

Employee disability/salary continuance

Onsite service utilization

PhilippinesAsia

MERCER MARSH BENEFITS

But what are the main reasons for not starting a program?

14

0% 10% 20% 30% 40% 50% 60% 70%

Employee turnover is seen as a barrier

Employee communication challenges

Our employees do not see the value of ahealth program

Demonstrating a return on investment

Complexity of administration

Resource constraints within theorganization

The cost of health and programs is too high

PhilippinesAsia

15MERCER MARSH BENEFITS

§ Immediate monetary savings; medium and long term savings will be greater

§ Treatment behaviors should move to driving more effective utilization and clinical outcomes

§ A 3-year plan with short, medium and long-term cost containment/ health risk management elements developed

§ Assessment of current benefit andhealth strategy and identified spend notsupporting organizational objectives

§ Redesigned benefit program and:

– Refocused monies/ resources fromtreatment to prevention throughplan design

– Introduced positive health program

– Identified strategy to makeemployees smarter healthcareconsumers

– Identified return on investmentmetrics

§ Multinational employer offeredcomprehensive hospitalizationinsurance plan, but with significant gapsin coverage based on employee needs/health risks

§ 45% a year cost increases, with littleincentive for employees to managecosts

§ Various health programs had notevolved strategically and were notintegrated

§ High volume of health issues, includingthose specific to a BPO operation

§ Cost effective and meaningful medicalcoverage for parents important

A case study

Results

ActionsSituation

MERCER MARSH BENEFITS 16

Bringing it all togetherRoadmap

IMPORTANT NOTICE: This document does not constitute or form part of any offer or solicitation or invitation to sell by either Marsh or Mercer to provide any regulatedservices or products in any country in which either Marsh or Mercer has not been authorized or licensed to provide such regulated services or products. You accept thisdocument on the understanding that it does not form the basis of any contract.The availability, nature and provider of any services or products, as described herein, and applicable terms and conditions may therefore vary in certain countries as aresult of applicable legal and regulatory restrictions and requirements.Please consult your Marsh or Mercer consultants regarding any restrictions that may be applicable to the ability of Marsh or Mercer to provide regulated services orproducts to you in your country.