Emerging Issues in Workers Compensation: Obesity, Overweight

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Emerging Issues inWorkers CompensationObesity,
Overweight Physical InactivityWorkforce
Reintegration of VeteransNeurodegenerative
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 [phone] ? Fax [phone]
? bobh_at_iii.org ? www.iii.org
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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

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OBESITY WORKERS COMPENSATIONA Heavy
BurdenFor Workers Comp?
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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.
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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 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.
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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 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.
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Most Obesity-Related Costs to WC Systems are
Indirect
Most losses to associated with WC claim arising
from obesity are indirect in nature.
Source 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.
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Direct and Indirect Workers Comp Costs for
Obesity in California Adults (2000 Dollars)
Source 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.
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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.
10
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.
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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.
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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

• lt10
• 15-19
• 20

Source Behavioral Risk Factor Surveillance
System Insurance Information Institute
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Prevalence of Overweight and Obesity among US
Adults (aged 20-74 years)
31
23
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Nearly 2/3 of US adults are overweight or obese,
up from 47 in the late 1970s 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
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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
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Issues in Reintegration of Military Veterans
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Exposure Issues AssociatedWith 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.
• 14,021 physically injured so far many 1000s more
  yet to come
• 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
• Estimated that 100,000 may need some mental
  health help
• Only a minority will actually ever receive it

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Why Does this Matter forWorkers Compensation?

• Tens of thousands of soldiers will re-enter the
  civilian workforce having suffered some physical
  injury
• Some will require accommodation
• Possibility of reinjury/second injury Second
  Injury Funds?
• Interaction with Americans With Disabilities Act
  (ADA)
• 100,000 will have suffered some mental health
  issues
• How will lack of treatment manifest itself in the
  workplace?
• When?
• Costs to VA are already staggering
• 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

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Why Does this Matter forWorkers 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
• Depression Sleep Deprivation
• Substance Abuse Marital/Family Problems
• Occupational Instability Social Maladjustment
• Anxiety

Source National Center for PTSD
http//www.ncptsd.va.gov/facts/general/fs_what_is_
ptsd.html accessed August 20, 2005.
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Military PersonnelKilled in Iraq
Deaths can fluctuate dramatically from month to
month
1,861 military personnel have been killed so far
in Operation Iraqi Freedom
Source Brookings Institution, Iraq Index
Archive, updated August 18, 2005.
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Non-Fatal Injuries to Military Personnel Deployed
in Iraq
Injury counts can fluctuate dramatically from
month to month
14,021 military personnel have been wounded so
far in Operation Iraqi Freedom. Their issues
have received relatively little attention.
Source Brookings Institution, Iraq Index
Archive, updated August 18, 2005.
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Non-Fatal Physical Injury RatesAmong 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.
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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.
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Reported Mental Health Problems Among Army
Marine PersonnelAfter 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.
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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.
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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.
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Combat Experience of US ArmySoldiers 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.
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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.
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Reasons Why Troops Dont 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.
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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
• Monitoring is probably wise, esp. in stressful
  jobs or jobs involving operation of heavy
  equipment and driving
• Most former military will have no major problem
  readjusting
• 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.
• Veterans who were wounded or suffer from
  service-related mental health problems entitled
  to lifetime medical benefits from the Veterans
  Administration
• NOTE Many may be undiagnosed (barely ¼ see MH
  prof.)
• Be aware of local VA resources
  http//www.va.gov/rcs/
• VA Readjustment Counseling Service 800-905-4675

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The Defense Base ActWhat 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 USLH Act to civilian workers on
  bases overseas contractors employees outside US
• Administered by US Department of Labor
• Covers all US citizens employed on job site
  (e.g., Iraq), 3rd party and local nationals,
  subcontractors

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Claims Under Defense Base Actin 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
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Degenerative Neurological Diseases Occupational
RiskThe Next Frontier for Workers Comp?
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Occupational Groups Showing Elevated Incidence of
PSD or AD

• Presenile Dementia
• Clergy
• Dentists
• Graders/Sorters
• Hairdressers/ Cosmotologists
• Social Workers
• Teachers (prim/sec.)
• Farmers
• Under age 65 only

• Alzheimers Disease
• Aircraft Mechanics
• Bank Tellers
• Clergy
• Hairdressers/Cosmo.
• Painters/Sculptors
• Secretaries
• Teachers (prim/sec.)
• Farmers
• 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).
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Occupational Groups Showing Elevated Incidence of
PD or MND

• Parkinsons Disease
• Biological Scientists
• Post-Secondary Teachers
• Clergy
• Other Religious Workers
• Welding
• For deaths under age 65 only

• Motor Neuron Disease
• Graders Sorters (non-agricultural)
• Hairdressers
• Teachers (prim/sec.)
• Veterinarians
• Farmers

Source Park, Robert M., et al, Potential
Occupational Risks for Neurodegenerative
Diseases, American Journal of Industrial
Medicine, 48 63-77 (2005).
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Casual Theories About Occupations With Elevated
Odds of Neurodegenerative Diseases
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TERRORISM WORKERS COMPENSATIONIs TRIA Enough?
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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

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But The Door Was Left Open

• If Congress were to reauthorize TRIA, these are
  the key changes that insurers required to make
• The event size that triggers coverage must be
  increased from current 5 million level to 500
  million.
• Dollar deductibles and percentage co-payments
  must be increased.
• Certain lines of insurance, such as commercial
  auto, GL and other smaller lines must be
  eliminated from the program.
• Reforms to ensure that injured plaintiffs can
  recover against negligent defendants, but not by
  exploiting the litigation system.

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Terrorism InsuranceMarket OverviewWorkers Comp
is the Most TRIA-Dependant Line
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Terrorism Coverage Take-Up Rates by Region
Terrorism take-up rates are highest in the
Northeast and Midwest
Source Marsh, Inc. Insurance Information
Institute
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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
Take-up rate exceeds 50 in Midwest, Northeast
Source Marsh, Inc. Insurance Information
Institute
42
Terrorism Coverage Take-Up Rates by Industry
Take-up rates rose substantially in 2004 Highest
among Finl. Inst. Real Estate firms
Source Marsh, Inc.
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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
44
Estimated Workers Comp Insured Losses Deaths
for Terrorist Events
173,000
Fatalities
12,300
1,300
1,000
Source Eqecat, NCCI.
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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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