Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits

Managing Total Risk & Total Cost: Workers Compensation & Employee Benefits

Why Wellness, Why Now? May 17, 2011 Joe Picone, Chief Claim Officer, Willis

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Agenda

Cost of Workers Compensation and Employee Benefits

Today’s Workforce

Employee Benefits vs. Workers Compensation vs. Wellness

The Wellness Solution

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WC Lost Time Claims: Indemnity

NCCI, WC Symposium 2010

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WC Lost Time Claims: Medical

NCCI, WC Symposium 2010

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WC Medical Costs Rising

NCCI, WC Symposium 2010

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“Presenteeism”

The measurable extent to which health symptoms, conditions

and diseases adversely affect the

productivity of individuals who

choose to remain at work.

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Why is Health Care So Expensive? (Employee Benefits

Version) Rise in spending for treated diseases (37%)

Innovations / advances in technology New / better medicines New treatments Delivery costs of newborns have increased 5X (1987-2002)

Rise in prevalence of disease (63%) ¾ of all spending in US focused on patients who have one or

more chronic conditions. Chronically ill patients receive only 56% of clinically

recommended preventive health services. 27% of the rise in health care costs is associated with increased

rates of obesity.

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Why is Health Care So Expensive? (Workers

Compensation Version) Increasing Severity – Decreasing Frequency

Attempts to maximize income by some

Failure to properly manage utilization

Wrong measures: savings vs. paid

Trends in our society: Obesity Age Cultural Mental Health

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Time and Effort You Invest When Buying

A Car?

A House?

A College?

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How much time do we take to research our own health

decisions?Have you ever… Never Yes, once Yes, >once

Brought internet info to medical visit to discuss? 60% 20% 20%

Taken notes during a visit to help remember what the doctor or nurse said?

55% 21% 29%

Brought along friend/family as your advocate? 44% 21% 35%

Brought along a list of questions to ask? 28% 23% 49%

During a visit, have you ever held back questions because…

You were unsure how to talk about your medical problems or how to ask your question?

59% 19% 22%

The doctor seemed rushed? 59% 16% 25%

Source: NBGH online survey, September 2007 N=1,558

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Today’s Workforce

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Some Facts About Today’s Workforce: Current

AmericansGI Generation 1905-1925 50,000,000

Silent Generation 1926-1945 35,000,000

Baby Boomers 1946-1964 78,000,000

Generation X 1965-1982 65,000,000

Millennials 1983-2002? 80,000,000

*US CENSUS 2006

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More Facts About Today’s Workforce: Current

Workforce

Silent Born before 1946 5%

Boomers 1946-1964 40%

Gen X 1965-1981 30%

Millennials 1982-2001 25%

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Why It’s Important to Understand Generational Differences

•Boomers are larger than two previous generations

•One out of every three adults over 21 is a boomer

•Boomers have tremendous work ethic

•10,000 Boomers per day are turning 50

•13,000 people will reach the age of 60 every day for the next 20

years

•Boomers will work longer than in past

•By 2050, the median age worldwide will be 38, up from 28 in 2000 and 24 in 1950.

•In the US, the median age in 2050 will be 41, in Italy it will be 53!

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The Workers: What are they like?

Generation Shaping Events Traits

Baby Boomers TV, Cold War, Space Race, MLK, JFK,

Vietnam, Civil Rights, Prosperity, Rock N

Roll

Work Ethic, Driven, Entitlement, Optimism, No to Status Quo, Health and Wellness

Generation X Latchkey Kids, Single Parents, Reagan, Berlin

Wall, MTV, Computers,

Parents Divorce Rate

Risk Takers, Independent, Task Driven, Consumers

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Fact: We have an aging workforce that:

Likes to work hard - motivated

Independent

Will retire later

Will be dependent on dual incomes

Are entitlement dependent

Are generally optimistic about how long they will live and how they will live

Have been hit hard by recent recession in home values and savings for retirement

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What We Anticipate Will Happen To Our Workforce

Low claim frequencyHigh claim severityIncreased fallsLonger healing timesMore severe musculoskeletal disordersCertain claim types will increase

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Common Age-Related InjuriesChanges with Age Type of Injury

Loss of Strength Strains and sprains; tendonitis

Loss of muscular flexibility Strains and sprains; falls

Diminished postural steadiness Slips, trips, falls; fractures, sprains, strains

Reduced grip strength Repetitive motion disease; tendonitis, bursitis, epicondylitis; carpal tunnel syndrome

Reduced balance Falls, Slips

Reduced nervous system responses Decreased reaction times, being struck by objects; fractures, dislocation, death

Reduced cardiovascular capacity Greater risk for heart attack and stroke

Reduced visual capacity Greater exposure to safety hazards, falling injuries

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The years ahead could be the best for your workers…

•Laura Ingalls Wilder wrote her first book at the age of 65.

•Colonel Sanders took to franchising Kentucky Fried Chicken Restaurants, starting at age 65.

•Orville Redenbacher launched famous popcorn at age of 63.

•Ronald Wilson Reagan became President of United States at age of 70.

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Can we agree on one major point?

Our Workforce is Getting Older!

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Cost of Obesity: Duke University Medical Center Study

–Obese workers filed 2X the number of workers' compensation claims

–Obese workers had 7X higher medical costs

–Obese workers lost 13X more days of work from work injury or work illness than did non-obese workers.

–The average medical claim costs per 100 employees were $51,019 for the obese and $7,503 for the non-obese.

–John Hopkins and NCCI released similar studies

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Obesity & Workers Compensation Duke Study

5.8

11.65

0

2

4

6

8

10

12

NormalBMI (18 -

25)

BMI >= 40

WCClaims

Claims Per 100 FTEs

14.19

183.63

0

50

100

150

200

Normal BMI(18 - 25)

BMI >= 40

Lost WorkDays

Lost Work Days per 100 FTEs

Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:766-773.

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Claims most strongly affected by Body Mass Index (BMI):

Lower extremity Wrist or hand Back Pain/inflammation Sprain/strain Contusion/bruise Falls/slips Lifting Exertion

Obesity & Workers Comp

Truls Østbye, MD, PhD; John M. Dement, PhD & Katrina M. Krause, MA (2007). Obesity and Workers' Compensation Results From the Duke Health and Safety Surveillance System, Arch Intern Med.167:766-773.

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2001-What shape were we in?

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2002 - What shape were we in?

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2003 - What shape were we in?

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2004 - What shape were we in?

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2005 - What shape were we in?

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2006 - What shape were we in?

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2007 - What shape were we in?

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2008 - What shape were we in?

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2009 - What shape were we in?

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Can we agree on two major points?

Our current workforce is (1) older and, (2) more obese when compared to past

years.

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Non-English Languages Spoken at Home

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“Ljestve moraju biti ispravno osiguran prije….” That was an important safety message but did you understand it?

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Can we now agree on three major points?

Our current workforce is (1) older (2) more obese and (3) is

experiencing an increase in cultural (fear) barriers.

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What has the “Employee Benefits” Side Identified as the Top 2 Drivers of Overall

Health Care Costs?

Stress Mental Health

More workers are absent from work because of stress & anxiety than because of physical illness or injury

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Work-related Stress is a Growing Health Concern

33% of the 40.2 million workdays lost by illness and injury are from stress, anxiety, and depression.

Stress can be a hidden trigger behind cardiovascular problems, musculoskeletal disorders, obesity, depression, and violence.

National Safety Council - News Release September 21, 2005

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Impact of Mental Illness

Recent economic trends have affected stress levels

Recession Layoffs, foreclosures, loss of investments & savings Impact on disposable income

Increased risk of stress-induced health concerns Depression Anxiety Compulsive behaviors (over-eating, excessive gambling,

spending) Substance abuse

Substance Abuse and Mental Health Services Administration, April 2009

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Effect of Single Risk Factors on Sick Leave Absenteeism

Mental Health

Back Pain

Stressed

No Exercise

Obesity

0% 100%50% 150%

N = 35,451 Source: Serxner, S., et al., (2001). The impact of behavioral health risks on worker absenteeism. JOEM, 43(4), 347-354

150%

140%

131%

118%

116%

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Can we agree on four major points?

Our workforce is (1) older (2) more obese (3) more chance of encountering a language barrier and, (4) has more mental health issues.

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Why Wellness and WC Have Not Mixed

Many employers haven’t seen correlation

Wellness typically focuses on Employee Benefits only

Some companies keep WC in Risk Management and Employee Benefits with HR…Wellness Message Not Shared

Carriers slow to make correlation

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Strongest Force in Universe – Resistance to Change

•Why don’t people change?

•Think of one “risk” factor you could eliminate:–Why don’t you eliminate it?–What are cons of not making change?–What are pros of making change?–What support can you get?

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Why don’t people change?

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Rate Your Driving Skills

Excellent

Above Average

Average

Below Average

Poor

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Optimistic Bias

“An earthquake of 9.2 won’t hit here?”

“The Titanic is the greatest ship ever made, it’s unsinkable.”

“I’ll quit tomorrow or soon.”

“I don’t have the time to exercise.”

“It’s so hard to eat good when you’re traveling.”

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Health Risks & WC Costs

Low OWS

Smoking

Poor Health

No Exercise

Low Life Satisfactio

n0% 1000%500

%1500%

1989%

1243%

836%

556%

255%

N = 3,388 X 4 YearsSource: Musich, S., et al., (2001, June). The Association of Health Risks with Workers’ Compensation Costs, JOEM, P. 534-541

2000%

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< 35 35-44 45-54 55-64 65+

0-2 Risks

5+ Risks

$3,432$4,130

$6,664

$9,221

$10,095

$2,025

$2,741

$3,601

$5,445

$7,268

$1,247 $1,515$1,920

$3,366

$4,319

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Surviving the Perfect Storm; D.R. Anderson, PhD

Source: StayWell Data analyzed by University of Michigan N=43,687

Analysis of Risks, Age and Cost

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The Wellness SolutionConverging healthcare trends affecting employers: Ballooning costs – demand for new solutions Increased focus on productivity Talent retention / competition Consumerism, cost sharing Aging workforce

Shifting costs does not always lead to lower costs or help address the problems causing increasing costs

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ROI in Worksite Health Promotion

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Why Now?

"There's no question that workplace wellness is worth it.  The only question is whether you're going to do it today or tomorrow.  If you keep saying you are going to do it tomorrow, you'll never do it.  You have to get on it today."

- Warren Buffett

1. Focus on productivity – doing more with less

2. Proactive cost-containment approach

3. Investment in human capital

4. Increased stress levels due to economic climate

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Wellness Implementation Barriers Still Remain

Willis Wellness SurveyThe op three barriers to implementing a wellness program: 

Budget constraints 61%

Not enough time/staff to devote 42%

Employees in various geographic locations 25%

Think investment - not cost.

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What are Employers Doing?

Willis Wellness Survey

Weight management 64%Physical activity 65%Smoking cessation 71%Medical screenings 49%General health website 52%Disease management 47%Periodic health fairs 41%Health risk assessments 50%

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Management’s Perspective

Willis Wellness Survey

94% of leadership is committed to improving employee

health.

94% of management believe that employee health can be

directly linked to absenteeism and productivity.

86% of management are committed to improving the

work-life balance of employees.

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Wellness StrategyGroup Health Programs Worker’s Compensation

Loss Prevention

Wellness Programs Health Risk Assessments/ScreeningsWellness Committee

Create a safe working environmentErgonomic Assessment, safety audits, pre-work stretchSafety Committee

Loss Reduction Condition ManagementEducation: medical self-care, consumerismBehavior change programs

Claims managementEducation: safety practices & proceduresTransitional return-to-workProvider Discounts

Risk Transfer Fully insured alternativesCoordination of BenefitsDefined Contribution

Insurance Contract reviewRetrospective plans

Risk Financing Direct Contracting, Networks, Tiered plan

Program Design

Benefit Structure/Pricing

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Willis – Wellness Strategy

Willis

Tools & Resources

Turnkey wellness

Diet content

Fitness content

Health coaching

Virtual health fair

Reward tracking

Reward delivery

Productivity

Moral

Employee Engagement

Work-Life Balance

Absenteeism

Turnover

Healthcare Cost

WorkplaceAccidents

Wellness Strategy Goals

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Worksite Wellness

A strategic business initiative designed to maximize the health of the workforce.

Policies & Cultural Support

Early Identification of Risk

Behavior Change

Ongoing Efforts to Maintain & Improve Health

More than a Vendor Relationship

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Conclusion

Do Homework: Analytics on Obesity, Aging, Mental Health Impact, Cultural Barriers

Know your Demographics: Risk Pool

Combine Disability, Medical and WC data

Bridge Gap: Joint Strategy with Workers Compensation and Employee Benefits

Wellness Strategic Risk Planning Session

Measure ROI

Managing Total Risk & Total Cost: WC & Employee BenefitsWhy Wellness, Why Now? April 12, 2011

Questions?