Background

The Co-Chair of the FB Network presented an overview of the approach taken by the Network in establishing the ASHI Working Group, and summarized the main findings of the Group, as presented in the report of the Secretary-General.  The Working Group was led by the Director of the Accounts Division of the UN Secretariat and comprised representatives from sixteen UN system organizations, as well as FAFICS, FICSA, the HLCM Human Resources Network, the FB Network Working Group on Common Treasury Services, the United Nations Joint Staff Pension Fund (UNJSPF) and the CEB Secretariat.

Discussion

The HLCM Vice-Chair introduced the agenda item and brought to the Committee’s attention a letter from the President of the Federation of Associations of Former International Civil Servants (FAFICS) to the HLCM Chair on this item.  The Vice-Chair thanked the Finance and Budget Network (FB Network) and all those who worked on this - technically and politically - very complex project. She noted that this undertaking has shown the power of data and of working together and leveraging the collective strengths of organizations across the UN system, and the importance and power of actionable, clear recommendations.

The FB Network Co-Chair explained that the Working Group was tasked with four deliverables including collecting and sharing information on the different ASHI practices within the United Nations System; exploring ways to contain the costs of ASHI services; proposing common criteria for the review of the assumptions underlying the valuation of the estimated liability; and exploring how actuarial valuation criteria can be harmonized across the United Nations System. The study conducted by the Working Group provided a comprehensive view of the current situation of the health plans and after-service health insurance funds and liabilities of each agency, with an unprecedented level of detail collected. He noted that, based on the analysis conducted by the Working Group, a set of eight complementary recommendations was developed and provided an explanation of each recommendation.

The Controller of the UN, supported by the Director of the UN Accounts Division via audio link, then presented an overview of the outcome of the discussions in the General Assembly, and of the work to be done in the next phase of the ASHI Working Group. The UN Controller noted that the ASHI report received a very good welcome in the General Assembly. The Controller highlighted that for the first time the UN system has a full picture of the diversity and scope of health plans across organizations, and that the report has raised awareness as to how large and important the ASHI scheme is.

In her overview of the discussions within the General Assembly, it was noted that recommendations 1 to 3 regarding collective negotiations with healthcare administrators, health care providers and insurers were endorsed by the ACABQ and Fifth Committee, and that collective negotiations would be made possible based on the information gathered by the Working Group. With regards to the 4th recommendation on the use of national health insurance plans, the Controller noted that, without aiming for a single directive, for countries where there are strong national plans, and provided there is no detriment to the benefits of staff, there is the potential for considerable advantages in terms of reducing costs.

With regards to the 5th recommendation concerning the mandate of the UNJSPF, the Controller informed the Committee that UNJSPF was not supportive of increasing its mandate to include ASHI as, among other reasons, UNJSPF does not have the same population as the ASHI population. However the General Assembly recommended the UN system continue the conversation on this issue.

The General Assembly supported the 6th recommendation regarding standardised valuation methodology, and the Controller observed that this was a clear example of the benefits of IPSAS having revealed these liabilities, and in ensuring that they are evaluated on the same basis and that managers consider these liabilities when making operational decisions. During later discussion on this matter some organizations noted that for those mandated to follow IFRS, not IPSAS, this aspect should be taken into account when moving towards a joint approach to valuation factors.

The 7th recommendation regarding adequate funding was not supported, and the General Assembly decided to maintain a pay-as-you-go approach to funding the ASHI liabilities.  The UN Controller noted that for organizations funded by assessed contributions, the pay-as-you-go approach may be tolerable, however for organizations heavily funded by voluntary contributions, at least a core amount of investment would be required. She noted that smaller organizations in particular would be more vulnerable.

With regards to the 8th recommendation, the UN Controller noted that the General Assembly agreed that work should continue on leveraging existing arrangements for investment of reserves.

A number of HLCM members acknowledged the outstanding work performed by the ASHI Working Group, and congratulated it on the positive outcome of the discussions with the General Assembly.  Several organizations felt that it was important that the Working Group be allowed to complete its work, with each member organization able to participate on an equal footing.  It would not be appropriate for individual member organizations of the Working Group to propose and implement their own ASHI cost saving measures whilst the Working Group continued to operate.

Some concerns were raised regarding the General Assembly’s decision not to approve the recommendation for adequate funding, noting that this represents an enormous problem due to the rapid growth in ASHI liabilities. It was agreed that the ASHI Working Group would have to do more work on the funding issue to differentiate those organizations who would need to fund the liability and to provide additional convincing justifications in the next report that is submitted to the General Assembly. It was commented that a pay-as-you-go approach is poor financial management, and is not in line with the recommendations of the External Auditors.

Strong concern was also expressed that the adequate funding of the liabilities has linkages to mobility. It was noted that unless funding of the past liability is made mandatory, it will be very difficult for staff to move from one organization to another if the releasing organization has not funded the past liability.

A number of organizations shared their experiences with efforts to adequately fund their ASHI liabilities, and informed the Committee on initiatives ongoing in their respective governing bodies to undertake separate, individual studies on ASHI.

The Director of UN Medical Services indicated the need for a strong engagement with medical services staff of the UN system on a technical basis for management of health insurance, noting that a combination of financial and medical technical expertise was required. She noted that more work should be done on evaluating plans and administrators with a view of exacting efficiency while maintaining good quality care for UN staff. In response, the Chair of the Working Group confirmed that HLCM had already decided to include representatives from medical services in the continuation of this work, recalling that the first phase of the work had only focused on the management side. The Co-Chair of the Finance and Budget Network also expressed strong support for involvement of UN medical services in the next phase of the work, noting that his organization had separate health insurance governance with external medical advisors to provide advice, and suggested that perhaps this should be considered for all organisations. He noted that from his experience he had also seen examples of third-party administrators not being held to task to put pressure on costs.

In response to questions as to the timeline for commencing implementation of some of the recommendations contained in the report, the Chair of the Working Group noted that work would resume soon, with the goal of presenting another report to the resumed 71st session of the General Assembly in March 2017. With regards to the analysis of national health plans, he noted that the initial analysis had only included 6 plans, and that this analysis will be expanded through a survey to be distributed to all Member States on their national plans. He noted that there will be some countries in which implementation will be easier, and that based on the responses from each Member State an action plan will be devised. On the issue of portability he agreed that not having a portability scheme is jeopardising mobility from agency to agency, as currently the recipient organisation has to bear the burden of all past service. He agreed that portability cannot be effective without a standardised set of benefits and standardised funding. He confirmed that the Working Group will focus on portability and will use it as a leverage to argue for adequate funding. Overall, the main goals of the Working Group would be to tackle all pending questions from the General Assembly and put renewed effort into the arguments for adequate funding, including differentiating different schemes and funding mechanisms.

Action

The Committee:
Expressed appreciation for the work of the FB Network ASHI Working Group and took note of the outcome of the General Assembly`s deliberations on the report of the Secretary-General.

Requested the Finance and Budget Network to follow up on the recommendations formulated in the report of the Secretary-General on managing after-service health insurance liabilities, as endorsed by the ACABQ and the Fifth Committee, taking into account the objective to contain costs and protect the interests of staff and retirees, and prepare a report for submission to the General Assembly at its seventy-first session.

Reaffirmed the need for the Working Group to complete a comprehensive, UN system-wide analysis and follow-up action plan on the complex and multi-faceted subject of ASHI, informed by the inter-governmental discussion that took place in the General Assembly, with a view to presenting a coherent and collective position, representative of the needs and specificities of all member organizations, in the next report of the Secretary-General to be submitted to the General Assembly at its resumed 71st session.

Requested the Finance and Budget Network to provide a status report on progress made at the next session of HLCM.