PHL seen receiving thousands of jobs from US health insurers in 2013

UNDER extreme pressure to slash costs, a greater number of American health insurers will likely transfer thousands of clinical support service and other back office jobs to the Philippines in the months ahead, House Deputy Majority Leader Roman Romulo boldly predicted Wednesday.

American health insurers such as Bloomfield, Connecticut-based Cigna Corp.; Louisville, Kentucky-based Humana Inc.; and Woodland Hills, California-based Health Net Inc. are bound to follow the footsteps of their rivals who have invested aggressively to build new back offices in Manila, according to Romulo, a key congressional backer of Manila’s business process outsourcing (BPO) industry.

Minnetonka, Minnesota-based UnitedHealth Group Inc., Indianapolis, Indiana-based WellPoint Inc. and Hartford, Connecticut-based Aetna Inc. have already put up back offices in the Philippines either on their own or via independent BPO providers.

“These top six American health insurers cover more than 130 million Americans. One could just imagine the claims they process every day as well as the clinical support services they require,” Romulo said.

“Substantially lower cost is the biggest factor driving US health insurers to transfer jobs to Manila. Studies suggest they stand to generate around 30 percent in potential cost-savings once they convey the jobs here,” he pointed out.

“The huge cost-savings are impossible to ignore, especially since we are talking here of New York Stock Exchange-listed American health insurers under constant pressure to report ever-increasing profits to their public shareholders,” he added.

That the Philippines has tens of thousands of college-educated, fluent English-speaking professionals, including nurses and other health practitioners, ready to staff the back offices is another advantage, according to Romulo.

He also said the Philippines’ new Data Privacy Protection Law is helping to encourage outsourcing to Manila.

“The back offices of American health insurers handle and process a great deal of highly sensitive personal information of patients. Our new law assures them of adequate safeguards,” he said.

Authored by Romulo, Republic Act 10173 compels all entities, including BPO firms, to protect the confidentiality of personal information collected from clients and stored in information technology (IT) systems, in compliance with strict international privacy standards.

The back offices of US health insurers perform multifaceted support functions such as clinical quality analysis and management, medical billing coordination, medical data coding, claims processing, premium and benefit administration, agency management, account reconciliation, policy research, underwriting support, new business processing, and policy servicing, among others.

Romulo said another factor driving US insurers to relegate jobs to Manila is Obamacare, or the US Patient Protection and Affordable Care Act, which mandates reforms to simplify and cut down the cost of health care in America.

Obamacare will enable an additional 30 million Americans to get hold of health insurance via subsidies and tax credits to employers and individuals, among other mechanisms.

The new US law also requires that health insurance plans cover preventative services, and stops insurers from dropping a policyholder when he/she is sick due to a pre-existing condition.

Obamacare’s medical loss ratio provision likewise mandates insurers to spend at least 80 percent of premium dollars on health care or quality improvement activities, or pay a rebate to their policyholders.

“What Obamacare basically means is that US health insurers will now have to cover more Americans and process more claims while their profit margins are being squeezed. Thus, the pressure to shift jobs to lower-cost locations such as the Philippines,” Romulo said.

The Philippines’ highly labor-intensive, IT-enabled services industry encompasses contact center services; back offices; medical, legal and other data transcription; animation; software development; engineering design; and digital content.

The industry is projected to produce $27 billion in revenues and directly engage some 1.3 million Filipino workers by 2016.

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