Workers’ compensation insurance is a great support for injured workers, and covers the cost of medical care and rehabilitation for employees injured on the job.
Medical claims review is an important process that helps determine the legitimacy of the claims and the cost involved. This insurance compensates workers for lost wages, and provides death benefits for their dependents if they are killed in workplace accidents, including terrorist attacks. Cost control is a major concern in the workers’ compensation system, and workers’ compensation costs is one of the major factors that influence businesses to expand or relocate in a state, creating jobs. The reforms made from time to time enable employers and insurers to exercise better control over medical care costs via management and supervision of the treatment plan and the return-to-work process, and also to improve safety in the workplace. However, new problems appear from time to time that have a direct bearing on the costs. Increasing costs of prescription drugs, mainly the long-term use and abuse of narcotics is a major cost driver.
Now there is another major concern for the workers’ compensation system – the aging workforce. Rich Ives, vice president of the Travelers Insurance Company says that medical costs in workers’ compensation are rising, and comprises 63% of claims costs. During an interview with Insurance Business, he drew attention to the aging American worker who is not very healthy, and brings with him/her chronic conditions. Here are his observations:
- At least one-third of the labor force is aged 55 years and older, with 25% of current workers eligible for retirement.
- By 2040, 40% of workers will be eligible for retirement.
- 10,000 Americans reach retirement age every day, and this trend may continue for the next 16 years.
- Workers who reach retirement age are choosing to work longer, which makes the workforce older.
- The presence of chronic conditions such as pain, diabetes, and obesity doubles the claim cost. If two or more conditions are present, the claim cost increases five times.
As he pointed out, the continuing consolidation in the medical costs market is another reason for increasing costs. Consolidation gives providers more bargaining chips and this could result in increase in the cost of utilization.
- According to the 2017 Liberty Mutual Workplace Safety Index, U.S businesses spend more than one billion dollars every week on serious, non-fatal workplace injuries.
- More shockingly, at least $1 trillion is spent on unaddressed employee chronic disease each year, the Milken Institute data shows.
Most employers are not taking the necessary steps to help workers manage their conditions. Most workplace wellness programs focus only on health evaluations and disease identification. While this is important, businesses should also have programs that will help employees to effectively manage their chronic diseases.
This brings us back to our earlier topic of discussion – the aging workforce and their chronic conditions.
Why is it important that chronic conditions are effectively controlled?
- Chronic illnesses can last indefinitely and worsen over time.
- The CDC says that medical costs for treating chronic disease comes to 86% of the nation’s healthcare costs, and the National Association of Chronic Disease Directors says that healthcare costs for people with chronic illnesses are five times higher than those who don’t have a condition.
- Chronic illnesses also lead to uncalculated indirect costs such as loss of productivity, absenteeism, employee stress and anxiety.
- As of 2012, 117 million people (almost half of all adults) had one or more chronic health conditions.
- In 2010, seven of the top 10 causes of death were chronic diseases (Data from the Centers for Disease Control and Prevention). This means that employers will surely have one or more workers with a chronic condition.
- The costs associated with these health conditions manifest disproportionately and have an impact on the workplace. More than 150 million Americans obtain health coverage through their employer, whereas only 20 million people buy their coverage on and off the Affordable Care Act’s insurance exchanges.
Many chronic conditions such as heart disease, cancer, stroke, type 2 diabetes, arthritis and obesity are common but preventable. These can be effectively controlled with care management. Employers can identify workers who comprise the high-risk segment, and work with them to provide hands-on care to reduce costs over the long term. While providing medical record review for attorneys handling workers’ compensation cases, we have seen that chronic pain is an epidemic in the country. Statistics show that it adds costs of around $600 billion to the US economy. Workers with chronic pain conditions must therefore be identified at the earliest so that it ensures improved outcomes in the patient as well as reduced medical costs. Another major contributor to medical costs is diabetes that affects around 29 million people in the United States. More distressingly, CDC statistics show that around one-third of the American population comprising 86 million individuals have pre-diabetes that may progress to type 2 diabetes. Here also there is a chance of incurring huge healthcare costs, and loss of productivity.
As providers of medical review services and very much active in the industry, we understand the urgency of giving special care and attention to the high-risk segment of workers. Surely, a healthier workforce is a happier group that can ensure increased productivity. At the same time, minimizing the risk of chronic health conditions through specific interventions to the high-risk group will also help reduce costs considerably.