Editorial
2010 five-yearly review: what should be retained from the comparisons?
In conformity with Annex A1 of the Staff Rules and Regulations, the five-yearly review must include basic salaries and may include any other financial or social conditions. In 2010, besides salaries, only one optional subject is included: health insurance. It was already on the menu of the five-yearly review in 2005, but at that time CERN Council decided that large-scale measures could wait. Any similarity with the pensions file would be fortuitous.
To prepare the decisions to be taken at the end of 2010 by CERN Council, on the proposal of the Director-General, the first discussions on relevant comparisons have just taken place at the Tripartite Employment Conditions Forum (TREF) between the Member States, Management and staff representatives.
Salary comparison
For a number of benchmark jobs in administrative and technical careers, external experts (OECD/CCT) have compared CERN salaries with those of the best employers in the hi-tech industry in the local area (career paths AA and B) and in several European countries (career paths C to G). Compared to 2005 when CERN salaries were up to 40% lower, the situation has further deteriorated, with a gap which has substantially widened in places. It is clear that this deterioration can no longer continue and must be stopped by the Organization. Excellence has indeed a price and this comparison highlights the fact that today CERN is no longer able to attract the best candidates. We will come back to this in a future editorial.
CERN health insurance system
A comparison has been made between our health insurance scheme (CHIS) and those of the Geneva agencies of other international organization agencies. It consisted of a study of the contributions, benefits and insured populations of four employers: the International Labour Office (ILO), the World Health Organization (WHO), the United Nations Organization (UNOG) and CERN.
We underline right away that such a comparison is not easy, as fundamental differences exist as far as historical and cultural factors are concerned (definition of the “family”, contribution per member or per family, etc.).
Benefits
Only the CHIS applies as a matter of priority an annual deductible and a reimbursement rate of 90%, the other three schemes reimburse at 80% from the first franc spent. All schemes have a ceiling for the out-of-pocket payments for the health expenses incurred by the insured. This limit is applied per family (ILO, WHO, UNOG) or per individual (CERN).
Figure 1 shows for a single person and for a couple the effective rate of reimbursement according to their expenditure. We can distinguish three areas. First, over a large area the reimbursement at CERN is lower, then slightly higher, and finally it is more or less the same for large expenditure. As far as our scheme is concerned, we should note above all that the “official” rate of 90% is deceptive. In fact it is reached only above 20 000 CHF of annual medical expenses.
Salary comparison
For a number of benchmark jobs in administrative and technical careers, external experts (OECD/CCT) have compared CERN salaries with those of the best employers in the hi-tech industry in the local area (career paths AA and B) and in several European countries (career paths C to G). Compared to 2005 when CERN salaries were up to 40% lower, the situation has further deteriorated, with a gap which has substantially widened in places. It is clear that this deterioration can no longer continue and must be stopped by the Organization. Excellence has indeed a price and this comparison highlights the fact that today CERN is no longer able to attract the best candidates. We will come back to this in a future editorial.
CERN health insurance system
A comparison has been made between our health insurance scheme (CHIS) and those of the Geneva agencies of other international organization agencies. It consisted of a study of the contributions, benefits and insured populations of four employers: the International Labour Office (ILO), the World Health Organization (WHO), the United Nations Organization (UNOG) and CERN.
We underline right away that such a comparison is not easy, as fundamental differences exist as far as historical and cultural factors are concerned (definition of the “family”, contribution per member or per family, etc.).
Benefits
Only the CHIS applies as a matter of priority an annual deductible and a reimbursement rate of 90%, the other three schemes reimburse at 80% from the first franc spent. All schemes have a ceiling for the out-of-pocket payments for the health expenses incurred by the insured. This limit is applied per family (ILO, WHO, UNOG) or per individual (CERN).
Figure 1 shows for a single person and for a couple the effective rate of reimbursement according to their expenditure. We can distinguish three areas. First, over a large area the reimbursement at CERN is lower, then slightly higher, and finally it is more or less the same for large expenditure. As far as our scheme is concerned, we should note above all that the “official” rate of 90% is deceptive. In fact it is reached only above 20 000 CHF of annual medical expenses.
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| Fig. 1: Reimbursement rate in the 4 organizations | Fig. 2: Relative cost per age bracket (2007) |
Moreover, very recent figures from the CHIS Board show that when all parameters are considered (contribution, annual deductible, part non-reimbursed due to application of various ceilings), 44% of health costs are borne by the whole of the insured population of the CHIS. This is very far from 90%. Pass it on…
Insured populations
As medical expenditure rises significantly with age (see Fig. 2), it would also be appropriate to compare the insured populations.
In the CHIS, the average age is 45.5 years, compared to 40 years in the three other organizations, a situation which naturally gives rise to increased expenditure. Yes, but how much? To answer this, a rough idea can be had by studying the ratio of retired/active members, bearing in mind that the average cost for the CHIS of the “retired” population is on average 3.7% higher than for the “active” population. The comparison shows that the ratio of retired/ active members is 0.87 at CERN, compared to 0.76 at ILO, 0.78 at WHO, and 0.46 at UNOG.
Costs under control
Thus, the average cost per insured member of the CHIS should be 1.55 times higher than that of UNOG. In reality, it is only 1.38 times higher, which confirms that the CHIS is well managed. And when indeed expenditure is higher for the CHIS, it can mostly be explained by this demographic phenomenon.
As expenditure and receipts must be balanced in a budgetized scheme, the observations made on costs can also be applied to contributions: their volume is greater at CERN. In our scheme, active and retired members contribute at a rate of 10.37% of their last basic salary. For the “average active insured member”, this rate is slightly lower than at BIT or UNOG, in accordance with a younger insured population of the latter organizations. For the retired members of these organizations, these rates are similar to those of the CHIS. On the other hand, their “employer” share covers the total difference which exists between the rates for active members and those which are significantly higher for retired members, which is not the case at CERN.
Concrete measures are needed
In short, whilst it is difficult to make precise comparisons between different health insurance schemes, the CHIS, although different, is on the whole equivalent to the other schemes studied. There is therefore no objective reason to change the bases of our scheme. In the no. 100 edition of Echo, we explained that our health insurance scheme has been experiencing a structural deficit since 2008, which will continue to grow by several millions each year.
More than ever it is vital that something is done about it. Without further delay.
