RESTRICTED  
  
 WT/BFA/W/406  
 
6 December  2016 
(16-6675) Page: 1/34 
Committee on Budget, Finance and Administration   
 
   
 
 
 
 
WTO SECRETARIAT STRA TEGY FOR  
MANAGING HEALTH INSU RANCE LIABILITIES  WT/BFA/W/406  
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  TABLE OF CONTENTS  
 
1  EXECUTIVE SUMMARY  ................................ ................................ ................................ .. 3 
2  INTRODUCTION  ................................ ................................ ................................ ...........  4 
2.1  Background of the Plan  ................................ ................................ ................................ . 5 
2.2  Principle of the Plan  ................................ ................................ ................................ ...... 5 
2.3  Comparison with other IGOs  ................................ ................................ ..........................  5 
2.4  The summary of our research is contained in the tables below.  ................................ ..........  9 
2.5  The Sustainability of the Medical Plan  ................................ ................................ ............. 10 
2.5.1   The ASHI Obligation  ................................ ................................ ................................ ..10 
2.5.2   Budget Implications  ................................ ................................ ................................ . 11 
3  A PATH TOWARDS A MOR E SUSTAINABLE FUTURE  FOR THE MEDICAL PL AN ..............  16 
3.1  Cost Controls to improve the financial situation of the Plan  ................................ ............... 16 
3.1.1   A Comparison between WTO and LAMAL Premiums  ................................ ....................... 17 
3.1.2   Eligibility for participation in the Plan ................................ ................................ ........... 18 
3.1.3   General elements of coverage  ................................ ................................ .................... 19 
3.1.4   Hospitalisation  ................................ ................................ ................................ .......... 21 
3.1.5   Specific Benefits  ................................ ................................ ................................ .......22 
3.1.6   Projected Impact  ................................ ................................ ................................ ......24 
3.1.7   Cost Sharing  ................................ ................................ ................................ ............ 24 
3.1.8   Prevention  ................................ ................................ ................................ ............... 25 
3.2  Funding changes to improve the financial situation of the Plan  ................................ .......... 26 
3.2.1   Level of Fundin g Ambition  ................................ ................................ .........................  26 
4  GOVERNANCE, MONITORI NG AND REPORTING  ................................ ..........................  27 
4.1  Governance and Administration  ................................ ................................ ..................... 27 
4.2  Human Resources needs  ................................ ................................ .............................. 28 
4.3  Actuar ial Monitoring  ................................ ................................ ................................ .....28 
4.4  Suggested Approach to Key Performance Indicators (KPIs)  ................................ ............... 29 
4.5  Creation of a Fund  ................................ ................................ ................................ .......31 
4.6  Funding Oversight  ................................ ................................ ................................ .......32 
4.7  Investment Oversight  ................................ ................................ ................................ . 32 
5  SPECIFIC IMPLEMENTAT ION RECOMMENDATIONS  ................................ ....................  34 
 WT/BFA/W/406  
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  1  EXECUTIVE SUMMARY  
1.1.  This document proposes a strategic direction and practical first steps to steering the WTOMP  
and the ASHI benefit offered to eligible former staff towards long term sustainability. The strategy 
is mindful of the recommendations of the original ASHI Working Group Report (WT/BFA/W/370) 
concerning what it saw as the key elements of a strategy —including cost control.  
1.2.  The strategy sets forth a description of the different elements that form a part of any attempt 
to address the problem at hand as well as how the Secretariat proposes to analyse and address 
them.  
1.3.  Cost control is a particularly important part of t he strategy. Indeed, some cost control 
measures have already been decided and will be implemented with the transition to a new medical 
provider at the start of 2017. Other measures will require more time for consideration or 
implementation.  
1.4.  A full range o f cost control measures that have been or will be considered is elaborated in the 
body of this document. Priority has been given to the major cost drivers of the WTOMP: 
hospitalization, doctor's visits and medications. It has also been important to focus g eographically 
on where the WTOMP incurs the vast majority of its costs: Switzerland and France.  
1.5.  To the extent a measure has already been considered the strategy includes a summary of the 
Secretariat's initial assessment relative to potential impact and, i f deemed appropriate, timing for 
implementation.  
1.6.  The DDG responsible for HRD and AGSD will provide oversight of the strategy on behalf of 
the Director General. Management and operation of the WTOMP  and ASHI obligations will be the 
responsibility of the Hum an Resources Division (HRD) and, consistent with the Rules of the Medical 
Insurance Plan, the Medical Insurance Management Committee (MIMC). HRD and MIMC will be 
advised by the Financial Management Service within the Administration and General Services 
Division (AGSD) regarding financial and budgetary implications.  
1.7.  The WTO Secretariat will provide an annual report to stakeholders on the experience of the 
Medical Plan that will include financial, actuarial, demographic and other indicators of the overall 
situation of the Plan. Over time, these reports will provide important information on the trajectory 
of the Plan with regard to its sustainability and allow for appropriate planning as well as 
adjustment of the strategy when necessary.  
1.8.  The principle of the WTOMP is to provide access to quality affordable medical coverage1 for 
eligible stakeholders in a cost -efficient way. Therefore, the strategy will prioritize cost 
consciousness and efficiency as the foundation of a sustainable Medical Plan while also bearing  in 
mind the need to maintain quality.  
1.9.  It is also important to note that the WTO  Secretariat  has been advised by its medical plan 
providers that effective prevention can be an important mechanism for controlling costs.  
1.10.   In addition to managing the growth of  costs of the Plan effectively, the question of cost 
sharing must be addressed. That is, what portion of the costs should be covered by contributions 
from the WTO budget and what portion of the costs should be borne by participants in the Plan?  
1.11.   Here the st rategy proposes to consider cost sharing measures that would ask participants to 
pay more in anticipation of their rights to an ASHI benefit, thus shifting some of the future burden 
from the WTO budget to staff. Additionally, this process would also examin e ways to allocate the 
costs to be borne by staff more equitably across salary levels so that more highly compensated 
staff members will likely pay more than in the past.   
1.12.   The WTO Secretariat believes it will be important to establish a mechanism that will  allow 
any budgetary savings that result from any cost control or cost sharing measures implement to be 
captured and reserved in the interests of the future sustainability of the WTOMP.  
                                                
1 Consistent with the WTO's obligations under the Headquarters Agreement with the Swiss authorities.  WT/BFA/W/406  
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  1.13.   Finally, the strategy looks at budget implications of the WTO Members contributions to the 
costs of the Plan. The strategy proposes a partial funding approach where unused budget 
allocations could be used to mitigate current ASHI liability impacts on future budgets. Additionally, 
the WTO Secretariat  will start building futur e ASHI accruals into the budget for new staff so that 
gradually over time the ASHI liability will systemically be on a path to sustainability.  
1.14.   Under any scenario o f cost control,  cost sharing  and funding  it is clear that more resources 
will be necessary in  the future. Therefore, the strategy proposes to create a dedicated fund to 
accumulate and invest dedicated assets now that will help to mitigate the future financial impacts 
of operating the Medical Plan.  
1.15.   A summary of key actions to begin implementing the  strategy are listed at the end of the 
document.  
2  INTRODUCTION  
2.1.  This strategy document is the preliminary response to an ASHI Working Group 
recommendation accepted by the CBFA that the WTO Secretariat develop a strategy for steering 
the WTOMP  toward ASHI sus tainability.  
2.2.  The original ASHI Working Group Report (WT/BFA/W/370) focused on the fact that the 
obligation to provide an ASHI benefit to retired staff (and their families) creates a financial liability 
for the Organization and because the WTO is a relative ly young organization, the evolving 
demographic profile of the Organisation will result in particular challenges in terms of the 
sustainability of the Medical Plan.  
2.3.  This demographic evolution in the profile of the Plan's participants, where the number of 
retirees is projected to increase over the years while the level of active staff members is projected 
to remain constant, will lead to a future liability and budgetary implications that, in the view of the 
Working Group, would be financially unsustainable. For example, left unaddressed the budgetary 
costs of the WTOMP could be expected to increase more than 250 % over a 20 year period even 
without factoring in accrued service costs and interest charges necessary to reduce the net ASHI 
liability.  
2.4.  The original report observed that the provision of after service health insurance (ASHI) by the 
WTO, and international organizations in general, is a long established practice driven in part by the 
fact that staff members when they retire from these organizations may n ot have access to other 
post-employment medical coverage.  
2.5.  On 6 November  2015, the Committee on Budget, Finance and Administration established a 
Monitoring Group on After Service Health Insurance (ASHI). The Monitoring Group, open to all 
Members, will remai n active until the ASHI strategy of the Secretariat has been approved by the 
CBFA.  
2.6.  This document is intended to set a strategic direction that will address the long term 
sustainability of the WTOMP  and the ASHI benefit offered to eligible former staff. The  strategy is 
mindful of the recommendations of the Working Group Report concerning what it saw as the key 
elements of a strategy. Although the original ASHI Working Group focused on ASHI, the WTO 
Secretariat  is of the view that to appropriately address the  ASHI issue it must take a holistic 
approach to the overall WTOMP with particular regard to the ASHI aspects of the Plan.2 
2.7.  There is no easy solution  to the challenge of ensuring that the WTOMP can be sustainable. 
The multi -faceted strategy outlined here wi ll need to evolve and be methodically reviewed as it is 
implemented over time.  
                                                
2 Therefore, references to WTOMP and ASHI are both variously found in t he document. The choice of 
which reference is used will usually depend on the emphasis in a particular context.  WT/BFA/W/406  
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  2.1  Background of the Plan  
2.8.  Since 1949 the Organization (originally the GATT) has striven to provide quality medical 
coverage on par with those of its main competitors for talent, i. e. other international organizations.  
2.9.  In 1995, at the creation of the WTO, the organization concluded a Headquarters Agreement 
with the Swiss Confederation. Article 16 of that agreement exempts the WTO as an employer and 
its officials as individuals from a  variety of the Swiss social security provisions including 
compulsory accident3 and sickness insurance. However, it obliges the WTO to provide the same 
level of coverage by its own means. Therefore, Staff Regulation 8.2 requires the Director -General 
to est ablish a scheme providing for the coverage of medical expenses incurred by staff members 
and their families as a result of sickness or accident.  
2.10.   The Plan provides comprehensive sickness and accident coverage for staff members, 
retirees4 and their dependant s. The structure of the benefits, the level of the premium, and the 
level of contributions are determined by the Director -General upon recommendation of the Medical 
Insurance Management Committee (MIMC). The MIMC is a "joint body" comprised of 
representati ves of the Staff Council, the Retirees Association, and those appointed by the 
Director -General. The Human Resources Division administers the WTO Secretariat 's relationship 
with the Plan provider and provides the Secretary to the MIMC.  
2.2  Principle of the Pla n 
2.11.   The current Plan has been designed consistent with the fundamental principles of 
inter-generational solidarity and distributional equity while bearing in mind the need for the WTO 
Secretariat  to offer a competitive benefits package. Therefore, the WTO Se cretariat  is resolved 
that the basic coverage will be the same for everyone participating in the plan while the financial 
burden may be distributed among the plan participants and the WTO in a way that takes into 
account the financial capability of the pla n participants and the effect the cost and level of benefits 
could have on recruitment and retention.  
2.12.   Following the recommendation of the Working Group to develop an underlying principle for 
ASHI that would provide greater clarity on the objectives of the ASHI benefit, the WTO Secretariat  
has proposed the following statement.  
2.13.   The principle of the WTOMP  is to provide access to quality, affordable medical coverage for 
eligible stakeholders in a cost -efficient way.  
2.3  Comparison with other IGOs  
2.14.   The benefits packa ge of the WTOMP  is broadly comparable to and competitive with the 
medical benefits provided by other international organizations in the Geneva area.  
                                                
3 Article 16.3 states, "[t]he officials of the Organization shall not be subject to the Swiss scheme for 
compulsory insurance against accident t o the extent that the Organization offers them equivalent protection in 
respect of accident, whether employment -related or not, and employment -related illnesses."  
4 In particular, Article 4(b) of the Internal Rules of the Medical Plan which staff members a re 
mandatorily enrolled in upon employment states that membership in the Plan extends to:  
A staff member who receives a retirement, early retirement or disability benefit from the WTO Pension 
Plan (WTOPP) or from the United Nations Joint Staff Pension Fund  (UNJSPF), or who has separated from the 
WTO at or beyond age 50 and is entitled to a deferred benefit from the WTOPP or UNJSPF, may choose to 
continue to participate in the Plan together with his/her dependants as defined in Article 4(c), provided that 
he/she has been affiliated to a health insurance scheme contracted by the WTO within the meaning of Article 
4(a) for at least five years. Length of participation in the insurance plan of other intergovernmental 
organizations shall be taken into account.    
  WT/BFA/W/406  
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Table 1 Comparison of Benefits with other I GOs 
 WTO  UNOG/WMO  ILO/ITU  WHO  WIPO  
Entitlement to 
continue after 
retirement and 
years of 
participation in 
the Plan  Yes, beyond age 50 and at 
least five years of 
participation in the plan 
prior to retirement  
 
(dependants can also 
continue)  10 years  10 years in the UN system of 
which the last 5  with ITU  At least five continuous years 
of participation in the plan 
prior to separation at official 
age (60, 62 or 65) provided 
the required lump sum has 
been paid by the staff member 
on separation (dependents can 
also continue under para. 
90.2(d)(ii))  At least five years before their 
separation from service  
Is there a limit for 
the recruitment 
age?  No, but retirement age is 
mandatory at 65.  No Applicants are expected to 
complete a term of appointment  65 Maximum age on admission shall be 
65 years  
BENEFI T      
Out-Patient 
treatment  Annual deductible of 
CHF 300 per adult insured  
 
90%, then 100% after 
CHF 1,000/adult/year 
out-of-pocket expenses  No annual 
deductible  
 
80%, then 100% 
after CHF  2,800 
(single) or 
CHF 4,600 (family) 
out-of-pocket 
expenses  As of 1 May 2014, new Plan annual 
deductible (varies according to 
level of revenue of insured).  
 
80%, then 100% when the 
threshold of approved expenses 
entitled to payment of 
supplementary benefits is reached. 
That threshold, per  family and per 
year, is  equal to  25% of the 
paying member's annual 
remuneration or full  pension (full 
pension based on 25 years of 
service)  No annual deductible  
 
80%, then 100% if year's total 
out-of-pocket expenses 
exceed 5% of  annual net 
salary (for expenses without 
ceiling only)  A franchise of CHF 350 for each 
calendar year to the cost of 
out-patient treatment for insured 
persons of ≥ 21 years. All insured 
person assume a 10% share of the 
costs of out -patient treatment in 
excess, where applicable, of the 
amount of the franchise. Total 
contribution to expenses may not 
exceed CHF 2,000 for each insured 
person of ≥ 21 years old and 
CHF 250 for each < 21 years old  
In-Patient treatment   
- public ward  100%  100%  100% in some countries  100%  100%  
- semi-private ward  100%  90%, then 100% as 
above Hospitalization: 80% (max. 
approved expense $500/day), then 
100% of the approved expense 
when the threshold of approved 
expenses entitled to payment of 
supplementary benefits is reached. 
Limited to 45  days per insured 
person and per calendar year. 
Treatment: 80% then 100% of the 
approved expense when the 
threshold of approved expenses 
entitled to payment of 
supplementary benefits is reached  80% of room rate not 
exceeding CHF  950 
(accommodation + nursing 
care), then 100% not 
exceeding CHF  950 
(accommodati on + nursing 
care) if year's total 
out-of-pocket expenses 
exceed 5% of annual net 
salary  100%    
  WT/BFA/W/406  
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 WTO  UNOG/WMO  ILO/ITU  WHO  WIPO  
- private ward  90%, then 100% for 
medical treatment costs 
after CHF  1,000/adult/year 
out-of-pocket expenses  Limited to semi -private 
coverage  Limited to semi -private 
coverage  80% of room rate not 
exceeding CHF  950 
(accommodation + nursing 
care) in Switzerland or $500 
(only on accommodation) 
outside, then 100% not 
exceeding CHF  950 
(in Switzerland or $500 
outside) if year's total 
out-of-pocket expenses 
exceed 5% of annual net 
salary  90% with a maximum of 
CHF 1,000 on cost of 
treatment, 90% 
reimbursement on 
accommodation with no 
maximum + any amount 
above a top price of 
CHF 850/day  
Long term care  100% of the cost of 
long-term non -medic al care 
in hospital, nursing home or 
similar institution, subject to 
a maximum reimbursement 
of CHF  4.000 per person per 
month.  
 CHF 90 per day full 
dependency  
CHF 45 per day for partial 
dependency  Long term care at home or 
in an institution  Nursing (long term) 80% of 
USD 100 per day  Maximum of CHF 4,000 per 
month and per person if 4 
out of 6 daily activities may 
not be performed  
Glasses  90% (max. CHF  600/year)  80% (max. CHF  450/year 
cumulative over 2 years)  80% (max. $320 of 
approved expenses/year 
cumulat ive over 2  years to 
max. $960 of approved 
expenses, of which $125 
max. of approved expense 
for frames)  80% (max. $250 cumulative 
over 3  years) or whenever 
change in vision following 
eye operation max. $250  on 
glasses only)  90% (max CHF  1,000/year)  
Lump sum  of CHF 250 
granted towards frames not 
more than once every 
2 years  
Dental treatment  75% (max. CHF  3,000/year, 
cumulative over 2 years)  80% (max. CHF  2,500/year 
cumulative over 2 years)  80% (max. $1,500 of 
approved expenses/year 
cumulative over 3  years to  
max. $6,000 of approved 
expenses)  80% (max. $1,500 
cumulative over 3  years)  75% (max 3,500/year, 
cumulative over 2 years). In 
France rate of 
reimbursement is 85%    
  WT/BFA/W/406  
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Table 2 Comparison with other IGOs on Share of Premiums Payable  
PREMIMUM PAYABLE BY 
INSURED  
 WTO  UNOG  ILO WHO  WIPO  
 
Organization /Insured  
 
Premium sharing ratio  
  
60% WTO / 40% retiree5 
 
 
 
51% WTO / 49% staff 
members   
75% UNOG/ 25% retirees  
 
 
 
50% / 50% staff members  
  
67% ILO/ 33% retirees  
 
 
 
50% / 50% staff members   
67% WHO / 33% retirees  
 
 
 
67% WHO / 33% staff 
members   
65% WIPO/ 35% retiree  
 
25% WIPO/75% staff at the 
higher grade  
 
50%/50% staff at the lower 
grade  
 
                                                
5 Rounded averages as of December  2014 that includes non -subsidized (children, dependents) at WTO. Methodology for estimating ratios may vary across IGOs.  WT/BFA/W/406  
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  2.15.   The other IGO's are also dealing with the issue of how to manage the ASHI liabilities 
associated with pr oviding a medical plan with benefits for retirees. Many international 
organizations (and governments) have been studying the issue and developing various approaches 
to managing their liabilities. In most cases, the approach of the other IGO's has involved efforts to 
address the funding side of the equation by establishing ASHI reserve funds of one kind or 
another.  
2.16.   The WTO  Secretariat  looked at several UN System agencies, the Inter -American 
Development Bank (IADB), the IMF, the OECD and the World Bank for ex amples of how 
post-employment benefit liabilities are funded and managed.  
2.4  The summary of our research is contained in the tables below.  
Table 3 The UN System  
Organization  Funding mechanism  Funding oversight  
The UN  Not applicable  Continues to manage its 
post-employment medical benefits 
on a pay -as-you-go basis.  
WHO  Payroll charge (1/3, 2/3 paid by 
staff/retirees and the organization 
respectively) plus ad hoc 
payments/revenue based on funds 
available, including investment 
income  A dedicated global oversight 
committee that advises the DG and 
an WHO advisory investment 
committee  
WIPO  6% payroll charge (no staff or 
retiree participation)  plus ad hoc 
payments/revenue based on funds 
available, including investment 
income  Advisory Committe e on 
Investments in coordination with 
Finance and HR  
FAO Regular budget provision. No 
attempt to invest assets.  HR and Finance advise the Finance 
Committee  
ITU Regular budget allocation as per 
ITU Governing Body decision. No 
staff contributions.  the Fina ncial Resources 
Management Department (FRMD) 
that advises the Secretary General 
on financial resources management  
 WT/BFA/W/406  
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  Table 4 Other International Organizations  
Organization  Funding mechanism  Funding oversight  
IADB  [awaiting clarific ation]  governance of the post -retirement 
benefits account is shared between 
the finance and human resources 
departments  
IMF Incorporated into the budget since 
1994 when accounting rules 
changed. Contributions shall be 
made taking into consideration 
period ic actuarial valuations in 
accordance with generally accepted 
accounting and actuarial principles  governance mechanism modelled 
on their pension plan and gave the 
pension plan's investment 
committee responsibility for 
investing its post -retirement 
benefits  account  
OECD  Savings generated by reductions in 
expatriation allowance benefit and 
savings on budget allocation for 
premiums. Budget contributions to 
medical costs re -evaluated on the 
basis of actuarial studies at least 
every five years  Reserve assets in vested under the 
responsibility of the Management 
Board of the Pension Budget and 
Reserve Fund, in accordance with a 
mandate and an investment 
strategy, approved by Council  
World Bank  Incorporated into budget. 
Contribution reviewed annually 
based on valua tions of assets and 
liabilities.  overall responsibility for the 
finances of their post -retirement 
benefits account with the Bank's 
Pension Finance Committee  
 
2.17.   The conclusion from reviewing comparators is that each organization has different 
established str uctures and no clear best practices can be discerned from the range of funding and 
governance arrangements. Generally there is some form of shared responsibility between an 
organization's finance and HR functions.  
2.5  The Sustainability of the Medical Plan  
2.18.   There are two main aspects that affect the sustainability of the Plan and they are 
interrelated. The first is the ASHI obligation and what this means financially for the Organization. 
The ASHI obligation is described in section 2. 5.1 below. The second aspect is the budgeting for the 
WTOMP (active staff and retirees) and how those costs are expected to evolve overtime. The 
budget implications are sequentially explored in section  2.5.2. 
2.5.1   The ASHI Obligation  
2.19.   WTO staff members, when they enter service, are promised  that they are entitled to after 
service health insurance coverage if they satisfy certain criteria. For most employers the actual 
cost of these benefit obligations has been more than expected. This can be attributed to rising 
life-expectancy and a general  misunderstanding of the difference between current costs (pay as 
you go) and full costs (pay as you go plus the accrual of the costs of future benefits earned in the 
current period).  
2.20.   The WTO only budgets for the actual cash (pay as you go) costs of the AS HI expenditure in 
any given year and not the full service and interest costs necessary to guarantee the promise to 
provide coverage in the future. This has resulted in an accumulated ASHI liability of between CHF 
250 and 350  million (depending upon the cur rent discount rate) that the WTO is obligated to 
reflect in its financial statements each year. This liability is currently unfunded and would require 
aggressive increases in funding to offset in the short to medium term. Even with a strategy to 
address th is liability in the long term the liability will continue to increase for many years to come 
until stability is reached in the total number and average age of retirees.  WT/BFA/W/406  
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  2.21.   The Organization must plan appropriately for the future and for this purpose the strate gy 
proposes to undertake periodic actuarial evaluations to estimate the present value of the 
estimated future costs as well as current annual service and interest costs. While recognizing these 
costs is an accounting requirement for complying with IPSAS, t he accounting standards do not 
prescribe how the liability should be funded. A key decision will be the extent to which WTO 
Members accept to partially pre -fund these costs to offset the liability and incorporate the future 
costs into the regular budget of  the Organization.  
2.5.2   Budget Implications  
2.22.   The WTO currently budgets for medical insurance costs on an annual basis – what is known 
as "pay -as-you-go". In this way the premiums paid – both the WTO contribution and that paid by 
the plan participants - are used to cover the costs of claims in a given year. Using this as a 
baseline, the WTO S ecretariat  has analysed several factors to project the budgetary implications of 
continuing on a pay -as-you-go basis. This takes account of the expected demographic evolutions , 
expected evolutions in the structure of the Secretariat and key assumptions about both general 
and specific medical inflation.  
2.23.   The following paragraphs summarize the analytical results and the implications for the 
budget over a 20 year horizon.  
2.24.   An Aging Population: The WTO Secretariat projected the population of the medical plan 
over a 20 years horizon, based on the 2015 population of active (fixed term and regular posts), 
and current retired staff, including their related beneficiaries. According to this  analysis, the total 
number of beneficiaries is projected to increase by some 13 %, from 2  087 in 2015 to 2  348 in 
2035.  
2.25.   Within this increase in the insured population is an important demographic change within 
the population. In particular, the number of in sured persons associated with active staff (staff 
members and their dependants) is expected to remain constant, while there is an expected 
increase of over 50 % for the beneficiaries linked to retired staff. In 2015, the 525 retirees and 
their beneficiaries  constitute a quarter of the total number of insured persons; in 2035 they would 
represent a third.  
Table 5 Current and Estimated Number of Beneficiaries  
Year ALL Active  Retiree  Active staff policy holders  Retired staff policy holde rs 
Staff6 Spouse  Child  2nd Dep Staff  Spouse  Child  2nd Dep 
2015  2087 1562 525 662 236 641 22 344 132 44 5 
2035  2348 1536 812 662 241 611 23 537 219 55 1 
 
2.26.   It is also important that WTO retirees in 2035 will be on average older than in 2015. On 
averag e, in 2015, a retiree plan member (including beneficiaries) is above 65 years old and by 
2035 the retiree plan member will be, on average, over 70 years old.  
                                                
6 Only fixed -term and regular staff on 31  December  2015 are accounted for. This is lower than data 
provid ed in Office(16)/72, pp.9 . WT/BFA/W/406  
- 12 - 
  Chart 1 Distribution Of Beneficiaries By Age Group  
 
 
2.27.   Changing Demographics Lead to Higher Claims : Assuming medical consumption 
pattern remains unchanged, the total medical claims of beneficiaries will increase due to:  
a. higher number of insured persons;  
b. increase share of insured persons over age 65. Insured persons over 65 year old have, 
on average, hi gher medical consumption as shown in the annual claims analysis from the 
current medical health insurance provider; and  
c. expected medical inflation . 
2.28.   The average of annual overall claims for 2012 – 2015 is 11.5  million CHF. In 2035, the total 
medical claims are estimated to be at 15.7  million CHF due solely to these demographic factors 
and not including any assumptions about inflation. This represents an increase of 36 % in costs 
which will be shared between the contributions from the staff and contributions f rom the WTO 
budget.  
Table 6 Medical Reimbursement by Policy Holder and Age Group  
(000s CHF)  
Year Policy holders  By age group  
All Active  Retiree  0-20 21-30 31-40 41-50 51-60 61-65 65+ 
2015  11,556  6,554  5,002  1,144  612 1,178  1,645  1,799  1,023  4,154  
2035  15,689  6,677  9,012  1,050  521 1,857  1,231  1,625  1,220  8,186  
 
2.29.   WTO Contribution to the Medical Plan will Increase:  Under the current medical 
coverage scheme, an increase in the number of insured persons will mechanically lead to high er 
level of contribution that the organization has to finance. In 2015, taking into account retirees, 
fixed term and regular contracts, 7.4  million CHF was contributed from the WTO budget to the 
costs of the medical plan. This amount is expected to grow gr adually over the years and is 
expected to reach 8.6  million CHF in 2035 all other things held constant.  
2.30.   A substantial part of the increase is due to the increasing number of retiree policy holders. 
The remaining marginal part of the increase is attributabl e to hiring entry -level staff where the 
rate of contribution is higher than for the senior staff leaving on retirement.  
Table 7 WTO Contribution To Medical Insurance  
(000s CHF)  
Year Policy holders  
ALL Active  Retiree  
2015  7,378  4,987 2,391  
2035  8,560  5,041  3,519  
 
2.31.   Applying the increase in claims to WTO contribution: In its current form, the medical 
plan is a pay -as-you-go plan. An increase of 36 % of medical claims will call for an increase in the 
medical premium. As the premium i s divided between the insured person and the WTO, there will 
be a consequential increase in the WTO contribution. However, the rate of the WTO contribution is WT/BFA/W/406  
- 13 - 
  not the same across all staff and retirees, but is instead currently linked to the grade or 
pensi onable income, respectively.  
2.32.   Indeed, currently the WTO pays on average 55 % of the premium for all insured persons. In 
the current simulations it is assumed that the share of WTO contribution in medical premium 
remains constant (in percentage). An increase in medical premium due to higher level of medical 
reimbursement would imply higher contribution in CHF for both the WTO and for the beneficiaries. 
Since the medical premium is projected to grow by some 36 %, by 2035, in the current 
"pay-as-you go" system, t he medical premium would also need to be increased by 36 %. 
Table 8 WTO Annual Contribution with Increase in Reimbursement  
(000s CHF)  
Year All Active  Retirees  
2015  7,378  4,987  2,391  
2035  11,625  6,846  4,779  
 
2.33.   Our simulations project  that the WTO contribution would increase to 11.6  million CHF, i.e. a 
total increase of circa 58 % compared to 2015, of which 16 % is mainly due to financing the 
increase in number of beneficiaries and the remaining 42 % due to aging of the population.  
2.34.   Applyi ng Inflation: Over a 20 -year horizon, one has to take into account general inflation 
(Consumer Price Index), medical inflation and increase in real medical expenditure. At a rate of 
1% per year, 100 CHF of medical expenditure in 2015 would be worth 122 CHF  in 2035, an 
increase of 22 % in nominal terms. The table below lists estimated 2035 WTO contributions for 
medical insurance with different levels of inflation.  
Table 9 Estimated Annual WTO Contribution to Medical Insurance  
(000s CHF) 
Year Annual rate of cost increase  
0.0 1.0 2.0 2.5  3.0 4.0 5.0 
2015  7,378   - - - - - 
2035  11,625  14,185  17,274  19,049  20,996  25,472  30,845  
 
2.35.   Assuming the current medical expenditure trend remains constant an increase of 1 % per 
year would mea n that the CHF 11.6  million contributions in 2035 should be increased to CHF 
14.2 million to adjust for the increase in medical cost. The projected expenditure would almost 
triple if an inflation rate of 5 % is considered (CHF 30.8  million).  
2.36.   The table below  aggregates the budgetary implications of the factors discussed in the 
previous paragraphs starting at para graph  2.22. For illustrating the compound effects general 
inflation is assumed to be 2.0 % per year and medical inflation an additional 2.5 % per year.  
Changes in any of these factors will lead to a different actual experience. For the purposes of 
simulating the evolution of the budget, these assumptions are consistent with typical actuarial 
estimates as a starting point. Formal actuarial valuations will  allow these estimates to be updated 
periodically and will help to monitor over time if the Plan is performing better or worse than 
expected. However, it should be noted that experience over the past several years for the WTOMP 
has been very different than  these assumptions as price deflation has been the norm.  
Table 10 Aggregated Budget Projections  
 In 000s CHF  Percentage increase  
(2015 basis)  
ALL Active  Retiree  ALL Active  Retiree  
Current situation on 31  December  2015a 7,378  4,987 2,391  0 0 0 
1. Projection in 2035        
1a. Taking into account higher number of 
beneficiaries from retiree policy holders  8,560  5,041  3,519  16 1 47 
1b. Factoring effect of aging population  11,625  6,846  4,779  58 37 100 
1c. Include general inflation ( CPI) of 2% 
p.a. 17,274  10,172  7,102  134 104 197 
1d. Add 2.5% p.a. medical inflation  28,036  16,510  11,526  280 231 382 
a  refers to fix term and regular staff for "Active" . WT/BFA/W/406  
- 14 - 
  2.37.   If cost controls (discussed later in the document) could achieve a 5 % reduction in  premiums 
the projected budget implications would change as shown in the next table.  
Table 11 Aggregated Budget Projections with 5% Premium Reduction  
2. Projection 2035 with lower premium ( - 5%) 
2a. Taking into account higher numbe r of 
beneficiaries from retiree policy holders  8,132  4,789  3,343  10 -4 40 
2b. Factoring effect of aging population  11,044  6,503  4,540  50 30 90 
2c. Include general inflation (CPI) of 2% 
p.a. 16,410  9,664  6,747  122 94 182 
2d. Add 2.5% p.a. medical inflati on  26,634  15,684  10,950  261 214 358 
 
2.38.   The chart below summarizes the information graphically and on the next page is a table 
showing the estimated year by year budget evolution.  
Chart 2 Aggregated Budget Projections with 5% Premium Reduction  
 
   
  WT/BFA/W/406  
- 15 - 
 
Table 12 WTO Contribution to Medical Insurance, Projection by Year  
(000s CHF) 
Year 1a. Higher number of 
beneficiaries  2a. Lower premium  
(-5%) 2b. Effect of aging 
population  2c. General inflation of 2% per 
annum  2d. Add 2.5% p.a of medical 
inflation  
ALL Active  Retiree  ALL Active  Retiree  ALL Active  Retiree  ALL Active  Retiree  ALL Active  Retiree  
2015 7,378  4,987  2,391  - - - - - - - - - - - - 
2016 7,515  4,988  2,527  7,139  4,738  2,401  7,396  4,909  2,487  7,544  5,007  2,537  7,729  5,130  2,599  
2017 7,565 4,996  2,569  7,187  4,746  2,440  7,647  5,050  2,597  7,956  5,254  2,701  8,350  5,515  2,835  
2018 7,625  4,994  2,631  7,244  4,744  2,499  7,896  5,171  2,724  8,379  5,488  2,891  9,010  5,901  3,109  
2019 7,653  4,998  2,655  7,270  4,748  2,522  8,033  5,246  2,787  8,695  5,679  3,017  9,580  6,256  3,324  
2020 7,793  5,015  2,778  7,404  4,764  2,639  8,470  5,450  3,020  9,351  6,017  3,334  10,555  6,792  3,763  
2021 7,862  5,018  2,844  7,469  4,767  2,702  8,679  5,539  3,139  9,774  6,238  3,535  11,302  7,214  4,088  
2022 7,927  5,011  2,916  7,530  4,760  2,770 8,863  5,603  3,260  10,181  6,436  3,745  12,062  7,625  4,437  
2023 8,046  5,022  3,024  7,643  4,771  2,873  9,264  5,782  3,482  10,854  6,774  4,080  13,174  8,222  4,952  
2024 8,201  5,038  3,163  7,790  4,786  3,004  9,761  5,997  3,765  11,666  7,167  4,499  14,506  8,912  5,595  
2025 8,167  5,025  3,142  7,759  4,774  2,985  9,823  6,044  3,779  11,974  7,367  4,607  15,255  9,386  5,869  
2026 8,272  5,026  3,246  7,858  4,774  3,084  10,138  6,159  3,979  12,605  7,658  4,947  16,452  9,995  6,457  
2027 8,235  5,007  3,228  7,823  4,757  3,066  10,084  6,132  3,952 12,789  7,776  5,012  17,101  10,399  6,702  
2028 8,359  5,013  3,346  7,941  4,762  3,179  10,434  6,258  4,177  13,498  8,095  5,403  18,492  11,090  7,402  
2029 8,387  4,984  3,403  7,968  4,735  3,233  10,589  6,293  4,296  13,972  8,303  5,669  19,610  11,654  7,956  
2030 8,324  4,991 3,333  7,907  4,741  3,166  10,367  6,216  4,151  13,952  8,365  5,587  20,062  12,029  8,033  
2031 8,419  5,004  3,415  7,998  4,754  3,244  10,765  6,399  4,366  14,778  8,785  5,994  21,771  12,941  8,830  
2032 8,483  5,019  3,464  8,059  4,768  3,291  10,952  6,480  4,472  15,335  9,073 6,262  23,146  13,695  9,451  
2033 8,536  5,038  3,498  8,109  4,786  3,323  10,964  6,471  4,492  15,659  9,242  6,416  24,213  14,291  9,921  
2034 8,561  5,049  3,512  8,133  4,796  3,337  11,053  6,518  4,534  16,102  9,496  6,606  25,508  15,044  10,465  
2035 8,560  5,041  3,519  8,132 4,789  3,343  11,044  6,503  4,540  16,410  9,664  6,747  26,634  15,684  10,950  WT/BFA/W/406  
- 16 - 
  3   A PATH TOWARDS A MORE SUSTAINABLE FUTURE FOR THE MEDICAL PLAN  
3.1.  The WTO Secretariat  recognizes that any path towards a sustainable WTOMP while fulfilling 
the WTO's ASHI obligation s requires a number of elements to be addressed that involve a variety 
of stakeholders. Elements such as cost control, efficient and equitable allocation of available 
resources and additional funding will all be required to ensure sustainability. We will a ddress these 
elements of the strategy in this section.  
3.2.  The types of changes  contemplated have legal implications for how they are implemented as 
well touching on the need for human resources to carry out the implementation. In recommending 
any changes to t he structure and financing of the Plan, the WTO must respect the legal rights of its 
employees and retirees with respect to the terms of their employment and the WTO's obligations 
under Article 16 of the Headquarters Agreement.  
3.3.  While the WTO Secretariat  is confident that there is sufficient legal scope to implement 
necessary changes to the Plan, it underlines the need to approach the matter in a carefully 
considered manner and to ensure that the Plan's participants have ample opportunity to engage 
with and participate in the strategy process and its subsequent implementation.  
3.4.  The MIMC, consisting of representatives of relevant stakeholders, is the appropriate starting 
point for any consultation process. As part of the strategy development, the WTO Secretaria t has 
already begun the process of consulting directly with affected persons. The WTO Secretariat  has 
held "town -hall" meetings with the retiree's association and all staff members to explain the 
current situation and forecast potential benefit changes and  the rationale behind them. The WTO 
Secretariat  will continue a broad consultation process as part of the introduction to the new plan 
administrator as well when other significant changes are contemplated.  
3.5.  There is no panacea that will achieve the goals of  making the Plan sustainable in the long 
term. Instead a variety of small measures must be examined in three mutually reinforcing core 
areas: cost controls, cost sharing, and prevention.  
 
 
3.6.  Although each individual change may not have a significant impact,  the implementation of 
several changes in concert can have a significant impact. Nonetheless, some changes may need to 
be phased in over time. HRD with the advice of the MIMC and AGSD as required will address each 
of these areas continuously as part of the  Strategy.  
3.1  Cost Controls to improve the financial situation of the Plan  
3.7.  An important element of the strategy is to strive to control medical costs. It should be noted 
that the expected result of implementing any cost control measures is not to decrease  the 
available budgetary allocations but rather to provide for a more efficient and better use of existing 
funding in a manner that will help to mitigate future budgetary demands and future liabilities.  WT/BFA/W/406  
- 17 - 
  3.8.  The WTO MP is faced with certain demographic realities, na mely a steadily aging population 
and a slow increase in the total number of plan participants. Therefore, even after taking cost 
control measures the absolute costs of the plan will nevertheless increase as seen in the section on 
budgetary implications abo ve. Thus, the objective of any cost control measures adopted will not be 
to see an actual decline in costs over time, but rather to slow the rate of increase in these costs 
thus contributing towards the overall goal of managing the liability.  
3.9.  Sections 3.1. 2 through 3.1.8 look at the cost control ideas identified in the original Working 
Group Report and a few additional ideas. For all the proposals, the stage of consideration, the 
assessed potential and the timing for decision or further action are evaluated . In some cases, 
similar or overlapping proposals are evaluated together.  
3.10.   When analysing what cost control methods are appropriate to implement, it is important to  
note that the costs of the WTOMP have been relatively stable in recent years. As premiums ar e 
based on reimbursements in the previous period it can be demonstrated that medical expenses are 
not increasing at the rates that might have been expected (and assumed in the projections 
above).  
3.1.1   A Comparison between WTO and LAMAL Premiums  
Table 13 Annual Adult Premium for Geneva and Switzerland 2010 -2017  
(INDEX 2010=100)  
 WTO  Geneva  CPI total Switzerland 
(Annual average)  
Year Premium  Index  % Change  Premium  Index  % Change  Index  % Change  
2010 7106 100.0  -0.3%  5225 100.0  4.1%  100 8.4% 
2011 7106 100.0  0.0%  5394 103.2  3.2%  100.2  0.2%  
2012 7382 103.9  3.9%  5552 106.3  2.9%  99.5 -0.7%  
2013 7382 103.9  0.0%  5636 107.9  1.5%  99.3 -0.2%  
2014 7382 103.9  0.0%  5796 110.9  2.8%  99.3 0.0%  
2015 7382 103.9  0.0%  5996 114.8  3.4%  98.1 -1.2%  
2016 7382 103.9  0.0%  6282 120.2  4.8%    
2017 7382 103.9  0.0%  6642 127.1  5.7%    
 
3.11.   The Table 13 above shows fluctuations of Premium in 2010 -2017 and compares it with 
Geneva LAMAL premiums. The WTO premium is higher than the Geneva premium, but is not 
directly compa rable in absolute terms. Some benefits covered by WTO are not included in a basic 
LAMAL premium (legally required minimum coverage in Switzerland), but rather in a separate 
complementary insurance (e.g. dental and optical benefits). The WTO Secretariat is working on 
developing a more direct comparison with Geneva LAMAL based on benefits/coverage for 
comparable employment for use as a key performance indicator.  
3.12.   The Table 13 above also shows index fluctuations and year to year percentage change. The 
data for the period 2010 -2017 were compared. The data collected show that the WTO premium 
increased far less than the Geneva LAMAL premium between 2010 and 2017 The WTO premium 
increased faster than the Swiss inflation rate after 2010. However, the "medical inflati on" 
(difference between expenditure=premium and general price increase) is below the 2.5 % 
stipulated in actuarial evaluations.  
3.13.   The stability of costs in recent years can also be seen when looking at the costs of the 
medical plan as a percentage of the WTO budget. In 2010 the costs represented about 3.4 % of the 
WTO budget and in 2015 they represented about 3.8 %. This is during a period when the WTO 
budget has been largely flat. During the same period the populations covered by the Plan 
increased by more than  5per cent and also became on average older. These data show that the 
Plan participants have been modest consumers of health care services (and are likely healthier on 
average than the general population in Switzerland) all of which contributes to long -term 
sustainability.  
3.14.   Moreover, as can be seen from our reimbursement data from the past 5 years, in the case 
of the WTO, hospitalization, regular doctor's visits, and medications are the major drivers of the 
costs.  The WTO Secretariat has prioritized its init ial efforts at cost control on these key cost WT/BFA/W/406  
- 18 - 
  drivers. Additionally, it has geographically prioritized measures that will be effective in Switzerland 
and France where the vast majority of expenditures are incurred.  
Chart 3 Categories of Medical Expense cla ims in WTOMP  2012 -2015  
 
3.15.   These are core benefits that must be maintained at a certain level to ensure the WTO is 
living up to its obligation to provide quality care that is affordable to plan members. Nevertheless, 
the rate of cost increases and the abilit y to create efficiencies is still a core element of the WTO 
Secretariat 's strategy.  
3.16.   In 2016, the WTO Secretariat  conducted a procurement process for a new insurer and 
administrator of the WTOMP. The Technical Evaluation Committee was comprised of 
represent atives from HRD, AGSD, and the MIMC. In conjunction with the procurement process 
particular elements that were suggested by the Working Group on ASHI to the CBFA as well as 
others were considered. The measures relating to cost controls can be grouped into four areas: 
eligibility for participation in the plan, general elements of coverage, hospitalization, and 
adjustments to specific benefits. The progress made thus far and the current state -of-play on each 
element is discussed below.  
3.17.   It is important to note  that good decision making requires good data. As part of the new 
insurance contract, the WTO Secretariat  will now receive quarterly reports from the administrator 
of the Plan which will enable it to continue its evaluation of the benefit structure. The MI MC 
intends to continuously examine the benefits as the WTO S ecretariat  receives better data. 
Moreover, the MIMC will base its recommendations not only on the data of our own plan, but also 
benchmarking our Plan against the Swiss system and other internatio nal organizations.  
3.1.2   Eligibility for participation in the Plan  
3.18.   Certain of the proposed measures address cost controls by seeking to limit the probability of 
high cost or high risk Plan members. The suggested measures were:  
a. Alter eligibility criteria for Afte r-Service Health Insurance – increase years of service to 
be eligible (currently five years);  WT/BFA/W/406  
- 19 - 
  b. No longer allow secondary dependants to be insured under the WTOMP ; 
c. Review the possibility to have a divorced spouse to stay indefinitely in the Plan. Only 
provid e coverage to divorced spouses if they are unable to enrol another health 
insurance plan. Limit the n° of divorced spouses per active or retiree member to 
continue their affiliation in the Plan; and  
d. Review the possibility to have a retiree spouse affiliate d into the Plan, i.e. if the marriage 
takes effect after retirement.  
3.19.   As part of the strategy, the WTO Secretariat  has already examined the first three of these 
elements.  
3.20.   With respect to increasing the required years of service, the WTO Secretariat  found th at 
very few staff members have less than 10 years of service when they retire, especially with the 
recent trend for most hiring to take place at the entry level. Additionally, years of service in 
another international organization count towards the five (o r possibly 10) years to qualify for the 
benefit. Therefore, even if we extended the time it is unlikely that many staff members would be 
eliminated from the ability to participate in the Plan through its implementation.  
3.21.   Looking at our comparator organizati ons we can see that UN and ILO have a ten year limit 
while WIPO and WHO have the same rule as the WTO. The WTO Secretariat  is of the view that it 
would be reasonable to look at the vesting period, even if the impact on costs is not dramatic, and 
consider a  gradual increase in the level of WTO contribution as years of service increase.  
3.22.    It is also planned to address the issue of the costs for those who retire after limited service 
– namely that their premium contribution for the rest of their life should be determined based on 
some other indicator of income than solely their WTO pension. Someone who retires from the WTO 
after only five years of service may often have a higher ability to pay than reflected in their WTO 
pension. The WTO Secretariat  proposes to examine this aspect when it evaluates the calculation of 
retiree income for purposes of determining the level of the WTO contribution to the premium (see 
section on cost sharing below).  
3.23.   With respect to the secondary dependants, the MIMC evaluated the issue  and found that 
secondary dependants are on average over 70 and tend to cost the plan far more than they 
contribute. Therefore, the MIMC has recommended to the Director -General that no new secondary 
dependants be allowed on the Plan after 1  January  2017. T he 26 secondary dependants currently 
on the Plan will be able to remain in the Plan. As the number of secondary dependants will 
decrease over time, a gradual reduction in costs of up to CHF 175,000 per year can be expected, 
which is the difference between the average reimbursements for secondary dependants and the 
premiums they pay. (Note that the WTO makes no contribution to the premiums of secondary 
dependents.)  
3.24.   Currently, divorced spouses may remain on the Plan, but they must pay the full 
unsubsidized pr emium and they may not add any future dependants. Over the past ten years we 
have had three  divorced spouses on the Plan. They are such a small amount of the population that 
we do not have data addressing their expenses as a sub -group (as we do for seconda ry 
dependants). Given the small number of individuals and the lack of data, the MIMC has decided 
not to recommend any action on divorced spouses at this time.  
3.25.   The MIMC has not yet addressed the issue of new retiree spouses. However, the MIMC will 
address t his in 2017.  
3.1.3   General elements of coverage  
3.26.   The WTO Secretariat  has examine several aspects of the general coverage. In particular:  
a. Examining ways to have retirees use their national health insurance systems (require 
first reimbursement from that system, onl y allow those retirees who cannot get into such 
a national plan to stay in the full WTO insurance);  WT/BFA/W/406  
- 20 - 
  b. Provide "core" coverage and negotiate rates for staff members who want complementary 
additional coverage; and  
c. Restrict the world -wide coverage benefit for r etirees who reside outside Switzerland and 
France.  
3.27.   With respect to national health systems. We recall that many retirees are not eligible for 
their national systems because of their long employment outside their country. According to the 
Retirees Associati on 87 % of the retirees live in Switzerland and France, with a considerable 
number in Spain and the United Kingdom. 40 retirees live in the United States. The rest are 
dispersed over more than 20 other countries. Therefore, the WTO Secretariat  would propose  to 
focus any initial efforts on national health systems with Switzerland and France and then move on 
to Spain, the United Kingdom and the United States. Such a process could take a long time. We 
will need the expert help of our insurers and it may require  negotiations with the relevant 
countries. Nevertheless, the WTO Secretariat  is committed to examining the issue, including the 
feasibility of requiring retirees who do have access to a national health system to make initial 
claims from that system before making claims from the WTOMP . We may also be able to benefit 
from experience of other international organizations that have implemented or are attempting a 
similar process.  
3.28.   With respect to "core" coverage. The assumption is that any defined core benefits w ould be 
less than the current coverage. However, the WTO Secretariat  notes that our coverage is broadly 
comparable to that of our comparator organizations. The WTO Secretariat  intends to do a further 
analysis of how our Plan compares to not only the other international organizations, but also the 
Swiss system. This analysis may assist us in deciding if a set of "core" benefits could be identified.  
3.29.   Even if such a set of benefits could be identified, it might not be economical to move to a 
complementary model . In the past, the WTO Secretariat  has explored this option for long -term 
care and found that our population is so small that it does not lend itself to an affordable 
complementary coverage. Moreover, such coverage would have to be offered by an internatio nal 
broker (such as the Provident and insurance group of international officials) as to qualify for 
complementary plans from Swiss providers the underlying insurance has to be part of the LAMAL 
system.7 The WTO Secretariat  is prepared to look into this iss ue, but would propose that this be in 
the long -term after we see how the recent changes and the new insurance contract perform and 
after the benefits comparison is complete.  
3.30.   Finally, on world -wide coverage, the WTO Secretariat  notes that 87 % of the retiree s are in 
Switzerland and France. Similarly 92 % of our medical expenses are in Switzerland and France.  
                                                
7 See http://www.gpafi.com/ . WT/BFA/W/406  
- 21 - 
  Chart 4 Plan Expenses by C ountry  
 
 
3.31.    Therefore, the world -wide coverage is not seen as a meaningful cost driver of expenses 
generally or for retirees spe cifically. Additionally, Switzerland consistently ranks as one of the top 
spenders on medical care as a percentage of gross domestic product and was third in the world in 
per capita spending in 2015 after the United States and Luxembourg.8 Indeed if staff and retirees 
were incentivized to go outside Switzerland for medical care to a greater extent than today, it 
would likely be less expensive and thus world -wide coverage may actually save the Plan money. 
The potential to control costs through treatment outs ide Switzerland will be addressed in the 
specific benefits section below.  
3.1.4   Hospitalisation  
3.32.   As noted above, the biggest cost driver of the Plan is hospital related expenses (medical 
treatments, bed and board, etc.). Indeed, the original ASHI Working Group Re port identified 
several items related to hospitalisation that have been or will be examined as part of the strategy.  
3.33.   In particular, the Working Group identified the following areas related to hospitalisation:  
a. Expand the list of procedures and hospitalizati ons that require pre -approval from the 
health insurance;  
b. encourage public hospitals (i.e.  Hôpital Cantonal in Geneva and University Hospital in 
Lausanne) usage rather than private hospitals and clinics;  
c. re-examine benchmark rates for "reasonable and custom ary" charges both for local and 
world -wide coverage; and  
d. examine and adjust reimbursement rates for private room coverage.  
3.34.   All in -patient procedures and hospitalizations other than emergencies already require 
pre-authorisation. With respect to out -patient procedures, the MIMC has decided to recommend to 
                                                
8 See http://www.oecd.org/els/health -systems/health -data.htm . WT/BFA/W/406  
- 22 - 
  the Director -General to add pre -authorisation for orthodontia for those over 18 to ensure that it is 
for medical rather than cosmetic purposes.  
3.35.   With respect to the other three measures, through the procureme nt process the WTO 
Secretariat  has selected a provider that has very favourable negotiated rates with the local 
hospitals that are significantly lower than the published rates. This alone may have the positive 
impact we are looking for. Because of the spec ial negotiated rates that are often discounted on the 
published ones, in certain instances the private hospital may actually be cheaper than the public 
one. We also note that the Cantonal hospital in Geneva is already the only hospital in the area that 
can provide certain procedures (e.g. premature labour, level 1 trauma, certain surgical 
procedures). Therefore, the MIMC has recommended leaving the local benchmark rate to be the 
Hôpital de La Tour (where possible) using the new negotiated rates. The MIMC is  committed to 
re-examining this and considering other options, such as a benchmark rate based on an average of 
area costs, but would like to receive better data on usage of different hospitals and the effect of 
the negotiated rates before making additional  changes.  
3.36.   For the benchmark rate for coverage outside Geneva the MIMC has recommended that the 
Director -General change the benchmark to be that of the local area (reasonable and customary as 
determined by the Plan provider) so long as they do not exceed th e Geneva rate.9 
3.37.   With respect to private room coverage, the MIMC examined the issue in light of the new 
negotiated rates as well as the desire to leave private room coverage as an incentive for plan 
participants to go to lower cost areas. Therefore, the MIM C has recommended maintaining the 
coverage, but capping the amount at CHF 700 per day for the room rate. Providing this coverage, 
but with a cap is consistent with WHO and WIPO. Both those organizations set the cap at CHF 850 
per day. We also note that thi s cap is less than the published rate for a semi -private room at 
Hôpital de La Tour. In addition, it should be noted that with the new negotiated rates and due to 
the larger co -share for private rooms (90 % coverage of room and board and CHF 1,000 for 
Docto r's fees), shorter hospitalizations in a private room typically results in lower costs to the Plan 
than in a semi -private room in Hôpital de La Tour.  
3.1.5   Specific Benefits  
3.38.   The Working Group Report recommended that the Secretariat examine whether certain 
specif ic benefits were calibrated appropriately.  
a. For specific medical treatments, require referral from general practitioner, before 
consulting specialists.  
b. Discounts or increased coverage if using "in network" versus out of network providers. 
Up to 20 % cost sav ing. Agreements on medical care and rates between service provider 
networks (general practitioners, specialist doctors, medical and radiology centres, test 
laboratories, opticians, public hospitals).  
c. Optical coverage: decrease the cap and limit coverage fo r frames to only 1 pair every 
two years . 
d. Dental: decrease the cap.  
e. Increase reimbursement  % or decrease deductible for certain benefits (optical, dental, 
other) that are undertaken in areas significantly cheaper than Switzerland.  
f. Travel benefit for insured s who seek medical treatment in another location that is 
significantly cheaper than that in Switzerland.  
g. Long-term care: provision for care at home or a lump sum for long -term care . 
3.39.   In respect of requiring pre -approval to see a specialist, the WTO Secretar iat has not been 
given any projections on savings that could be achieved through this process. The WTO Secretariat  
                                                
9 In certain special circumstan ces the Geneva rate can be exceeded.  WT/BFA/W/406  
- 23 - 
  has noted that there could be an additional cost of the visit to the general practitioner. The MIMC 
intends to explore the feasibility of req uiring pre -authorisation for specific tests or treatments 
often conducted by specialists as the more targeted and cost -effective approach. However, we will 
need a clearer picture of the data to proceed and to name the specific tests and treatments.  
3.40.   Our ana lysis showed that both the prior insurer and the new one have extensive networks in 
the Geneva area and that a high percentage of staff members were already using "network" 
providers. Therefore, the WTO Secretariat  is recommending an initial approach to im prove 
information to plan participants about who is in network and to try to increase the direct -billing 
arrangements with providers for high cost treatments as an incentive to steer plan participants to 
them. To that end the new insurance provider has a m obile app that plan participants can 
download onto their smartphones to identify network providers. The insurer has also agreed to 
pursue direct billing arrangements for planned out -patient treatments (other than dental) if they 
exceed 1000 CHF. As noted, the WTO Secretariat  intends to continuously monitor the performance 
of the Plan and can return to this issue if these measures are not effective.  
3.41.   The MIMC examined a proposal to lower the cap on optical from 600 CHF to 500 CHF, to 
provide for a 2 -year carr y forward, and to limit benefits to 1 set of frames per year. When 
examining the prior years' claims analysis, the MIMC discovered that this was one of the benefits 
with the lowest coverage rate (68per cent in 2014 and 71per cent in 2015). Additionally, th e 
current data did not enable the MIMC to understand how much of reimbursements were attributed 
to frames, lenses, or contact lenses. Therefore, the MIMC has recommended requesting data on 
usage of the benefit for frames. As this won't be available until t he end of 2017, the MIMC 
recommends delaying any potential changes in the optical coverage until relevant data can be 
more carefully analysed . 
3.42.   For dental coverage the MIMC examined the coverage rate and cap. The current benefit is 
75% coverage with a cap o f CHF 3000 per year with a carry forward into the following year. The 
MIMC looked at lowering the cap to CHF 2500. The data for recent years show that dental care is 
approximately 7 % of medical reimbursements. It already has a lower coverage rate than othe r 
benefits (75 % as opposed to 90 %) and a cap as opposed to other out -patient treatments that 
have none. Given the high cost of dental care in Switzerland, the MIMC thought that any 
implementation of a reduction in the cap should be in concert with an incre ased coverage rate in 
lower cost jurisdictions, particularly neighbouring France. Therefore, the MIMC will re -examine this 
issue after it has been able to address the issue of differential coverage rates based on geographic 
location with the insurer.  
3.43.   The M IMC examined increasing coverage rates for certain treatments if they take place 
outside of Switzerland, particularly for dental. The MIMC did not feel that it had adequate 
information on what areas should have increased coverage rates and at what levels. The WTO 
Secretariat  believes that extensive consultation needs to be done with the insurer on this matter. 
The WTO Secretariat  would foresee that such discussions would begin to take place after the 
implementation period of the new contract, i.e., the latt er half of 2017. The new insurer has 
confirmed that such measures would be possible. The WTO Secretariat  has sought to retain 
flexibility on this matter by including in the contract the ability to change benefits throughout the 
contract and to normally hav e such changes take effect in the following quarter.10 
3.44.   Similarly, the WTO Secretariat  is looking at other incentives, such as a reimbursement for 
travel. Again, the specific areas and levels of reimbursement would have to be defined with the 
insurer. The WTO Secretariat  notes that it is already seeking other ways to incentivize travel for 
lower cost treatment.  
3.45.   There is currently a long term care benefit in the Plan, but only for institutionalisation in a 
nursing home or hospital. The WTO S ecretariat  is commi tted to looking at ways to make this 
benefit more cost effective, including providing for a lump sum or reimbursement for at home 
care. The WTO S ecretariat  notes that increasing these benefits could cause a short term increase 
                                                
10 The period might be longer if the change necessitated significant alterations to the insurer's IT 
system, for example.  WT/BFA/W/406  
- 24 - 
  in the premium, but might be expected to in the long run reduce hospitalisations and institutional 
care expenses  as has been demonstrated in several studies .11 
3.46.   Finally, the WTO S ecretariat  examined other parts of the benefit package as part of this 
process and in the context of the pro curement. In particular the MIMC has recommended that the 
Director -General agree to place an individual cap of CHF 2000 on alternative therapies while 
retaining the CHF 6000 cumulative cap.  
3.1.6   Projected Impact  
3.47.   Assuming that the new hospitalisation rates in Ge neva negotiated by the service provider 
combined with other cost control measures could lower premiums by 5 % or more, i.e. medical 
expenditure would be roughly lower by 5 % due to competition and economisation, the additional 
budgetary cost over 20 years fo r medical subsidy would be approximately CHF 163  million – an 
16% decrease on the CHF 194  million estimated without cost control.12 However, although there 
would be a decrease in the projected growth of the expenditure, cost controls would not be enough 
to offset the total increase in cost.  
3.1.7   Cost Sharing  
3.48.   The Working Group also suggested that as part of the strategy the WTO Secretariat  examine 
different elements of cost sharing. These included:  
(a) Increase yearly deductible and maximum out -of-pocket . 
(b) Changing the level of subsidy for both retirees and staff members . 
(c) Change how the premium is determined for both staff members and retirees . 
(d) Review the income calculation method for retirees . 
3.49.   In the context of the procurement the WTO Secretariat  conducted an initial an alysis of 
adjusting some cost sharing elements, namely the deductible and maximum out of pocket.  
3.50.   In the most recent years for which we have data the share of participants reaching the 
deductible is reasonable as it has a positive threshold (generally at or  over 50 Per cent). Moreover, 
for the same time -period approximately 18 % of claimants had claims less than CHF 500.  
Table 14 Deductible  
Year % reaching deductible  
2011 49% 
2012 54% 
2013 55% 
2014 56% 
 
                                                
11 See, for example, the Wall Street Journal article " How House Calls Can Cut Medical Costs " 27 
September 2015.  
12 Although the simulated decrease in premium is only 5 %, the total savings over 20 years is much 
higher due to the compounding from general and medical inflation.  WT/BFA/W/406  
- 25 - 
  3.51.   Based on the available dat a the WTO Secretariat  concluded that these elements are 
appropriately set and that raising them might actually produce negative incentives as insured 
persons would be discouraged from seeking treatment in lower cost areas as their coverage rate 
would actua lly be less than those that sought more expensive treatment. We present the following 
example of two plan participants seeking the same treatment, one in Switzerland and one in 
France.  
Table 15 Deductible in Relation to Coverage Sha re 
 Treatment in Switzerland 
(2000 CHF)  Treatment in France  
(1500 CHF)  
Deductible  300 300 
Maximum out of pocket  700 700 
Balance of services covered by Plan  1000 500 
Coverage rate  50%  33%  
% paid for by plan participant  50% 67% 
 
3.52.   The plan participant ge tting the more expensive treatment would actually have a higher rate 
of coverage than the one being cost effective.  
3.53.   Therefore, in 2017, the MIMC intends to look at ways to possibly adjust the deductible and 
maximum out of pocket down  in certain situations where insured persons are seeking treatment in 
locations where costs are significantly less than in Geneva.13 As noted above, the MIMC will also 
examine other incentives for insured persons to seek cost effective treatment, such as a travel 
benefit.  
3.54.   The MIM C expects to tackle the other issues identified by the Working Group in 2017 – 
namely the proposed rate of subsidization and the calculation method for the staff member/retiree 
portion of the premium.  
3.55.   The MIMC is exploring various options to make the distri bution of the costs amongst insured 
persons more equitable and to address some of the cost sharing concerns. In particular, 
re-examining whether the premium of the staff member should be based on a percentage of 
income or an income band rather than by grad e of the staff member. Retiree premiums are 
already based on income bands. For this group the issue will be whether to switch to a percentage. 
The MIMC will also examine how the retiree's income is calculated.14 We would expect that this 
analysis would be d one in the course of 2017.  
3.56.   The MIMC will also examine whether a mechanism can be created for staff members to 
themselves participate in pre -funding the ASHI obligation. However, before anything could be 
finalized a framework would need to be created to ens ure that any savings taken from the budget 
allocation for health insurance and particularly from staff member contributions would be in a 
properly administered and protected fund as described in sections 4.5 to 4.7.  
3.1.8   Prevention  
3.57.   A primary mechanism for contr olling costs is to maintain or increase the "healthy" 
population that does not use the maximum benefits every year. A variety of measures can be 
taken to promote a healthy culture amongst employees. The exact amounts of e medical costs that 
have been avoid ed or the extent to which the cost for a chronic illness has been reduced cannot be 
defined. Nevertheless, the positive impact on medical cost reduction and individual productivity of 
the workforce cannot be underestimated.  
3.58.   The Working Group identified dis couragement of unhealthy behaviours and promotion of 
wellness through in -house initiatives as well as through products offered by the Insurer. Moreover, 
they identified increased vaccination as well as other preventative screenings as potential areas 
where  the WTO could have a positive impact on the rate of cost growth.  
                                                
13 See discussion of higher coverage in cheaper locations in 3.38.  e. 
14 As noted above, we currently calculate the retiree income based on WTO or UN pension income if the 
UN pension comes from GATT service. Other methods may need to be considered to address people who retire 
from the WTO at a high income, but a low pension because of a  relative low number of years of service.  WT/BFA/W/406  
- 26 - 
  3.59.   As part of the procurement, the WTO Secretariat  inquired as to the effect on the premium of 
adding 100 % coverage for prescribed or over -the-counter vaccinations as well as smoking 
cessation medication. The selected insurer indicated that it would have result in no increase in the 
premium while having the potential to have a positive impact on costs long term by preventing the 
onset of expensive diseases such as lung cancer, emphysema, measles , meningitis, etc... 
Therefore, the MIMC has recommended to the Director -General that the Plan adopt the increased 
preventative coverage as of 1  January  2017.  
3.60.   In addition to these measures, prevention and wellness will remain an important part of the 
Strategy. In 2017 we hope to look at other avenues for promoting prevention and wellness such as 
screening campaigns, providing some medical or wellness services in -house, incentives for 
physical fitness, and coverage for care at home rather than in an institut ional setting.  
3.2  Funding changes to improve the financial situation of the Plan  
3.2.1   Level of Funding Ambition  
3.61.   The original Working Group Report approved by the CBFA examined alternative approaches 
to funding the Plan and the associated ASHI liabilities. As the a ccrued (accounting) costs of the 
Plan are greater than the actual cash costs in a given year, any decision to move beyond the 
pay-as-you-go approach would necessitate the creation of a medical insurance/ASHI reserve fund 
where assets, including savings rea lised from implementing cost controls, could be set aside for 
future use.  
3.62.   From a budgetary funding perspective, the extreme objective is a full funding scenario . 
This approach would reflect in the budget the impacts of fully prefunding the costs implied by  the 
commitment to current staff of access to the Medical Plan after they retire and amortizing the 
already accumulated estimated liability for past service. Such an approach would dramatically 
increase budgetary impacts over the next 25 -30 years, but woul d result in the accumulation of 
investable assets equal to the projected future liabilities for a net liability of zero.  
3.63.   Full funding would cost an additional CHF 11  million in 2016 for service costs and interest 
beyond the pay -as-you-go amount. Amortizing  the existing liability would be an additional amount 
depending upon over how many years the amortization would be spread. Rough estimates suggest 
that amortizing an extra CHF 10  million per year for 25 years would eliminate the net liability if the 
full service and interest costs were also set aside each year in a fund. However, The ASHI Working 
Group Report did not see this as either a viable or appropriate objective for the use of Member 
resources in the medium term.  
3.64.   Few organizations are actively fundin g the full costs (annual service and interest charges) of 
the ASHI benefits and this contributes significantly to the escalation in the ASHI liability. It is the 
view of the external auditors that as the staff earn benefits for their services during a give n year 
these costs should also be funded through the budget of the respective period on an accrual basis.  
3.65.   While the pay -as-you-go funding approach results in lower budgetary impacts in the 
short-term, the longer term implication is an increase in the volum e of funding that will ultimately 
need to be diverted from the regular budget to cover ASHI liabilities as they come due. Not 
funding the accrued costs of a given period therefore passes these costs to future budgets, rather 
than covering them by the contr ibutions of Members corresponding to the period they were 
incurred. Funding costs when they are incurred should be seen as a principle of fairness among 
Members.  
3.66.   There are two general approaches for an organization to begin funding its ASHI liability. 
Neither of which is mutually exclusive. First, the Members may set aside ad-hoc amounts when 
available such as from unused budget allocations. Second, the organization can begin a 
"pre-funding" mechanism whereby amounts for ASHI are incorporated into the budge t beyond the 
pay-as-you-go cost. For example based on a percentage of the payroll. This could be done only by 
the organization or jointly by the staff members and the organization.  
3.67.   An objective of any funding approach should be to create the incentives for  staff and the 
organization to behave efficiently and generate "savings" for the plan. A mechanism to capture WT/BFA/W/406  
- 27 - 
  savings that result from cost control measures is an important element of the funding model. 
Otherwise, such savings will simply pass to the budge tary "surplus" where, absent any established 
principle to capture them, they could be diverted to other uses. In which case short term cost 
consciousness would not support the longer term sustainability of the WTOMP.  
3.68.   Currently, only the pay -as-you-go costs  of the Plan are reflected in the budget planning of 
the Organization. A decision by WTO Members to recognize a gradually increasing portion of the 
IPSAS accounting costs related to the Plan would, over a very long time, slow the growth in the 
liability an d eventually, once the Plan had fully matured, start reducing the liability. It is a variation 
on a partial funding  approach that the WTO Secretariat is proposing as part of the strategy.  
3.69.   In order to make realistic projections on long term funding scenario s and establish the level 
of ambition regarding partial funding, the services of a consulting actuary will be necessary. The 
strategy proposes to engage a consulting actuary for the purposes of conducting an initial ASHI 
study that would help to establish funding targets for WTO Members to consider. The consulting 
actuary would also provide period formal valuations to update the funding status should a decision 
to set aside prefunding assets be taken. This aspect of the strategy will be elaborated further i n 
section 4. 3 below on actuarial monitoring.  
4  GOVERNANCE, MONITORING AND REPORTING  
4.1.  Currently, the governance of the Medical Plan and its benefits rests in the hands of a variety 
of actors within the Secretariat as demonstrated by the table below. A key elem ent of the strategy 
is to examine ways to streamline governance while at the same time ensuring that all stakeholders 
are adequately represented. As the strategy moves towards implementation these aspects will be 
further clarified . 
4.2.  As part of good governan ce, monitoring and reporting on the WTOMP the WTO Secretariat 
will report regularly to WTOMP stakeholders. During the early stages of strategy implementation 
this would be anticipated at least twice a year. Once the core elements of the strategy have been 
implemented there would be at least an annual reporting, for example to the CBFA, on an on -
going basis. That reporting would cover actuarial projections, demographic and budget trends, and 
a few relevant Key Performance Indicators related to both implement ation and impact.  
4.3.  Although the intention is to build on existing structures and find economies of scale where 
possible, it should be noted that implementing the strategy will not be cost free in terms of 
administrative costs. There will be human resource c osts and external cost such as actuarial and 
investment services both for start -up activities and on an on -going basis.  
4.1  Governance and Administration  
4.4.  This section  of the document covers issues relating to how  the sustainability of the WTOMP 
should be monit ored, how any funds set aside for ASHI could be managed and the governance of 
such funds. Monitoring the liability estimates and evolutions in the key drivers of the liability is an 
important role for managing the sustainability of the WTOMP.  
4.5.  As mentioned  earlier, there are no clear best practices in this area. Each organization has 
adapted to its particular existing structures. Therefore, in the absence of best practices for the 
governance of post -employment benefit arrangements, it is proposed that the WTO Secretariat  
build on existing structures rather than create entirely new layers of administration to handle the 
ASHI situation.  
4.6.  The Human  Resources Division (HRD) is responsible for the management and administration 
of the WTOMP.  
4.7.  The Medical  Insurance Ma nagement Committee (MIMC), which advises the Director General 
on important aspects of the WTOMP, is comprised of staff appointed by the Director General, staff 
nominated by the Staff Association and representatives of the retiree population. Each category of 
representatives includes two members and one alternate. Its role is especially important in 
facilitating consultations with participants in the WTOMP in the context of potential changes to the 
Plan. WT/BFA/W/406  
- 28 - 
  4.8.  The Administration  and General Services Division (AGSD ) is responsible for financial 
management services and provides data and advice to both HRD and the MIMC on relevant 
matters related to the WTOMP.  
4.9.  The ASHI issue with respect to cost controls and demographics is inextricably linked to the 
management of the  WTOMP as a whole. In that respect, oversight of the WTOMP sustainability and 
corresponding reporting would be entrusted to HRD with the necessary advice from the MIMC and 
from AGSD as required. The WTO Secretariat  proposes to review the internal rules of the WTOMP 
and recommend changes to better reflect the ASHI aspects of the WTOMP and to clarify the 
responsibilities for monitoring the long term sustainability of the WTOMP.  
4.10.   Again, building on existing WTO Secretariat  structures, management of any fund 
management elements could be modelled on the WTO Pension Plan (WTOPP) approach. Indeed it 
could be possible to achieve efficiencies if the WTOPP Secretariat were to be endowed with 
responsibility (and resources) for the investment of the WTOMP's assets.  
4.11.   Howev er, there can be distinctions between the WTOMP and the WTOPP which have 
implications for their respective investment frameworks. Therefore, while we recommend aligning 
the financial management of an ASHI Fund with the WTOPP portfolio, we would also recomm end 
retaining separate control over the assets and separate oversight frameworks.  
4.12.   Regarding administration  of ASHI benefits, it could be foreseen to create a Post -Employment 
Benefits Team that would take responsibility for staff after they have retired. As  the WTOPP 
Secretariat already handles a significant portion of the post -employment relationship, its mandate 
could be expanded to also manage the ASHI aspects of client services thus providing a single point 
of contact for the majority of WTO retiree rela tionships with the organization.  
4.2  Human Resources needs  
4.13.   Implementing changes to the medical insurance Plan as well as the increased oversight and 
data analysis will require more dedicated staff from the Human Resources Division than in the 
past. 
4.14.   Initially, to help focus resources on managing the WTOMP, the WTO Secretariat  has created 
a Compensation, Benefits and Insurance team within the Human Resources Division. This team is 
comprised of three staff members who, as part of their range of functions, will act  as the central 
focal points for all issues with respect to the management of the WTOMP. Specific aspects of the 
management and administration of the Medical Plan will be discussed in more detail below.  
4.15.   Additionally, if the proposed funding mechanisms are introduced additional resources will 
need to be allocated to the WTOPP Secretariat to assist in the management of the fund.  
4.16.   Finally, the WTO Secretariat  may need to consider engaging dedicated legal resources for 
assessing the Plan, the appropriateness of any changes in terms of the guidance provided by the 
ILOAT and the Headquarters Agreement, and negotiating any necessary modifications to the 
relevant contracts.  
4.3  Actuarial  Monitoring  
4.17.   It is expected that the adoption of a strategic and administrative framew ork for the long 
term sustainability of the WTOMP will require that a consulting actuary be selected. This would be 
done through periodic competitive procurement exercises. The following actuarial service 
requirements are anticipated:  
(a) Provide recommendatio ns regarding various contribution schedules to fund the plan and 
the levels necessary to maintain sustainable funding in the long term, using different 
financial models and assumptions. This would include pay as you go and pre -funding 
approaches to financi ng the Plan.  WT/BFA/W/406  
- 29 - 
  (b) Perform sensitivity analysis of actuarial valuation results in order to show the effects of 
changes in the main actuarial assumptions (e.g. discount rate and medical cost trend 
rate).  
(c) Set up a "best estimate" of the expected base level of medi cal claims cost scale of the 
Plan for the projection of future liabilities; recommend a governance approach towards 
monitoring the medical claims, in particular, identifying key risk areas to aid decisions 
around benefits design, ceiling and caps.  
(d) Perform a periodic review of the Plan which will include financial sustainability through a 
series of cash flow projections, analysis of the contribution rates to fund the Plan and 
high-level approach to consider financing alternatives. The periodic evaluation rep ort 
may include among other elements a surplus/deficit funding ratio calculation, analysis of 
gains and losses and calculations of the actuarial value of accrued benefits.  
(e) Assistance with the preparation of reports to The General Council and The Committee on 
Budget Finance and Administration (CBFA) regarding actuarial matters.  
(f) Any other requests that the WTO Secretariat  may deem necessary in the above context.  
4.18.   Initially the consulting actuary would be asked to complete baseline studies on the 
sustainability  of the Plan with projected funding scenarios and potential funding targets.  
4.19.   Once a strategy based on these analyses is finalized, the actuary would continue to provide 
triennial formal valuations and annual interim updates on the situation of the WTOMP. 
Furthermore, the consulting actuary will help to assess and validate key assumptions such as 
medical inflation rates.  
4.4  Suggested Approach to Key Performance Indicators (KPIs)  
4.20.   To monitor the WTOMP  KPIs can help stakeholders to understand how various aspects o f the 
Plan are evolving. These can be tracked by the WTO Secretariat  in addition to the formal actuarial 
valuations proposed above. KPIs would likely change over  time as certain  KPIs are understood to 
be more or less useful and thus subject to modification  or replacement.  
4.21.   KPIs can relate to the performance of the WTO Secretariat relative to its strategy 
implementation. For example, the Secretariat says it will report annually to stakeholders on the 
situation of the Plan. This can be monitored to ensure what  is planned is followed through on. 
Another example of a strategy implementation indicator would be  reporting on whether  the 
Secretariat has reformed the approach to calculating premiums and allocating contributions?  
4.22.   KPIs can also relate more to the result s of the strategy implementation such as indicators of 
impact. The most obvious indicator here will be if the growth of the liability is slowed down from 
baseline expectations or if the pay as you go costs for the Plan have grown more or less quickly 
than originally predicted from the base assumptions. To monitor some of these elements will 
require actuarial expertise as mentioned above and it will also require the baselines against which 
to measure actual experience.  
4.23.   The WTO Secretariat  is still working to  identify relevant KPIs of both the strategy 
implementation variety and the overall impact variety. It will take some time to validate and 
standardize data for these KPIs. However, there are some basic baseline metrics that will be useful 
for evaluating th e information contained in the KPIs relative to our starting situation and starting 
assumptions. The presentation here is indicative of some of the base line data to be tracked.  
4.24.   Possible  Baseline Metrics include:  
(a) Health Plan Expenditure and Premium Evoluti on. 
(b) Management Costs Ratios . 
(c) Health Plan Costs Relative to Budget (Members' contribution) . 
(d) Level of Health Plan Contribution for a Competitive Employer . 
(e) Health Plan Costs and the Ageing Population . WT/BFA/W/406  
- 30 - 
  4.25.   Certainly there are more baseline metrics to be identified  and with the help of the consulting 
actuary the Secretariat will be able to identify and track relevant indicators for impact and 
eventually set targets  for managing the liabilities and moderating the budgetary impacts . 
4.26.   The Secretariat will also include i n its reporting to stakeholders during the initial period of 
strategy implementation, regular updates on the performance relative to action steps identified in 
the strategy.  
Table 16 Health Plan Expenditure and Premium Evolution  
Annual Expenditure and Adult Premium (Index 2010=100)  
 WTO Total 
Health 
Expenditure 
per year 
(CHF)  WTO  Geneva*  Switzerland *  
Year Premium 
(CHF)  Index  % 
Change  Premium 
(CHF)  Index  % 
Chang
e Premium 
(CHF)  Index  % 
Change  
2010 12,040,822  7,106  100.0  -0.3%  5,225 100.0  4.1%  4,213  100.0  8.7%  
2011 11,962,400  7,106  100.0  0.0%  5,394  103.2  3.2%  4,486  106.5  6.5%  
2012 13,785,443  7,382  103.9  3.9%  5,552  106.3  2.9%  4,584  108.8  2.2%  
2013 12,680,000  7,382  103.9  0.0%  5,636  107.9  1.5%  4,652  110.4  1.5%  
2014 13,142,859  7,382 103.9  0.0%  5,796  110.9  2.8%  4,753  112.8  2.2%  
2015 13,084,528  7,382  103.9  0.0%  5,996  114.8  3.4%  4,942  117.3  4.0%  
2016  7,382  103.9  0.0%  6,282  120.2  4.8%  5,138  121.9  4.0%  
* Adult refers to population at the age of 26 and more, including accident, standa rd franchise.  
 
4.27.   This baseline metric provides information on the overall WTO commitment to Health 
services. The Total Health Plan Expenditure  includes reimbursement, handling fee and profit 
(gross). Total Health Plan Expenditure increased by CHF 1  million d uring the five years and 
reached CHF 13  million in 2015 . 
4.28.   Premium evolution shows fluctuations of Premium in recent years and compares it with 
Geneva and Switzerland Premium. Comparing the WTOMP  premiums within the period 2010 -2015 
it was indicated that the  WTO premium increased much less than that of Geneva and that of 
Switzerland. During the period 2010 -2015 WTO premiums increased less than the CPI+2.5 % 
medical inflation annual rate. The 2010 -2015 medical rate accumulates to 13.1 %; with deflation of 
1.9% CPI the real expenditure expected is 11per cent for period 2010 -15. The observed increase 
in premiums was 3.9 % for the period 2010 -2015, which is 7 % less than "predicted".  
Table 17 Management Cost Ratios  
Year 2010  2011  2012  2013  2014  2015  
Administrative costs 
(external)  1,037,436  1,051,223  1,061,984  1,101,802  1,118,096  1,127,514  
Expenditure per year  12,040,822  11,962,400  13,785,443  12,680,000  13,142,859  13,084,528  
Ratio Admin. Costs to 
Total Exp  8.62%  8.79%  7.70%  8.69%  8.51%  8.62%  
 
4.29.   This baseline metric indicates the level of the administrative costs and whether the 
administrative costs of the WTOMP  are in the desired range. The data above suggests stable ratio 
(around 8 %) of the administrative costs of the WTOMP  over the last years . The data used here are 
estimates as a full appreciation of the costs can only be known once the current contract is closed 
out due to profit margin calculations based on the full contract period. The exact methodology for 
a metric like this would need to  be defined and validated. For example, this does not include costs 
of Secretariat staff administering the WTOMP, but the information here provides an illustration of a 
possible approach.  WT/BFA/W/406  
- 31 - 
  Table 18 Health Plan Costs Relative to Budge t (Members' Contribution)  
Year 2010  2011  2012  2013  2014  2015  
WTO's contribution  6,652,965  6,774,717  6,912,894  7,324,250  7,500,272  7,534,820  
WTO budget  194 million   
196 million   
196 million   
197.2  million   
197.2  million   
197.2  million  
Share in the W TO budget 
(%) 3.4%  3.5%  3.5%  3.7%  3.8%  3.8%  
* Share in WTO budget adjusted for the increase in the Reserve Fund of the Health Plan  
 
4.30.   This baseline metric of Health Plan Costs Relative to Budget (Members' contribution) shows 
the proportion of WTOMP  to the W TO budget. WTO contribution to the Health Plan increased by 
CHF 0.9  million within 2010 -2015. It was indicated that share of WTO contribution is rising from 
3.4% in 2010 to 3.8 % in 2015. Increase is negligible if adjusted for increase in reserves (3.5 %). 
Table 19 Level of Health Plan Contribution of a Competitive Employer  
Year 2010  2011  2012  2013  2014  2015  
Contribution  6,652,965  6,774,717  6,912,894  7,324,250  7,500,272  7,534,820  
Expenditure per year  12,040,822  11,962,400  13,785,443  12,680,000  13,142,859  13,084,528  
Share of WTO 
contribution (%)  55.25%  56.63%  50.15%  57.76%  57.07%  57.59%  
 
4.31.   Level of Health Plan Contribution of a Competitive Employer indicates the level of WTO 
contribution to total Health Plan expenditure and whether it is in the desired range. Share of WTO 
Contribution in Total Expenditure is steady in time and comparable or somewhat below that of 
other international organizations. (See Table 2 Comparison with other IGOs on Share of Premiums 
Payable ) It fluctuates between 50 and 58 % and it is rather stable and close to 58 % in recent 
years. It is implied that the WTO Contribution share is closer to 50 % if all health costs (including 
those not reimbursed) are included.  
Table 20 Health Plan Costs a nd the Ageing Population  
Year 2010  2011  2012  2013  2014  2015  
Long-term care 
reimbursements (CHF)  434,666  471,967  414,587  418,753  370,636  347,448  
Total Reimbursements  10,672,438  10,911,177  12,723,459  11,578,198  12,024,763  11,957,014  
Long-term care 
reimbursements (%)  4.07%  4.33%  3.26%  3.62%  3.08%  2.91%  
Population 65+ (%)  12.82%  13.50%  14.12%  14.80%  16.10%  16.70%  
 
4.32.   The purpose of this metric, Health Plan Costs and the Ageing Population, is to identify 
whether the ageing of the insured  population is a threat to the WTOMP . Ageing may affect the 
health Plan in at least two ways: beneficiaries will be more numerous and they will claim benefits 
over a much longer period than at present. Share of long term care (home nursing and 
institutiona l care) expenditure is decreasing from 4.07 % in 2010 to 2.91 % in 2015. Share of 
population 65+ increases steadily but is still smaller than in the Swiss population (17.9 %) and 
roughly the same as in population of Canton of Geneva (16.5 %). 
4.5  Creation of a Fun d 
4.33.   Regardless of how additional resources are identified and generated for the Medical Plan, 
any ambition to partially fund the ASHI liability will require the creation of a reserve fund. A fund 
will also require important practical decisions to be made wit h respect to how such resources will 
be managed and under what circumstances they could be used. These are specific issues which 
will require changes in current governance arrangements and budgeting approaches. Therefore, 
these are important elements of th e strategy for the long term sustainability of the WTO's medical 
insurance plan. These elements of the strategy are discussed in the section on Governance.  
4.34.   The Strategy proposes to eventually use the current accumulated budgetary surplus as the 
foundation of an ASHI reserve fund that could be used to progressively absorb extra -cost 
generated by the ASHI portion of the medical insurance costs. This could be done without 
prejudice to Members' decisions about future unused budgetary allocations. However, it is  most WT/BFA/W/406  
- 32 - 
  pressing to establish a fund first for the purposes of capturing any potential savings that can be 
realized as a result of cost control and cost sharing measures implemented by the WTO 
Secretariat.  
4.35.   During the first several years where the extra -costs are potentially manageable, the fund 
would generate income (if invested) until a decision was taken to use the resources to mitigate the 
budgetary impacts of ASHI. Other sources of funding and savings (e.g. unused budget allocations) 
would additionally au gment the fund. However, in the absence of additional measures the fund 
would eventually be diminished depending upon how aggressively it was used to off -set future 
budget impacts.  
4.36.   As it would not be anticipated to draw on funds in a WTOMP/ASHI reserve fun d in the 
immediately foreseeable future, the WTO Secretariat  would make specific proposals to the CBFA 
for drawing on funds. This is similar to the mechanism established for the Building Renovation 
Fund established by Members in 2015.  
4.6  Funding Oversight  
4.37.   Contributions to a WTOMP fund would be made according to a framework recommended by 
the Committee on Budget Finance and Administration (CBFA) and endorsed by the General 
Council.  
4.38.   The oversight for the WTOMP fund will be shared between WTO Management and the M IMC. 
As with the WTOPP Management Board, an important obligation for the WTOMP Governance 
Structure will be periodic reviews of the funding framework to ensure that resources set aside for 
the WTOMP are sufficient to meet the obligations to be funded when the benefits are actually paid. 
The WTO Secretariat  should therefore undertake periodic valuations of WTOMP assets and 
liabilities, based on the actuarial assumptions and methods it shall have adopted with the input of 
a consulting actuary.  
4.39.   WTO Management will retain responsibility for the administration of the benefits that are 
financed through the WTOMP. Day -to-day responsibilities for these benefits are carried out on 
behalf of management by HRD and the claims administrator of the Plan. The WTO Secretari at will 
ensure that adequate and appropriate staffing resources will be available for the administration 
and governance of the WTOMP. The benefits offered to plan participants will continue to be 
reviewed by the MIMC and WTO Management in the context of th e overall WTOMP.  
4.40.   The governance mechanism for the WTOMP will require regular reporting to stakeholders, 
most notably the CBFA. The WTO Secretariat  would prepare regular reports (at least annually) to 
the CBFA and other stakeholders regarding the historical  experience and funding outlook for the 
WTOMP assets as well as the changing actuarial projections and whether these have been 
impacted by measures adopted within the WTOMP framework (benefits restructuring, efforts at 
cost containment, etc.). These report s would recommend actions deemed appropriate to ensuring 
the long -term viability of the WTOMP and would include periodic reviews of the actuarial methods 
and assumptions used.  
4.41.   In addition to the reports to the CBFA, HRD and MIMC would regularly receive dat a from the 
insurers to assist them in evaluating the need for potential changes to the Medical Plan and also 
recommend to the Director General resources for such other reviews and studies it deems relevant 
to the effective management of the WTOMP.  
4.7  Investme nt Oversight  
4.42.   The WTOPP oversight framework for the investment of assets is a reasonable basis for any 
investment of WTOMP assets. Both plans are responsible for post -employment benefits. The 
similarities between the two funds such as the very long -term nat ure of liabilities, relatively low 
and predictable liquidity demands, and appetite for risk are important. Likewise, the funding 
approaches for both will be a function of actuarial analysis, using similar methodologies and 
assumptions. These factors would weigh towards a broad harmonization of the investment 
strategies of the two plans as well as the management of the funds.  WT/BFA/W/406  
- 33 - 
  4.43.   There are two elements in the oversight framework, the first is the role of any management 
board or oversight committee to take policy  decisions on the investment strategy of the WTOMP 
funds and the second is the day -to-day management of the account and investments.  
4.44.    With respect to a policy oriented management and oversight entity, it is important to recall 
that as a legal matter, decis ions taken by the WTOPP Management Board are taken as fiduciaries 
of the pension plan. Decisions with respect to the WTOMP should be similarly taken as fiduciaries 
of the medical plan (particularly if participants in the WTOMP are eventually asked to contr ibute 
pre-funding for post -employment benefits).  
4.45.   Although there are good reasons for administering the WTOMP investments broadly in 
parallel with the WTOPP, any such parallelism should not be the product of an assumption that 
what's good for the Pension Pl an automatically is good for the Medical Plan. Rather, the investment 
governance process should be capable of separately deciding matters respecting each. Therefore, 
the oversight of the investments of the WTOMP and the WTOPP should remain distinct and mos t 
importantly the respective assets should not be co -mingled.  
4.46.   Whatever is ultimately decided, the WTOPP Management Board and Secretariat could have 
the authority to oversee the management and investment of the Fund's assets and to make and 
establish rules,  policies, and procedures for the investment, management, and safekeeping of the 
Fund's assets. They could also be called upon to advise the WTOMP governance on the funding 
framework and in particular on the investment strategy. The WTO Secretariat  could a ccept to use 
the same investment advisor as the WTOPP Management Board, but should consider periodically 
obtaining specific investment advice from the investment advisor.  
4.47.   Practically, the day -to-day management of two investment portfolios, even if broadly 
aligned and benefiting from certain synergistic efficiencies, will require additional administrative 
resources. Implementation of investment decisions requires specific kinds of expertise and 
important amounts of legal and administrative paperwork. Mistake s can be costly. Careful 
monitoring of transactions, portfolio reporting and fees is an on -going task. While some of these 
elements can potentially be outsourced, there will be resource implications for the organization.  
4.48.   Before implementing any recommendat ion to expand the WTOPP Management Board's 
mandate and the mandate and resources of the WTOPP Secretariat to also cover managing the 
WTOMP funds, the WTOPP Management Board, which reports directly to the General Council, will 
need to be consulted. It will also be necessary to amend the WTOPP regulations and rules to 
accommodate any shared responsibility for investment of WTOMP assets.  
4.49.   We seek the Member's input and cooperation in the development of some of these 
elements. We note, in particular, that the CB FA would need to be involved in providing the funds, 
setting forth a general framework within which the fund would operate, approving any changes 
required to regulations, and assisting in locating sufficient resources for the effective management 
of the fu nd and the WTOMP in general.   
  WT/BFA/W/406  
- 34 - 
 
5  SPECIFIC IMPLEMENTATION RECOMMENDATIONS  
 
Strategy Area Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 20182019 and 
Beyond
Strategy Development Procurement for new Plan Administrator
Regular Meetings of ASHI Strategy Team
Statistical modelling of expected Plan development
Review strategy with Monitoring Group
Review benefits and usage data with Plan Administrator to develop and monitor sound cost control measures 
Draft financing elements of strategy
Collect Specific Feedback from CBFA on Strategy 
Engage Consulting Actuary through Competitive Procurement
Develop Targets and KPIs with input from Actuary
Progressive Implementation of Strategy
Period Reporting to CBFA and other stakeholders
Review Staffing and Resource Needs Related to Strategy Implementation
Cost Control Implement New Negotiated Rates for Hospitalization
Implement Reasonable and Customary Benchmarks Worldwide
Exclude Future Secondary Dependants from Eligibility
Implement Incentive for Using Generic Medications or Purchasing Medications in France
Pursue Potential Existing Access of Plan Members to National Systems
Review Dental and Optical caps and coverage rates
Review 5 Year Eligibility Criteria
Explore expansion of Access to National Systems
Expand Incentives for treatment in lower cost areas
Regular On-going Review of Benefits and Cost Control
Cost Sharing Review deductible and maximum out-of-pocket in Switzerland
Review deductible and maximum out-of-pocket based on geographic location of services
Review subsidization levels and distributional equity of subsidies
Review premium calculation
Review basis of retiree premium calculation
Implement new Premium Structure
Prevention and Wellness Consider Screening Campaigns
Implement Expanded Access to Vaccines
Implement Smoking Cessation Assistance
Consider in-house Medical and Wellness services
Actively Promote physical fitness and healthy behaviours
Finacing Actuarial Reports on ASHI Liability and Funding Targets
Define Rules of Governance, Monitoring and Reporting of ASHUI Reserve Fund
Establishment of ASHI Reserve Fund to Capture Savings
Explore Pre-funding mechanism for staff
Propose Allocation of Acculated Budgetary Surplus to ASHI Reserve Fund
Incorporated ASHI costs for New Staff into Budget
 
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