RESTRICTED  
  
 WT/BFA/W/406/Rev.1  
 
14 February 2017  
(17-0894) Page: 1/34 
Committee on Budget, Finance and Administration   
 
  
WTO SECRETARIAT STRA TEGY FOR  
MANAGING THE WTO MEDICAL PLAN  AND ITS AFTER SERVIC E HEALTH INSURANCE  
LIABILITIES  
Revision  
 WT/BFA/W/406/Rev.1  
 
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  TABLE OF CONTENTS  
 
1   EXECUTIVE SUMMARY  ................................ ................................ ................................ . 3 
2   INTRODUCTION  ................................ ................................ ................................ ..........  4 
2.1   Background of the WTOMP  ................................ ................................ ............................  5 
2.2   Principle of the WTOMP  ................................ ................................ ................................  5 
2.3   Comparison with other IGOs  ................................ ................................ .........................  6 
2.4   The summary of the WTO Secretariat's research is contained in the tables below.  ...............  6 
2.5   The Sustainability of the WTOMP  ................................ ................................ ...................  7 
2.5.1    The ASHI Obligation  ................................ ................................ ................................ .. 7 
2.5.2    Budge t Implications  ................................ ................................ ................................ .. 8 
3   A PATH TOWARDS A MOR E SUSTAINABLE FUTURE  FOR THE WTOMP  ........................  13 
3.1   Cost Controls to improve the financial situ ation of the Plan  ................................ .............. 13 
3.1.1    A Comparison between WTO and LAMAL Premiums  ................................ ...................... 14 
3.1.2    Eligibility for participation in the WTOMP  ................................ ................................ .....16 
3.1.3    General elements of coverage  ................................ ................................ ................... 17 
3.1.4    Hospitalisation  ................................ ................................ ................................ ......... 18 
3.1.5    Specific Benefits  ................................ ................................ ................................ ......19 
3.1.6    Projected Impact  ................................ ................................ ................................ .....21 
3.1.7    Cost Sharing  ................................ ................................ ................................ ........... 21 
3.1.8    Prevention  ................................ ................................ ................................ .............. 22 
3.2   Funding changes to improve the financial situation of the Plan  ................................ ......... 23 
3.2.1    Level of Funding Ambition  ................................ ................................ ......................... 23 
4   GOVERNANCE, MONITORI NG AND REPORTING  ................................ .........................  24 
4.1   WTOMP Governance and Administration  ................................ ................................ ........ 24 
4.2   Human Resources needs  ................................ ................................ ............................. 26 
4.3   Actuarial Monitoring  ................................ ................................ ................................ ....26 
4.4   Key Perform ance Indicators (KPIs)  ................................ ................................ ............... 27 
5   FUNDING THE LIABILIT Y ................................ ................................ ..........................  29 
5.1   Creation of an ASHI Fund  ................................ ................................ ............................ 29 
6   SUMMARY CONCLUSIONS  ................................ ................................ ..........................  29 
7   SPECIFIC IMPLEMENTAT ION RECOMMENDATIONS  ................................ ...................  31 
 WT/BFA/W/406/Rev.1  
 
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  1  EXECUTIVE SUMMARY  
1.1.  This document proposes a strategic direct ion and practical first steps to steering the WTO 
Medical Plan (WTO MP) and in particular the  After Service Health Insurance (A SHI) benefit offered 
to eligible former staff towards long term sustainability. The strategy adheres to the 
recommendations of the  original ASHI Working Group Report (WT/BFA/W/370) concerning what it 
saw as the key elements of a strategy.  
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 S ecretariat proposes to analyse and address 
them.  
1.3.  Cost control is a particularly important part of the strategy. Indeed, some cost control 
measures have already been decided and have been  implemented with the transition to a new 
medical provider at the sta rt of 2017. A range of o ther measures are identified for further scrutiny 
with a view to implementation  following feasibility analysis .  
1.4.  A full range of 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 as 
identified in the ASHI Woerking Group Report: hospitalization, doctor's visits and medications. The 
document also targets where, geographically, the WTOMP incurs the vast majority of its cos ts: 
Switzerland and France.  
1.5.  The document also includes activity already undertaken since the adoption of the ASHI 
Working Group Report. To the extent a measure has already been considered the strategy includes 
a summary of the Secretariat's initial assess ment relative to potential impact including , timing for 
implementation  as appropriate . 
1.6.  In line with the recommendations of the ASHI Working Group Report, a clear organisational 
and reporting structure has been established. The Deputy Director General ( DDG) responsible for 
Human Resources ( HRD) and Administration and General Services ( AGSD ) will provide oversight of 
the strategy on behalf of the Director General  (DG). Management and operation of the WTOMP  
obligations , including ASHI  will be the responsibilit y of the HRD and, consistent with the rules of 
the WTOMP , the Medical Insurance Management Committee (MIMC). HRD and MIMC will be 
advised by the Financial Management Service within the AGSD regarding financial and budgetary 
implications.  
1.7.  Furthermore, t he W TO Secretariat will provide an annual report to Members and WTOMP 
participants on the status  of the WTOMP, including ASHI,  that will include financial, actuarial, 
demographic and other indicators of the overall situation of the WTOMP . Over time, these repo rts 
will provide important information on the trajectory of the WTOMP  with regard to its sustainability 
and allow for appropriate planning as well as adjustment of the strategy whe re necessary.  
1.8.  A clear principle for the WTOMP has been established. The prin ciple 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 whi le 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 managin g the growth of costs of the WTOMP  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 
WTOMP ? 
1.11.   Here the strategy 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 participants . Additionally, this p rocess would also examine ways to 
                                                
1 Consistent with the WTO's obligations under the Headquarters Agreement with the Swiss authorities.  WT/BFA/W/406/Rev.1  
 
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  allocate the costs to be borne by participants  more equitably across salary levels so that more 
highly compensated participants  will likely pay more.   
1.12.   The WTO Secretariat believes it will be important to establish a mechan ism that will allow 
any budgetary savings that result from any cost control or cost sharing measures implemented to 
be captured and reserved in the interests of the future sustainability of the WTOMP. This will  
create the incentives for staff and the organ ization to behave efficiently and generate savings for 
the plan. Otherwise, such savings will simply pass to the budgetary surplus and potentially 
diverted to other uses  which would undermine the core objectives of this strategy . 
1.13.   Finally, the strategy look s at budget implications of the WTO Members contributions to the 
costs of the WTOMP . The strategy proposes a partial funding approach where unused budget 
allocations could be used to mitigate against the impact of  ASHI liabilit ies on future budgets. 
Additi onally, the WTO Secretariat  will start building future ASHI accruals into the budget for new 
participants  so that gradually over time the WTOMP  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 assets now that will help to mitigate the future financial impacts of 
operating the WTOMP . 
1.15.   A summary of ke y actions to implement  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 , including  ASHI, towards  sustainability.  
2.2.  The ASHI Working Group Report (WT/BFA/W/370) focused on the fact that the obligation to 
provide an ASHI benefit to retired participants  (and their families) creates a financial liability for 
the Organizat ion and because the WTO is a relatively young organization, the evolving 
demographic profile of the Organisation will result in particular challenges in terms of the 
sustainability of the WTOMP . 
2.3.  The ASHI Working Group had concluded that the demographic evo lution in the profile of the 
WTOMP  participants  - where the number of retirees is projected to increase over the years while 
the level of active staff participants  is projected to remain constant  - will lead to a future liability 
and budgetary implications  that will not be financially sustainable. For example, left unaddressed , 
the budgetary costs of the WTOMP could 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 ASHI Working Group Report  observed that the provision of after service health insurance 
by the WTO, and international organizations in general, is a long established practice driven in part 
by the fact that staff members may not have ac cess to other post -employment medical coverage  
when they retire from these organizations .  
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 remain active until this strategy has been positively noted  by the CBFA.  The 
Monitoring Group provided input of WTO Members of the course of the strategy’s development.  
2.6.  This document is intended to set a strategic direction that  will address the long term 
sustainability of the WTOMP , including the ASHI benefit offered to eligible former staff. The 
strategy addresses the recommendations of the Working Group Report concerning what it saw as 
the key elements of a strategy. Although the ASHI Working Group focused on ASHI, the WTO WT/BFA/W/406/Rev.1  
 
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  Secretariat  is of the view that to appropriately address the ASHI issue , parallel actions must be 
taken with regard to the overall WTOMP with particular regard to the ASHI aspects of the WTOMP .2 
2.7.  There is no e asy solution  to the challenge of ensuring that the WTOMP can be sustainable. 
The multi -faceted strategy outlined here will need to evolve and be methodically reviewed as it is 
implemented over time.  
2.1  Background of the WTOMP  
2.8.  Since 1949 the Organization (orig inally 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 establish 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 WTOMP  provides comprehensive sickness and accident coverage for staff members, 
retirees4 and their dependants.5 The structure of the benefits, the level of the premium, and the 
level of contributions are determined by the Director -General upo n recommendation of the Medical 
Insurance Management Committee. The MIMC is a "joint body" comprised of representatives of the 
Staff Council, the Retirees Association, and those appointed by the Director -General. The Human 
Resources Division administers th e WTO Secretariat 's relationship with the WTOMP  provider and 
provides the Secretary to the MIMC.  
2.2  Principle of the WTOMP  
2.11.   The current WTOMP  has been designed consistent with the fundamental principles of 
inter-generational solidarity and distributional equit y while bearing in mind the need for the WTO 
Secretariat  to offer a competitive benefits package. Therefore, the WTO Secretariat  is determined 
to ensure that the basic coverage will be the same for everyone participating in the WTOMP  while 
the financial bu rden may be distributed among the participants and the WTO in a way that takes 
into account the financial capability of the 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 that 
would provide greater clarity on the objectives of the ASHI benefit, the WTO Secretariat  has 
proposed the following statement  for the WTOMP including ASHI . 
                                                
2 Therefore, references to WTOMP and ASHI are both variously found in the document. The choice of 
which reference is used will usually dep end on the emphasis in a particular context.  
3 Article 16.3 states, "[t]he officials of the Organization shall not be subject to the Swiss scheme for 
compulsory insurance against accident to the extent that the Organization offers them equivalent protectio n 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 are 
mandatorily enrolled in upon employment states that membership i n 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 an d 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.  
5 Article 4(c) of the Internal Rules states that those who are dependan ts of staff members and retirees 
may also enrol in the Plan. These are:  spouses, children up to age thirty or irrespective of age if determined to 
be physically or mentally disabled either permanently or for a period expected to be of long duration, 
second ary dependant (if insured prior to 31 December 2016). Article 4(d) also provides that surviving spouses 
and divorced spouses may remain on the Plan if they were insured at the time of the death of or divorce from 
the staff member.  
  WT/BFA/W/406/Rev.1  
 
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  2.13.   The principle of the WTOMP , including ASHI  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 package of the WTOMP is broadly comparable  to and competitive with the 
medical benefits provided by oth er international organizations  in the Geneva area.  Annex 1 and 
Annex 2 contain  tables summarizing comparisons of benefits and premium contributions of other 
international organizations.  
2.15.   The other IGO's ar e also dealing with the issue of how to manage the ASHI liabilities 
associated with providing a medical plan with benefits for retirees. Many international 
organizations (and governments) have been studying the issue and developing various approaches 
to ma naging 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, t he Inter -American 
Development Bank (IADB), the IMF, the OECD and the World Bank for examples of how 
post-employment benefit liabilities are funded and managed.  (Table 1 and Table 2 below)  
2.4  The summary of the WTO Secretariat's  research is contained in the tables below.  
Table 1 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 adviso ry investment 
committee  
WIPO  6% payroll charge (no staff or 
retiree participation)  plus ad hoc 
payments/revenue based on funds 
available, including investment 
income  Advisory Committee 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 Financial Resources 
Management Department (FRMD) 
that advises the Secretary General 
on financial resources management  
 WT/BFA/W/406/Rev.1  
 
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  Table 2 Other International Organizations  
Organization  Funding mechanism  Funding oversight  
IADB  [awaiting clarification]  governance of the post -retirement 
benefits account is shared betw een 
the finance and human resources 
departments  
IMF Incorporated into the budget since 
1994 when accounting rules 
changed. Contributions shall be 
made taking into consideration 
periodic 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 invested under the 
responsibility of the Management 
Board of the Pension B udget 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 valuations 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 structures and no clear best practices can be discerned from the range of f unding 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 WTOMP  
2.18.   There are two main aspects that affect the sustainability of the WTOMP  and they ar e 
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 , including ASHI  and how those costs are expecte d 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 entitled to after service health insurance 
coverage if they satisfy certain criteria. Similar to o ther employers ’ experiences, the WTO observes 
that the actual cost of such benefit s has been more than originally anticipated . This can be 
attributed to rising life -expectancy and a general misunderstanding of the difference between 
current costs (pay as y ou 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 WTOMP expenditure , 
including ASHI,  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 current discount rate) that 
the WTO is obligated to reflect in its financial statements each year.  As was the case for the WTO, 
this aspect gained attention as international organisations adopted the IPSAS standard.  This 
liability is currently unfunded and would require significant  increases in funding to o ffset in the 
short to medium term. Even with a strategy to address this 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/Rev.1  
 
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  2.21.   The Organization must plan appropriately for the future and for this purpose the strategy 
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 recognizin g these 
costs is an accounting requirement for complying with IPSAS, the accounting standards do not 
prescribe how the liability should be funded. Key decision s will include  the extent to which these 
costs will be partially pre -funded to offset the liabili ty 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 c ontribution and that paid by 
the participants - are used to cover the costs of claims in a given year. Using this as a baseline, 
the WTO Secretariat  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 impl ications for the 
budget over a 20 year horizon.  
2.24.   An Aging Population: The WTO Secretariat projected the population of the WTOMP  over 
a 20 year horizon, based on the 2015 population of active (fixed term and regular posts), and 
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 po pulation. In particular, the number of insured 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 3 Current and Estimated Number of Beneficiaries  
Year ALL Active  Retiree  Active staff policy holders  Retired staff policy holders  
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 to note that WTO retirees in 2035  will be on average  5 years  older than 
in 2015. On average, in 2015, a retiree plan member (including beneficiaries) is just over  65 years 
old and by 2035 the retiree plan member is expected to  be, on average, slightly over 70 years old.  
                                                
6 Only fixed -term and r egular staff on 31  December  2015 are accounted for. This is lower than data 
provided in Office(16)/72, pp.9 . WT/BFA/W/406/Rev.1  
 
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  Chart 1 Distribut ion of Beneficiaries by Age Group  
 
 
2.27.   Changing Demographics Lead to Higher Claims: Assuming medical consumption 
pattern s remain unchanged, the total medical claims of beneficiaries will increase due to:  
a. higher number of insured persons;  
b. increase d share of i nsured persons over age 65. Insured persons over 65 year old have, 
on average, higher 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 overa ll 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 from the WTO 
budget.  
Table 4 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 WTOMP  will Increase:  Under the current medical coverage 
scheme, a n increase in the number of insured persons will mechanically lead to higher 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 b udget to the costs of the 
WTOMP . This amount is expected to grow gradually 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 attributable to hiring entry -level staff where the 
rate of contribution from the WTO budget is higher than for the senior staff leaving on retirement.  
Table 5 WTO Contribution to the WTOMP   
(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 WTOMP  
is a pay -as-you-go plan. An increase of 36 % of medical c laims will call for an increase in the 
medical premium. As the premium is divided between the insured person and the WTO, there will 
be a consequential increase in the contribution from the WTO budget . However, the rate of the WT/BFA/W/406/Rev.1  
 
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  contribution  from the WTO bud get is not the same across all staff and retirees, but is instead 
currently linked to the grade or pensionable income, respectively.  
2.32.   Currently , on average 55 % of the premium for all insured persons  is drawn from the WTO 
budget . In the current simulations i t 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 
beneficiari es. Since the medical premium is projected to grow by some 36 %, by 2035, in the 
current "pay -as-you go" system, the medical premium would also need to be increased by 36 %. 
Table 6 WTO Annual Contribution to the WTOMP with Increase i n Reimbursement  
(000s CHF)  
Year All Active  Retirees  
2015  7,378  4,987  2,391  
2035  11,625  6,846  4,779  
 
2.33.   The 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.   Applying 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 the 
WTOMP with different  levels of inflation.  
Table 7 Estimated Annual WTO Contribution to  the WTOMP  
(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 mean 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 project ed 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 compo und 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 a ssumptions 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 WTOMP  is performing better or worse than 
expected. H owever, 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 8 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 an d regular staff for "Active" . WT/BFA/W/406/Rev.1  
 
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  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 9 Aggregated Budget Projectio ns with 5% Premium Reduction  
2. Projection 2035 with lower premium ( - 5%) 
2a. Taking into account higher number 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 inflation  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 estimat ed year by year budget evolution.  
Chart 2 Aggregated Budget Projections  
 
  
  WT/BFA/W/406/Rev.1  
 
- 12 - Table 10 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/Rev.1  
 
- 13 - 
 
  3  A PATH TOWARDS A MORE SUSTAINABLE FUTURE FOR THE WTOMP  
3.1.  The WTO Secretariat  recognizes that  any path towards a sustainable WTOMP while fulfilling 
the WTO's ASHI obligations 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. These elements of the 
strategy  will be addressed  in this section.  
3.2.  The types of changes  contemplated have legal implications for how they are implemented 
and additional human resources will be required to implement them . The recommend ed changes to 
the structure and financing of the WTOMP respect the legal rights of employees and retirees with 
respect to the terms of employment and the WTO's obligations under Article 16 of the 
Headquarters  Agreement.  
3.3.  While there is sufficient legal scope to implement necessary changes to the WTOMP , the WTO 
Secretariat is  approach ing the matter in a carefully considered manner ensur ing that the WTOMP  
participants have ample opportunity to engage with and par ticipate in the strategy process and its 
subsequent implementation.  
3.4.  The MIMC, consisting of representatives of WTO management, the staff and retirees , is the 
appropriate starting point for any consultation process. As part of the strategy development, the 
WTO Secretariat  also began  the process of consulting directly with affected persons.  For example, 
the WTO Secretariat  held "town -hall" meetings with the retiree's association and all staff members 
to explain the current situation , potential benefit changes  and the rationale behind them. The WTO 
Secretariat  will continue a broad consultation process as part of the on-going transition  to the new 
plan administrator as well when other significant changes are contemplated.  
3.5.  There is no single panacea that will ac hieve the goals of making the WTOMP  sustainable in 
the long term. Instead a variety of measures must be examined , and where appropriate, 
implemented  in three mutually reinforcing core areas: cost controls, cost sharing, and prevention.  
 
 
3.6.  Although each ind ividual change may not move the needle significantly , the implementation 
of several changes in concert  and over time  can have a significant impact. HRD with the advice of 
the MIMC and AGSD as required will address each of these areas continuously as part o f the 
Strategy.  
3.1  Cost Controls to improve the financial situation of the Plan  
3.7.  An important element of the strategy is to control medical costs. It should be noted that the 
expected result of implementing any cost control measures is to provide for a more ef ficient and 
better use of existing funding in a manner that will help to mitigate future budgetary demands and 
future liabilities.  WT/BFA/W/406/Rev.1  
 
- 14 - 
 
  3.8.  The ASHI component of the WTOMP  is faced with certain demographic realities, namely a 
steadily aging population and a slow in crease in the total number of participants. Therefore, even 
after taking cost control measures the absolute costs of the WTOMP  will nevertheless increase as 
seen in the section on budgetary implications above. Thus, the objective of any cost control 
measur es adopted will be to slow the rate of increase in these costs . This will contribute  towards 
the overall goal of managing the liability  and support the sustainability of the WTOMP . 
3.9.  Sections 3.1.2 through 3.1.8 look at the cost control ideas identified in t he Working Group 
Report and a few additional measures identified by the Secretariat . 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 overlappin g proposals are evaluated together.  
3.10.   When analysing what cost control methods are appropriate to implement, it is noteworthy 
that the costs of the WTOMP, including ASHI, have been relatively stable in recent years. As 
premiums are based on reimbursements in  the previous period it can be demonstrated that 
medical expenses have not been 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 11 Annua l 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 11 above shows fluctuations of Premium in 2010 -2017 and compares it with 
Geneva LAMAL7 premiums. The WTO premium is higher than the Geneva premium, but is not 
directly comparable in absolute terms. S everal  benefits covered by the WTOMP are not included in 
the LAMAL premium, but rather in a separate complementary insurance (e.g. dental and optical 
benefits  or semi -private/private rooms ). 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 11 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 inflation" 
(difference between expenditure=premium and general price increase) is below the 2.5 % 
stipulated in actuarial evaluations.  
3.13.   This is not to suggest that the WTOMP is immune from the larger trends in medical costs 
observed in Switzerland or  most other parts of the world. However, this does suggest that the 
assumptions about medical inflation are likely prudent and reasonable.  
3.14.   The relative 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 participants  covered by the WTOM P 
increased by more than five per cent and also became on average older. These data show that the 
                                                
7 LaMal = Loi fédérale sur l’assurance -maladie ; legally required basic medical insurance coverage for 
residents of Switzerland; premiums vary betwe en cantons, sub -regions and insurance providers.  WT/BFA/W/406/Rev.1  
 
- 15 - 
 
  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.  
3.15.   Moreover, as can be seen from the reimbursement data from the past five years, in the case 
of the WTO, hospitalization, regular doctor's visits, and medications are the major drivers of the 
costs.  The WTO Secretaria t has prioritized its initial efforts at cost control on these key cost 
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 Categor ies of Medical Expense claims in WTOMP 2012 -2015  
 
3.16.   These are core benefits that require maintaining at a certain level to ensure the WTO is 
meeting its obligation to provide affordable quality care . Nevertheless, a core element of the WTO 
Secretariat 's strategy is to minimise the rate of cost increases and maximise efficiencies.  
3.17.   In 2016, the WTO Secretariat  conducted a procurement process for a new insurer and 
administrator of the WTOMP. The Technical Evaluation Committee comprised representatives 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: elig ibility for participation in the 
WTOMP , 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.  
3.18.   It is important to note that good deci sion making requires good data. As part of the new 
insurance contract, the WTO Secretariat  will now receive quarterly reports from the administrator 
of the WTOMP  which will enable it to continue its evaluation of the benefit structure. The MIMC 
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 the WTOMP , but also 
benchmark the WTOMP  against the Swiss system and other international organizations.  WT/BFA/W/406/Rev.1  
 
- 16 - 
 
  3.1.2   Eligibility for participation in the WTOMP  
3.19.   Some  of the proposed measures address cost controls by seeking to limit the probability of 
high cost or high risk WTOMP  participants . The suggested measures were:  
a. Alter eligibility criteria for the ASHI part of th e WTOMP  – increase years of service to be 
eligible (currently five years);  
b. For new entrants to the WTOMP, restrict insurability to their primary dependents ; 
c. Review the possibility to have a divorced spouse to stay indefinitely in the WTOMP . Only 
provide co verage 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 WTOMP ; and  
d. Review the possibility to have a retiree spouse affiliated i nto the WTOMP , i.e. if the 
marriage takes effect after retirement.  
3.20.   As part of the strategy, the WTO Secretariat  has already examined the first three of these 
elements.  
3.21.   With respect to increasing the required years of service, the WTO Secretariat  found that  
only four  staff members have had more than five years, but less than ten years of service when 
they retire d. With the recent trend for most hiring to take place at the entry level  this is not 
expected to change in a material way . Additionally, years of se rvice in another international 
organization count towards the five (or possibly ten) years to qualify for the benefit. Therefore, 
even if a decision was taken to  extend the required years of service, it is unlikely that many staff 
members would be eliminat ed from the ability to participate in the WTOMP . 
3.22.   Looking at the WTO's  comparator organizations it can be seen that UN and ILO have a ten 
year limit while WIPO and WHO have the same rule as the WTO. As such, t he 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 phasing in of  the level of WTO contribution as years of 
service increase  so that the standard subsidisation would only be provided after the 10  year 
period . 
3.23.    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 thei r WTO pension. For instance, s omeone who retires 
from the WTO after only five years of service may 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 re tiree income for purposes of determining the level of the WTO contribution to the 
premium (see section on cost sharing below).  
3.24.   Prior to 2017 staff members were able to ensure their  secondary dependants8 on the 
WTOMP.  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 Director -General  has 
approved a recommendation  that no new secondary dependants be allowed on the WTOMP  after 
1 January  2017. This will  not affect any secondary dependants (twenty six in number) currently on 
the WTOMP . 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 t he 
average reimbursements for secondary dependants and the premiums they pay. (Note that the 
WTO makes no contribution to the premiums of secondary dependents.)  
3.25.   Currently, divorced spouses may remain on the WTOMP , but they must pay the full 
unsubsidized pr emium and they may not add any future dependants. Over the past ten years the 
                                                
8 Staff Rule 106.13(d) defines secondary dependents as the mother, father, sister or brother for whom 
the staff member provides one half or more of the financial support. For a sibling to qualify they must f ulfil the 
same age and school attendance requirements established for a dependent  child or physically or mentally 
incapacitated for substantial gainful employment.  WT/BFA/W/406/Rev.1  
 
- 17 - 
 
  WTO has had five divorced spouses on the WTOMP . They are such a small amount of the 
population that the WTO Secretariat  does not have data addressing their expenses as a sub -group 
(as it has  for secondary 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.  
3.26.   The MIMC has not yet addressed the issue of new retiree spouses. However,  the MIMC will 
address this in 2017.  
3.1.3   General elements of coverage  
3.27.   The WTO Secretariat  has examine d several aspects of the general coverage  of the WTOMP . 
In particular:  
a. Examining ways to have retirees use their national health insurance systems (require 
first reimbursement from that system, only allow those retirees who cannot get into such 
a national plan to stay in the full WTO insurance);  
b. Provide "core" coverage and negotiate rates for staff members who want complementary 
additional coverage; and  
c. Restrict  the world -wide coverage benefit for retirees who reside outside Switzerland and 
France.  
3.28.   With respect to national health systems. The WTO Secretariat  recall s that many retirees are 
not eligible for their national systems because of their long employment ou tside their country. 
According to the Retirees Association 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 will take time. 
The WTO Secreta riat will need the expert help of WTOMP provider  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 nat ional health system 
to make initial claims from that system before making claims from the WTOMP . The WTO  may also 
be able to benefit from experience of other international organizations that have implemented or 
are attempting a similar process.  
3.29.   With respec t to "core" coverage. The assumption is that any defined core benefits would be 
less than the current coverage. However, the WTO Secretariat  notes that WTO coverage is broadly 
comparable to that of the WTO's comparator organizations  and not outside the nor ms of what is 
reasonably considered to be quality benefits for working professionals . The WTO Secretariat  
intends to do a further analysis of how the WTOMP 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.  
3.30.   Finally, on world -wide coverage, the above are likely to have a more measurable impact 
as 87% of the retirees are in Switzerland and France. Similarly 92 % of the WTOMP's  medical 
expenses are in Switzerland and France.  WT/BFA/W/406/Rev.1  
 
- 18 - 
 
  Chart 4 Plan Expenses by C ountry9 
 
 
3.31.    Therefore, the world -wide coverage is not seen as a meaningful cost driver of expenses 
generally or for retirees specifically. 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.10 Indeed if staff and retirees 
were incentivized to go outside Switzerland for me dical care to a greater extent than today, it 
would likely be less expensive and thus world -wide coverage may actually save the WTOMP  
money. The potential to control costs through treatment outside Switzerland will be addressed in 
the specific benefits sec tion below.  
3.1.4   Hospitalisation  
3.32.   As noted above, the biggest cost driver of the WTOMP  is hospital related expenses (medical 
treatments, bed and board, etc.). Indeed, the ASHI Working Group Report identified several items 
related to hospitalisation that have bee n 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 hospitalizations that require pre -approval from the 
health insurance;  
b. encourage pub lic 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 customary" charges both for local and 
world -wide coverage; and  
d. examine and a djust reimbursement rates for private room coverage.  
                                                
9 Please note that while all the countries in the legend are in fact included in the chart, most are 
obscured and overlap each other as they bump along the very bottom of the chart. Historically, expenses in 
countries other than Switzerland and France have been negligible from a policy -making perspective.  
10 See http://www.oecd.org/els/health -systems/health -data.htm . WT/BFA/W/406/Rev.1  
 
- 19 - 
 
  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 
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 procurement 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  which may deliver the positive 
impact desired . Because of the special negotiated rates that are often discounted on the published 
ones, in certain in stances the private hospital may actually be cheaper than the public one. 
Therefore, the MIMC has recommended leaving the local benchmark rate to be the Hôpital de La 
Tour (where possible11) using the new negotiated rates. The MIMC is committed to re -examin ing 
this and considering other options, such as a benchmark rate based on an average of area costs  as 
new data becomes available concerning the usage of different hospitals and the effect of the 
negotiated rates.  
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 the Geneva rate.12 
3.37.   With respect to private room coverage , the MIMC examined the issue in light of the new 
negotiated rates as well and if inclusion of private room coverage can incentiv ise plan participants 
to go to lower cost areas. Therefore, the coverage  will be capped  at CHF 700 per day for the room 
rate. P roviding this coverage, but with a cap is consistent with WHO and WIPO. Both those 
organizations set the cap at CHF 850 per day . It is to be  noted that this cap is less than the 
published rate for a semi -private room at Hôpital de La Tour. It should be not ed 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 Doctor's fees), shorter hospitalizations in a private room typically results 
in lower costs to the WTOMP  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 
specific benefits were calibrated appropriately.  
a. For specific medical treatments, require referral from general practit ioner, before 
consulting specialists.  
b. Discounts or increased coverage if using "in network" versus out of network providers. 
(The costs of using "in network" providers can be u p to 20 % lower when compared to 
the standard costs in some markets . This is due to agreements on medical care and 
rates between service provider networks (general practitioners, specialist doctors, 
medical and radiology centres, test laboratories, opticians, public hospitals).  Therefore, 
providing incentives to use "in network" provid ers can generate relative savings for the 
Medical Plan.)  
c. Optical coverage: decrease the cap and limit coverage for frames to only 1 pair every 
two years . 
d. Dental: decrease the cap.  
e. Increase reimbursement  % or decrease deductible for certain benefits (optica l, dental, 
other) that are undertaken in areas significantly cheaper than Switzerland.  
f. Travel benefit for insureds who seek medical treatment in another location that is 
significantly cheaper than that in Switzerland.  
                                                
11 There are some highly specialized emergency type services that are only available at the Geneva 
public hospital. Therefore, it will be the reference for the bench mark rates for those services.   
12 In certain special circumstances the Geneva rate can be exceeded.  WT/BFA/W/406/Rev.1  
 
- 20 - 
 
  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 Secretariat  has not 
identified if savings could be achieved through this process. Indeed, there could be an additional 
cost of the visit to the general  practitioner. The MIMC intends to explore the feasibility of requiring 
pre-authorisation for specific tests or treatments often conducted by specialists as the more 
targeted and cost -effective approach. However, the WTO Secretariat  will need a clearer pic ture of 
the data to proceed and to name the specific tests and treatments.  
3.40.   The analysis showed that both the prior provider of the WTOMP  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 
improve 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 mobile app that plan 
participants can download onto their smartphones to identify network providers. The new provider  
has also agreed to pursue direct billing ar rangements 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 WTOMP  and will return to this issue if these measures are not 
effective.  
3.41.   The MIM C examined a proposal to lower the cap on optical from 600 CHF to 500 CHF, to 
provide for a 2 -year carry 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 t he benefits 
with the lowest coverage rate (68  per cent in 2014 and 71  per cent in 2015). Additionally, the 
current data did not enable the MIMC to understand how much of reimbursements were attributed 
to frames, lenses, or contact lenses. The MIMC will con sider the matter further when  it receives 
the data on usage of the benefit for frames.  
3.42.   For dental coverage the MIMC examined the coverage rate and cap. The current benefit 
is 75% coverage with a cap of CHF 3000 per year with a carry forward into the follow ing 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. Given the high cost of dental care in Switzerland, 
the MIMC recognises that there could be an opportun ity to reduce costs in this area by 
incentivising (e.g. through increased coverage) uptake of provision in lower cost jurisdictions, 
particularly neighbouring France. Therefore, the MIMC will re -examine this issue after it has been 
able to address the issu e of differential coverage rates based on geographic location with the 
insurer.  
3.43.   The MIMC 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 adequat e 
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 provider  on this matter. 
The WTO Secretariat  would foresee that such discussions would b egin to take place after the 
implementation period of the new contract, i.e., the latter half of 2017. The new provider  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 have such changes take effect in the following quarter.13 
3.44.   Similarly, the WTO Secretariat  is looking at other incentives, such as a reimbursement for 
travel. Again, the speci fic areas and levels of reimbursement would have to be defined with the 
WTOMP provider . The WTO Secretariat  notes that it has already implemented one change in policy 
to incentivize travel for lower cost treatment.  As of 1 February 2017 a staff member may be 
authorized to use sick leave rather than annual leave for travel time to and from another location 
for treatment if, inter alia, the cost of treatment would be significantly reduced than that in 
Geneva.14  
                                                
13 The period might be longer if the change necessitated significant alterations to the insurer's IT 
system, for example.  
14 Administrative Memo No. 977, para . 38. WT/BFA/W/406/Rev.1  
 
- 21 - 
 
  3.45.   There is currently a long term care benefit in t he WTOMP , but only for institutionalisation in 
a nursing home or hospital. The WTO S ecretariat  is committed 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 ecretari at notes that increasing these benefits could cause a short term increase 
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 .15 
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 procurement. 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 Geneva negotiated by the service provider 
combined with other cost control measures could lower premiums by 5 % or more, i.e. medical 
expenditure would be r oughly lower by 5 % due to competition and economisation, the additional 
budgetary cost over 20 years for medical subsidy would be approximately CHF 1 74 million – a 9% 
decrease on the CHF 194  million estimated without cost control.16 Although  cost controls wi ll lead 
to a decrease in the projected growth of the expenditure, by themselves efforts to control costs  
would obviously not be sufficient  to offset the overall  increase s in the costs of operating the 
WTOMP . 
3.1.7   Cost Sharing  
3.48.   The Working Group also suggested th at 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 de termined for both staff members and retirees . 
d. Review the income calculation method for retirees . 
3.49.   In the context of the procurement for the new provider of the WTOMP the WTO Secretariat  
conducted an initial analysis of adjusting some cost sharing elements, namely the deductible and 
maximum out of pocket.  
3.50.   In the most recent years for which the WTO Secretariat  has data, the share of participants 
reaching the deductible is reasonable as it has a positive threshold (generally at or over 50 Per 
cent). Moreover, f or the same time -period approximately 18 % of claimants had claims less than 
CHF 500.  
Table 12 Deductible  
Year % reaching deductible  
2011 49% 
2012 54% 
2013 55% 
2014 56% 
 
                                                
15 See, for example, the Wall Street Journal article " How House Calls Can Cut Medical Costs " 27 
September 2015.  
16 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/Rev.1  
 
- 22 - 
 
  3.51.   Based on the available data 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 actually be less than those that sou ght more expensive treatment. This can be seen in the 
following example of two plan participants seeking the same treatment, one in Switzerland and 
one in France.  
Table 13 Deductible in Relation to Coverage Share  
 Treatment in Switz erland 
(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 getting the more expensi ve 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.17 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 MIMC expects to tackle th e 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 distribution of the costs am ongst 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 grade 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.18 It is expect ed that this 
analysis would be done in the course of 20 17. 
3.56.   The MIMC will also examine whether a mechanism can be created for staff members to 
themselves participate in pre -funding the ASHI aspect of the WTOMP . However, before anything 
could be finalized a framework would need to be created to ensure that any s avings 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 section 5.1. It is important to 
recall that increasing medical costs have a n impact on both the WTO budget and staff income.  
Cost-shifting to staff via changes in subsidation levels or prefunding contributions have real 
consequences for their take -home pay.  
3.1.8   Prevention  
3.57.   A primary mechanism for controlling costs is to maintain or i ncrease the "healthy" 
population that does not use the maximum benefits every year. A variety of measures can be 
taken to promote a healthy culture  and prevention  amongst employees  and retirees . The exact 
amounts of medical costs that have been avoided 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 discourag ement of unhealthy behaviours and promotion of 
wellness through in -house initiatives as well as through products offered by the provider of the 
                                                
17 See discussion of higher coverage in cheaper locations in 3.38.  e. 
18 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/Rev.1  
 
- 23 - 
 
  WTOMP . Moreover, they identified increased vaccination as well as other preventative screenings 
as potential are as where the WTO could have a positive impact on the rate of cost growth  These 
would also reduce absenteeism due to illness.  
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 not increase the premium but 
might  have a positive impact on long-term costs by preventing the onset of expensive diseases 
such as lung canc er, emphysema, measles, meningitis, etc... The  Director -General accepted the  
MIMC 's recommend ation to augment the coverage for vaccination and this took effect with the new 
contract on  1 January  2017.  
3.60.   In addition to these measures, prevention and wellness  will remain an important part of the 
Strategy. In 2017 the MIMC  hopes 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 co verage for care at home rather than in an institutional setting.  
3.2  Funding changes to improve the financial situation of the Plan  
3.2.1   Level of Funding Ambition  
3.61.   The Working Group Report approved by the CBFA examined alternative approaches to 
funding the  WTOMP, in cluding ASHI . As the accrued (accounting) costs of the WTOMP 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 WTOMP /ASHI reserve fund where assets, including 
savings realised from implementing cost controls, could be set aside for future use.  
3.62.   From a budgetary funding perspective, the most ambitious  objective is a full funding 
scenario . This approach would reflect in the budget the impacts of fully prefunding th e costs 
implied by the commitment to current staff of access to the WTOMP  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 year s, but would 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 acti vely funding 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 du ring a given 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 i n the volume of funding that will ultimately 
need to be diverted from the regular WTO budget to cover  the WTOMP – and in particular ASHI 
liabilities as they come due. Not funding the accrued costs of a given period therefore passes these 
costs to future bu dgets, rather than covering them by the contributions of Members corresponding 
to the period they were incurred.  
3.66.   There are two general approaches for an organization to begin funding its ASHI liability. 
Neither of which is mutually exclusive. First, the M embers may set aside ad-hoc amounts when 
available such as from unused budget allocations  at the end of a biennium . Second, the 
organization can establish  a "pre -funding" mechanism that will systematically (as opposed to on an 
ah-hoc basis) incorporate  amounts for ASHI into the budget. For example based on a percentage 
of the payroll.  WT/BFA/W/406/Rev.1  
 
- 24 - 
 
  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 
savings that result from cost control measures is an important element of the funding model. 
Otherwise, such savings will simply pass to the budgetary 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 ASHI benefits contained in 
the WTOMP.  
3.68.   Currently, only the pay -as-you-go costs of the WTOMP  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 WTOMP  would, over a very long time, slow the growth in the 
liability and eventually, once the WTOMP  had fully matured, start reducing the lia bility. It is a 
variation on a partial funding  approach that the WTO Secretariat is proposing as part of the 
strategy.  
3.69.   Under the model briefly described in the previous paragraphs, it would be assumed that the 
budget line for medical expenses would not be reduced even if over a short term period the pay as 
you go costs might be less than estimated. Given the demographic trends it is not anticipated that 
there would be any sustained period during which current costs would be declining. In addition, 
the strat egy foresees gradually increasing the budget line to begin to reflect better the ASHI 
promises to new staff. In any event, it is planned that a budgetary savings on the medical 
insurance line in any one year would automatically default to the ASHI fund to help mitigate the 
impact of future increases in costs on the budget.  
3.70.   In order to make realistic projections on long term funding scenarios 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 
WTOMP/ ASHI study that would help to establish funding targets for WTO Members to consider. 
The consulting actuary would also provide period formal valuations t o update the funding status 
should a decision to set aside prefunding assets be taken. This aspect of the strategy will be 
elaborated further in section 4. 3 below on actuarial monitoring.  
4  GOVERNANCE, MONITORING AND REPORTING  
4.1.  Currently, the governance of th e WTOMP  and its benefits rests in the hands of a variety of 
actors within the Secretariat. A key element of the strategy is to examine ways to streamline 
governance while at the same time ensuring that the interests of both WTOMP participants and 
WTO Membe rs are adequately taken into consideration .  
4.2.  As part of good governance, and monitoring the WTO Secretariat will report regularly to 
WTOMP stakeholders, including Members through the CBFA. During the early stages of strategy 
implementation this would be an ticipated at least twice a year. Once the core elements of the 
strategy have been implemented there would be at least an annual reporting on an on -going basis. 
That reporting will cover actuarial projections, demographic and budget trends, and relevant Key  
Performance Indicators related to both implementation and impact.  
4.3.  Standard practice is for a full actuarial valuation to be done once every three years. 
Reporting would compare expected to actual experience across a range of key variables and 
assumptions.  In between full actuarial cycles the reporting would provide overviews of claims 
analysis, comparisons of premium evolution to consumer and medical inflation, and observations 
related to the demographic profile of WTOMP participants and beneficiaries.  
4.4.  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 costs and external cos t such as actuarial and 
investment services both for start -up activities and on an on -going basis.  
4.1  WTOMP Governance and Administration  
4.5.  The Director General is responsible for the WTOMP. This duty is defined in Staff 
Regulation  8.2 which states: The Director -General shall establish  a scheme providing for the WT/BFA/W/406/Rev.1  
 
- 25 - 
 
  coverage of medical expenses incurred by staff members and their families as a result of sickness 
or accident and reasonable compensation to staff members  in the event of service -incurred illness, 
injury or death. Coverage shall also be provided for sick leave, maternity leave or  parental  leave.   
4.6.  Staff Regulations are approved by the General Council and Staff Regulation 13.1 provides 
that the  General Council may amend the Staff Regulations . The amendment o f the Staff Rules is 
left to the Director -General so long as it is in accordance with the Staff Regulations  and without 
prejudice to the acquired rights of staff members under those Regulations  and Rules.  The Director -
General must inform the General Counci l of amendments to the Staff Rules . Amendments to the 
Staff Rules  carrying financial implications or creating new rights for staff members shall be 
approved by the General Council before their entry into force, except where they are the result of 
approved automatic mechanisms.  
4.7.  The Director General has assigned responsibility for the management and administration of 
the WTOMP to the Human Resources Division. Furthermore, the Director General is advised on 
important aspects of the WTOMP by the Medical  Insuran ce Management Committee, which 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 rol e is especially important in facilitating consultations with participants in 
the WTOMP in the context of potential changes to the Plan.  
4.8.  The Administration  and General Services Division is responsible for financial management 
services and provides data and advice to both HRD and the MIMC on matters related to the  
financial and budgetary aspects of the  WTOMP.  
4.9.  As mentioned  earlier, there are no clear best practices for the governance of 
post-employment benefit arrangements. Each organization has adapted to its  particular existing 
structures. Therefore, in the absence of best practices it is proposed that the WTO Secretariat  
build on existing structures rather than create entirely new layers of administration to handle the 
WTOMP/ ASHI situation.  
4.10.   Cost factors  and demographics  driving the ASHI liability  are inextricably linked to the 
management of the WTOMP as a whole. In that respect, monitoring  of the  sustainability of the  
WTOMP and corresponding reporting will be entrusted to HRD with the necessary advice from th e 
MIMC and from AGSD as required.  
4.11.   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.  
4.12.   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 WTOMP provider . The WTO Secretariat  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 co ntext of the overall WTOMP.  
4.13.   Building on existing WTO structures, the investment aspects  of an ASHI f und could be 
supported by  the WTO Pension (WTOPP)  and its Secretariat if such an arrangement would result in 
operational efficiencies . 
4.14.   However , there are distinctions between the WTOMP and the WTOPP which have 
implications for their respective investment frameworks. Therefore, while the WTO Secretariat 
suggests  aligning the financial management of an ASHI fund with the WTOPP portfolio, it would 
recommend reta ining separate control over the assets and separate oversight frameworks.  The 
WTOPP Management Board will also need to be consulted on any potential alignment of investment 
management.  WT/BFA/W/406/Rev.1  
 
- 26 - 
 
  4.2  Human Resources needs  
4.15.   Implementing changes to the WTOMP  as well as the  increased oversight and data analysis 
will require more dedicated staff from the Human Resources Division than in the past.  
4.16.   Initially, to help focus resources on managing the WTOMP, the WTO Secretariat  has created 
a Compensation, Benefits and Insurance te am 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 
managem ent and administration of the Medical Plan will be discussed in more detail below.  
4.17.   The WTO Secretariat  may also need to consider engaging dedicated legal resources for 
assessing the WTOMP , the appropriateness of any changes in terms of the guidance provide d by 
the ILOAT and the Headquarters Agreement, and negotiating any necessary modifications to the 
relevant contracts.  Additionally, if the proposed funding mechanisms are introduced additional 
resources will need to be allocated to assist in the administra tion of the fund.  
4.3  Actuarial  Monitoring  
4.18.   It is expected that the adoption of a strategic and administrative framework for the long 
term sustainability of the WTOMP will require that a consulting actuary be selected. This would be 
done through periodic compet itive procurement exercises. The following actuarial service 
requirements are anticipated:  
a. Provide recommendations regarding various contribution schedules to fund the plan and 
the levels necessary to maintain sustainable funding in the long term, using di fferent 
financial models and assumptions. This would include pay as you go and pre -funding 
approaches to financing the Plan.  
b. Perform sensitivity analysis of actuarial valuation results in order to show the effects of 
changes in the main actuarial assumptio ns (e.g. discount rate and medical cost trend 
rate).  
c. Set up a "best estimate" of the expected base level of medical claims cost scale of the 
Plan for the projection of future liabilities; recommend a governance approach towards 
monitoring the medical claim s, 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 contributio n rates to fund the Plan and 
high-level approach to consider financing alternatives. The periodic evaluation report 
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 a bove context.  
4.19.   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.  
4.20.   Once a strategy based on these analyses is finalized, the actuary w ould 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.  WT/BFA/W/406/Rev.1  
 
- 27 - 
 
  4.4  Key Performance Indicators (KPIs)  
4.21.   To monitor the WTOMP , KPIs can help stakeholders to understand how various aspects of 
the WTOMP  are evolving. The main KPIs will be derived from the formal actuarial valuations done 
to track the ASHI liability.  
4.22.   In addition,  the WTO Secretariat  can track a few  KPIs directly based on current baseline 
data. The exact KPIs  would likely change over  time as certain  KPIs are understood to be more or 
less useful and thus subject to modification or replacement.  
4.23.   Some 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  and particularly its ASHI aspects . This can be monitored to ensure what is 
planned is followed t hrough 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 . 
4.24.   KPIs can also relate more to the results of the strategy impleme ntation 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.  
4.25.   One specific aspect of strategy implementation for which the Sec retariat will track metrics 
relates to incentives for staff to generate "savings" for the Plan by changing their behaviour. For 
example:  
a. percentage of treatment expenses in Switzerland (does it decline and by how much and is 
there an increase in treatment  in lower cost areas (France) etc…)  
b. number of staff availing themselves of the new sick leave policy to travel and using the 
justification of cheaper care  
c. number of staff availing themselves of reduced deductibles or increased coverage rates in 
particula r areas if we manage to arrange that with Allianz  
d. number of staff and retirees claiming against national insurance and using WTOMP for top -
up 
 
4.26.   The WTO Secretariat  has identif ied a few  KPIs of both the strategy implementation variety 
and the overall impact variety.  More will be identified in consultation with the actuaries.  
Nonetheless, there are some baseline metrics that will be useful for evaluating the information 
contained in the KPIs relative to the WTOMP's starting situation and starting assumptions. The 
presentation here is indicative of some of the base line data to be tracked.  
4.27.   Baseline Metrics include:  
a. Health Plan Expenditure and Premium Evolution  (including specifically increases in ASHI 
costs).  
b. Total Health Plan Costs Relative to Budget (Members' contribution) . 
c. Level of Health Plan Contribution for a Competitive Employer . 
4.28.   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 i mpact and 
eventually set targets  for managing the liabilities and moderating the budgetary impacts . 
4.29.   The Secretariat will also include in its reporting to stakeholders during the initial period of 
strategy implementation, regular updates on the performance relative to action steps identified in 
the strategy.  WT/BFA/W/406/Rev.1  
 
- 28 - 
 
  Table 14 Medical  Plan Expenditure and Premium Evolution  
Annual Expenditure and Adult Premium (Index 2010=100)  
 WTO Total 
Health 
Expenditure 
per year 
(CHF)  WTO  Geneva*  Switzerlan d * 
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%19 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, standard franchise.  
 
4.30.   This baseline metric provides information on the overall WTO MP commitment. The Total 
Medical  Plan Expend iture includes reimbursement, handling fee and profit (gross). Total Medical  
Plan Expenditure increased by CHF 1  million during the five years and reached CHF 13  million in 
2015. 
4.31.   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".  
4.32.   The WTO Secretariat will continue to monitor this important indicator of evolving health care 
costs. As mentioned previously, the recently observed data showing below expected levels of 
inflation in costs for the WTOMP do not imply that the WTO is immune from the serious 
demographic and other factors driving medical costs in Switzerland and around the world. 
Nonetheless, even modestly limiting the growth in costs now can have significant implications for 
the long term co sts of the plan when projected out over several decades as is necessary in the 
case of the ASHI liability.   
4.33.   In particular, the strategy proposes to track the increase in the cost of the ASHI aspects of 
the Medical Plan. In 2015 this cost was CHF 2.4 milli on and by 2035 could rise to more than CHF 
11.5 million in the absence of any action or strategy. This would represent a growth in total ASHI 
costs to the WTO of 165% over 20 years. These increases in ASHI costs could be partially off -set 
by drawing on an ASHI fund if established and adequately funded in advance.   
Table 15 Medical  Plan Costs Relative to Budget (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 WTO 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 WTOMP  
 
4.34.   This baseline metric of Medical  Plan Costs Relative to Budget (Members' contribution) shows 
the proportion of WTOMP  to the WTO budget. WTO contribution to the Medical 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 %). 
                                                
19 Premium level was maintained (0.0% change) by drawing on the reserve fund in both 2013 and 2016  WT/BFA/W/406/Rev.1  
 
- 29 - 
 
  Table 16 Level of Medical  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%  
 
Level of Medical  Plan Contribution of a Competitive Employer indicates the level of WTO 
contribution to total Medical  Plan expenditure and whether it is in the desired range. Share of WTO  
budget  contribution in Total Expenditure is steady in time and comparable or somewhat be low that 
of other international organizations  (See Annex 2 ). It fluctuates between 50 and 58 % and has 
been rather stable and close to 58 % in recent years. It is implied that the WTO budget 
contribution share is closer to 50 % if all health costs (including those not reimbursed) are 
included.  
 
5  FUNDING THE LIABILIT Y 
5.1  Creation of a n ASHI Fund  
5.1.  The Strategy proposes to use the accumulated budgetary surplus  of the past several years  as 
the foundation of a n ASHI Fund that could be used to progressively absorb extra -cost generated 
by the ASHI portion of the WTOMP costs. This would be done without prejudice to Members' 
decisions about future unused budgetary allocations.  
5.2.  It is important  to the Strategy to  establish a fund promptly, regardles s of what decisions may 
be taken by Members on the budgetary surplus,  so that  any WTOMP -specific savings that can be 
realized as a result of cost control and cost sharing measures implemented by the WTO Secretariat  
can be retained for the WTOMP . 
5.3.  A fund wil l require important practical decisions to be made with 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 app roaches. 
Therefore, these are important elements of the strategy for the long term sustainability of the 
WTOMP .  
5.4.  Members will be asked to approve the Terms of Reference for an ASHI Fund later in the year.  
These Terms of Reference will address among other things: specific gover nance and oversight 
arrangements for the Fund, disbursement guidelines, actuarial considerations for monitoring 
funding status, governance, oversight and administrative aspects of investing Fund assets, and 
reporting to Members.  
5.5.   It is anticipated that t he monitoring  of the WTOMP fund ing situation  will be shared between 
WTO Management and the MIMC  and reported on regularly to Members through the CBFA . An 
important obligation for the WTOMP Governance Structure will be periodic reviews o f 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  will therefore undertake 
periodic valuations of WTOMP assets and liabiliti es, based on the actuarial assumptions and 
methods it shall have adopted with the input of a consulting actuary . 
6  SUMMARY CONCLUSIONS  
6.1.  The WTO Secretariat has developed a comprehensive strategy addressing all aspect of the 
ASHI Working Group Report. The Secr etariat has already implemented several changes targeted at 
cost control. In 2017 the Secretariat will continue to monitor the elements that have been 
implemented and compare experience to established baseline metrics.  
6.2.  Additionally,  in 2017,  implementation  of the strategy will turn towards cost sharing 
measures . For the Plan participants  this will include  reviewing and revising  how subsidies are 
allocated and developing proposals for employee participation in the pre -funding of the ASHI 
aspects of the Plan.  For WTO Members, this will include considering how future liabilities should be WT/BFA/W/406/Rev.1  
 
- 30 - 
 
  incorporated into the WTO's budget and considering how the accumulated budget surplus could be 
used to mitigate the accumulated ASHI liabilities.  
6.3.  The WTO Secretariat seeks the Member's input and cooperation in the development of many 
of these elements , particularly the establishment of an ASHI Fund . The Secretariat notes that the 
CBFA would need to be involved in approving  a general framework within which an ASHI Fund  
would ope rate, approving any changes required to regulations, and assisting in locating sufficient 
resources for the effective management of the Fund and the WTOMP in general.  The WTO 
Secretariat will develop a concrete proposal on a Fund before the summer break.  
6.4.  In the medium term of 2 -5 years the implementation of the strategy will include review and 
reporting on WTOMP performance according to KPIs (including the monitoring and updating of 
actuarial analyses), looking at further incentives to promote cost control (such as geographically 
specific deductibles and coverage limits), on -going review of benefits, deductibles and coverage 
limits, and evaluating the feasibility  of coordinating with National Health Plans. Additionally, in 3.5 
years the WTO Secretariat will need to evaluate the experience with the new WTOMP provider to 
decide if the contract should be extended for 2 more years or if is more appropriate to launch a 
new competitive procurement process.  
6.5.  The Secretariat will continue to report regularly to Member s through the CBFA once the 
strategy is adopted by the Secretariat and as elements are implemented and subsequently 
monitored. This reporting is foreseen as at least twice a year in the early stages of 
implementation. Once the major elements of the strateg y are in place, there will be formal 
reporting annually specifically on the WTOMP and the ASHI Fund (in addition to normal financial 
and external audit reporting), and full actuarial valuations on a triennial basis.  
6.6.  There is no question that the WTOMP and particularly the impacts of ASHI will require 
increased budget allocations in the future. The strategy seeks to find an approach to help smooth 
and make more predictable those increases. Of course, there will always be, as there are now, 
competing budget p riorities that will have to be resolved. The ASHI strategy is intended to 
contribute positively to the ability of Members and the WTO Secretariat to anticipate and plan for 
future resource allocation decisions and ensure the WTOMP is sustainable.  
  
  WT/BFA/W/406/Rev.1  
 
- 31 - 7  SPECIFI C 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
  
  WT/BFA/W/406/Rev.1  
 
- 32 - ANNEX 1 COMPARISON OF BENEFI TS WITH OTHER IGOS  
 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 o r 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 retireme nt age 
is mandatory at 65.  No Applicants are expected to 
complete a term of 
appointment  65 Maximum age on admission 
shall be 65 years  
BENEFIT       
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 annu al 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 80% of room rate not 
exceeding CHF  950 
(accommodation + nursing 
care), then 100% not 
exceeding CHF  950 
(accommodation + nursing 
care) if year's total 
out-of-pocket expenses 
exceed 5% of annual net 
salary  100%   
  WT/BFA/W/406/Rev.1  
 
- 33 -  WTO  UNOG/WMO  ILO/ITU  WHO  WIPO  
threshold of approved expenses 
entitled to payment of 
supplement ary benefits is 
reached  
- private ward  90%, th en 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 ac commodation) 
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 -medical 
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 cumulative 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 whe never 
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 reimbu rsement 
is 85%  
  
  WT/BFA/W/406/Rev.1  
 
- 34 - ANNEX 2 COMPARISON WITH OTHE R IGOS ON SHARE OF P REMIUMS PAYABLE  
PREMIMUM PAYABLE BY 
INSURED  
 WTO  UNOG  ILO WHO  WIPO  
 
Organization /Insured  
 
Premium sharing ratio  
  
60% WTO / 40% retiree20 
 
 
 
51% WTO / 49% staff 
memb ers  
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 
 
 
 
__________  
                                                
20 Rounded av erages as of December  2014 that includes non -subsidized (children, dependents) at WTO. Methodology for estimating ratios may vary across IGOs.