Emerging Issues in Workers Compensation: Obesity, Overweight & Physical Inactivity Workforce Reintegration of Veterans Neurodegenerative Disorders & Occupational Exposure Workers Compensation Education Conference Orlando, FL August 23, 2005 Robert P. Hartwig, Ph. D. , CPCU, Senior Vice President & Chief Economist Insurance Information Institute 110 William Street New York, NY 10038 Tel: (212) 346 -5520 Fax: (212) 732 -1916 bobh@iii. org www. iii. org
Presentation Outline • Obesity, Overweight, Physical Inactivity & Workers Compensation • Reintegration of Military Veterans in the Workforce: Implications for Employers & WC Insurers • Neurodegenerative Disorders & Occupational Exposure • Terrorism
OBESITY & WORKERS COMPENSATION A Heavy Burden For Workers Comp?
Avg. Annual Hours Lost Per CA Worker Due to Obesity & Physical Inactivity Obesity costs employers nearly 2 weeks per year per employee in terms of lost output/ productivity Physical inactivity costs employers nearly 1. 5 weeks per year per employee in terms of lost output/ productivity *Presenteeism is defined as productivity loss that occurs when workers are on the job but not fully functioning. Source: Topline Report, The Economic Costs of Physical Inactivity, Obesity, and Overweight in California Adults.
Lost Productivity Cost By Risk Factor Tied to Obesity in California ($ Millions) $ Billions In California, total lost productivity cost tied to obesity is approximately $3. 36 billion Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Lost Productivity Cost By Risk Factor Tied to Physical Inactivity in California $ Millions In California, total lost productivity cost tied to physical inactivity is approximately $7. 53 billion Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Most Obesity-Related Costs to WC Systems are Indirect Most losses to associated with WC claim arising from obesity are indirect in nature. Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Direct and Indirect Workers Comp Costs for Obesity in California Adults (2000 Dollars) Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Estimated Cost of Obesity on US Workers Compensation Systems *Estimates extrapolated by the Insurance Information Institute based on CA estimates for 2000 assuming 4. 72% annual inflation in WC costs (same rate as was assumed in source study below). Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Estimated Cost of Physical Inactivity on US Workers Compensation Systems *Estimates extrapolated by the Insurance Information Institute based on CA estimates for 2000 assuming 5. 779% annual inflation in WC costs (same rate as was assumed in source study below). Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services.
Estimated Obesity Costs as a Percentage of WC Loss & LAE* Obesity costs account for about 4% of workers comp losses over the period from 2000 -2005 *Estimates extrapolated by the Insurance Information Institute based on CA estimates for 2000 assuming 5% annual inflation in WC costs (same rate as was assumed in source study below). Source: The Economic Costs of Physical Inactivity, Obesity and Overweight in California Adults: Health Care, Workers’ Compensation and Lost Productivity, ” April 2005. Study conducted by David Chenoweth, Ph. D. , FAWHP, for the California Department of Health Services. Note: Adjusting for self-insured and entities with high deductible programs would reduce this estimate by an indeterminate sum.
Impact of Obesity on WC Systems Varies With Heath Fitness of Population WC systems in the Southeast and Midwest incur a disproportionate burden because relatively high proportion of workforce is obese <10% 15%-19% ≥ 20% Source: Behavioral Risk Factor Surveillance System; Insurance Information Institute
Prevalence of Overweight and Obesity among US Adults (aged 20 -74 years) 23 15 31 Nearly 2/3 of US adults are overweight or obese, up from 47% in the late 1970 s Workforce out of shape too. Source: Centers of Disease Control and Prevention (CDC), National Center for Health Statistics (NCHS), National Health and Nutrition Examination Survey (NHANES); Insurance Information Institute
Prevalence of Overweight and Obesity Among Children and Adolescents Next generation of workers likely to be the most overweight ever, so cost to workers comp systems will rise steadily % In the past two decades the percentage of overweight children has more than doubled and the percentage of adolescents who are overweight has tripled Source: Centers of Disease Control and Prevention (CDC), National Center for Health Statistics (NCHS), National Health and Nutrition Examination Survey (NHANES); Insurance Information Institute
Issues in Reintegration of Military Veterans
Exposure Issues Associated With War in Iraq • By the time “major operations” are completed in Iraq and Afghanistan, likely that more than 500, 000 military personnel will have be deployed, some more than once • About 40% of these are National Guard and Reserves • Pentagon planning for presence of 100, 000+ through 2009 with 25% Reserve/Guard component • About 4% of troops in Iraq are physically injured ann. Ø 14, 021 physically injured so far; many 1000 s more yet to come Ø Most will return to civilian workforce; some w/impairment • Nearly 30% of soldiers deployed to Iraq exhibit some post-deployment symptoms of mental health problems, including depression, anxiety and PTSD; Alcohol issue Ø Estimated that 100, 000+ may need some mental health help Ø Only a minority will actually ever receive it
Why Does this Matter for Workers Compensation? • Tens of thousands of soldiers will re-enter the civilian workforce having suffered some physical injury Ø Some will require accommodation Ø Possibility of reinjury/second injury; Second Injury Funds? Ø Interaction with Americans With Disabilities Act (ADA) • 100, 000+ will have suffered some mental health issues Ø How will lack of treatment manifest itself in the workplace? Ø When? • Costs to VA are already staggering Ø VA spent $4. 3 billion on PTSD disability payments in 2004 (excl. med costs) • Could be some cost shifting to WC for both physical and “stress” (ultimately mental health related) injuries • Outcome of war, community/family can have effect on incidence of psychological disorders
Why Does this Matter for Workers Compensation? • Post Traumatic Stress Disorder, or PTSD, is a psychiatric disorder that can occur following the experience or witnessing of life-threatening events such as military combat, natural disasters, terrorist incidents, serious accidents, or violent personal assaults like rape. * • While Most Vets Function Normally, PTSD & Related Issues that Can Affect Workers Comp Injury Frequency and/or Severity Ø Depression Ø Substance Abuse Ø Occupational Instability Ø Anxiety Sleep Deprivation Marital/Family Problems Social Maladjustment *Source: National Center for PTSD; http: //www. ncptsd. va. gov/facts/general/fs_what_is_ptsd. html accessed August 20, 2005.
Military Personnel Killed in Iraq 1, 861 military personnel have been killed so far in Operation Iraqi Freedom Source: Brookings Institution, Iraq Index Archive, updated August 18, 2005. Deaths can fluctuate dramatically from month to month
Non-Fatal Injuries to Military Personnel Deployed in Iraq* 14, 021 military personnel have been wounded so far in Operation Iraqi Freedom. Their issues have received relatively little attention. Injury counts can fluctuate dramatically from month to month Source: Brookings Institution, Iraq Index Archive, updated August 18, 2005.
Non-Fatal Physical Injury Rates Among Troops in Iraq About 1 -in-300 troops is wounded in any given month. On an annual basis, a soldier in Iraq has about a 4% chance of being wounded Source: Insurance Information Institute calculations based in data from the Brookings Institution, Iraq Index Archive, updated August 18, 2005.
Troop Strength Levels in Iraq Guarantee Significant Flow of Injured Troop strength levels are expected to rise to their highest levels yet by year-end 2005 ahead of scheduled elections To date, 40% of troops have been National Guard or Reservists, meaning 100, 000+ people eventually looking to be returned to the workforce soon Source: Brookings Institution, Iraq Index Archive, updated August 18, 2005. *Estimate based on Pentagon comments.
Reported Mental Health Problems Among Army & Marine Personnel After Iraq Deployment* Nearly 30% of returning army and marine personnel exhibit at least one symptom of mental illness. Source: Hoge, et al, “Combat Duty in Iraq and Afghanistan, Mental Health Problems, and Barriers to Care, ” New England Journal of Medicine, v. 351, no. 1, July 1, 2004, pp. 13 -22.
War Takes a Toll on Mental Health of Military Incidence of PTSD more than tripled and other mental health problems doubled in 2004 Source: Han Kang and Kenneth Hyams, Department of Veterans Affairs.
Reported Alcohol Misuse Among Army & Marine Personnel After Iraq Deployment Sharp increase in alcohol misuse reported following deployment N/A Source: Hoge, et al, “Combat Duty in Iraq and Afghanistan, Mental Health Problems, and Barriers to Care, ” New England Journal of Medicine, v. 351, no. 1, July 1, 2004, pp. 13 -22.
Combat Experience of US Army Soldiers Deployed to Iraq Soldiers have experienced large numbers of potentially life-altering events-both physical and psychological Source: Hoge, et al, “Combat Duty in Iraq and Afghanistan, Mental Health Problems, and Barriers to Care, ” New England Journal of Medicine, v. 351, no. 1, July 1, 2004, pp. 13 -22.
Few Troops Who Need Mental Health Help Actually Receive It* Among troops with signs of major depression, generalized anxiety or PTSD, only about 1 -in-4 (27%) will receive treatment from a mental health professional *Among troops whose survey response met screening criteria for major depression, anxiety or PTSD. Source: Hoge, et al, “Combat Duty in Iraq and Afghanistan, Mental Health Problems, and Barriers to Care, ” New England Journal of Medicine, v. 351, no. 1, July 1, 2004, pp. 13 -22.
Reasons Why Troops Don’t Seek Treatment for Mental Health Issues Stigma of mental health problems remains Source: Hoge, et al, “Combat Duty in Iraq and Afghanistan, Mental Health Problems, and Barriers to Care, ” New England Journal of Medicine, v. 351, no. 1, July 1, 2004, pp. 13 -22.
What Can/Should Employers, WC Insurers (esp. Claims Staff) Do? • Be aware of physical injuries sustained in theater by returning/new employees who served in military combat roles or as contractors in war zones & accommodate • Be aware of possible mental health issues Ø Monitoring is probably wise, esp. in stressful jobs or jobs involving operation of heavy equipment and driving Ø Most former military will have no major problem readjusting Ø Some will, so know how to get them help • Most employers, claims people may mistake root cause of problems. Not trained to recognize warning signs. • Veteran’s who were wounded or suffer from servicerelated mental health problems entitled to lifetime medical benefits from the Veterans Administration Ø NOTE: Many may be undiagnosed (barely ¼ see MH prof. ) • Be aware of local VA resources: http: //www. va. gov/rcs/ Ø VA Readjustment Counseling Service: 800 -905 -4675
The Defense Base Act: What is It & Its Relationship to WC? • Congress passed DBA in 1941 to cover construction workers in lend/lease military bases outside continental US & broadened several times since • DBA extends USL&H Act to civilian workers on bases overseas & contractors employees outside US ØAdministered by US Department of Labor • Covers all US citizens employed on job site (e. g. , Iraq), 3 rd party and local nationals, subcontractors
Claims Under Defense Base Act in Iraq (As of June 2005) Premiums are high for US contractors operating abroad. Death rate among contractors is high, reflecting hazardous work in a war zone Source: US Department of Labor
Degenerative Neurological Diseases & Occupational Risk The Next Frontier for Workers Comp?
Occupational Groups Showing Elevated Incidence of PSD or AD Presenile Dementia 1. Clergy 2. Dentists 3. Graders/Sorters 4. Hairdressers/ Cosmotologists 5. Social Workers 6. Teachers (prim/sec. ) 7. Farmers* 8. *Under age 65 only Alzheimer’s Disease 1. Aircraft Mechanics 2. Bank Tellers 3. Clergy 4. Hairdressers/Cosmo. 5. Painters/Sculptors 6. Secretaries 7. Teachers (prim/sec. ) 8. Farmers* 9. *Under age 65 only Source: Park, Robert M. , et al, “Potential Occupational Risks for Neurodegenerative Diseases, ” American Journal of Industrial Medicine, 48: 63 -77 (2005).
Occupational Groups Showing Elevated Incidence of PD or MND Parkinson’s Disease 1. Biological Scientists 2. Post-Secondary Teachers 3. Clergy 4. Other Religious Workers 5. Welding* 6. Motor Neuron Disease 1. Graders & Sorters (non-agricultural) 2. Hairdressers 3. Teachers (prim/sec. ) 4. Veterinarians 5. Farmers *For deaths under age 65 only Source: Park, Robert M. , et al, “Potential Occupational Risks for Neurodegenerative Diseases, ” American Journal of Industrial Medicine, 48: 63 -77 (2005).
Casual Theories About Occupations With Elevated Odds of Neurodegenerative Diseases Profession Hairdressers Associative Theory Farmers Increased risk for all 4 NDDs, esp. before age 65. Suggests risk associated with pesticides. Teachers, Clergy & Other Professionals Elevated risk for all 4 NDDs described as “perplexing. ” Possibly educated professionals at lower risk of death for other diseases (less smoking, better health care). Mixed/no evidence of educational attainment link. Risk factors for teachers may include stress and exposure to infectious agents. Welding PD-like disorder associated with manganese fumes from arc-welding (manifestation of manganism). Studies in US, Europe, Korea suggest link. Increased risk of PSD, AD and MND, suggesting risk associated with dyes, components of hair care products & other exposures in hairdressing, manicure
TERRORISM & WORKERS COMPENSATION Is TRIA Enough?
TRIA UPDATE • TRIA expires December 31, 2005 • Treasury completed its study of the program 6/30/05 – did not back reauthorization of TRIA in current form • Insurers & coalition partners have established strong case for TRIA extension, but Treasury believes still clings to 4 myths: 1. Terrorism is insurable 3. Insurance is a “free market” 2. Govt. crowds out pvt. capital/innovation 4. Ample capacity now exists • Basically political/ideological issue for relatively small number in Congress and a few policymakers • Senate & House hearings held in mid-July 2005, went well • London terrorist attacks gave TRIA opponents pause • Legislation now looks likely
…But The Door Was Left Open If Congress were to reauthorize TRIA, these are the key changes that insurers required to make: Ø The event size that triggers coverage must be increased from current $5 million level to $500 million. Ø Dollar deductibles and percentage co-payments must be increased. Ø Certain lines of insurance, such as commercial auto, GL and other smaller lines must be eliminated from the program. Ø Reforms to ensure that injured plaintiffs can recover against negligent defendants, but not by exploiting the litigation system.
Terrorism Insurance Market Overview Workers Comp is the Most TRIA-Dependant Line
Terrorism Coverage: Take-Up Rates by Region Terrorism take-up rates are highest in the Northeast and Midwest Source: Marsh, Inc. ; Insurance Information Institute
Terrorism Coverage Take-Up Rate Rising Terrorism take-up rate for non-WC risk rose through 2003 and continues to rise in 2004 TAKE UP RATE FOR WC COMP TERROR COVERAGE IS 100% Source: Marsh, Inc. ; Insurance Information Institute Take-up rate exceeds 50% in Midwest, Northeast
Terrorism Coverage: Take-Up Rates by Industry Take-up rates rose substantially in 2004; Highest among Finl. Inst. & Real Estate firms Source: Marsh, Inc.
TRIA is Dormant Under Most Scenarios, but Vital When Triggered U/W Loss ($ B) Total Loss as % of P/C Surplus Federal role large under only under most horrific of scenarios Chance of an Event Source: EQECAT, NCCI
Estimated Workers Comp Insured Losses & Deaths for Terrorist Events Fatalities 173, 000 12, 300 1, 300 Source: Eqecat, NCCI. 1, 000
Percent of 2003 Surplus Lost Due to a $25 Billion Terrorism Attack in 2004 With TRIA in Place Even with TRIA in place, some major insurers will lose more than 10% of their policyholder surplus: Terrorism is a clear threat to stability. Source: The Economic Effects of Federal Participation in Terrorism Risk, Analysis Group, September 14, 2004.
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