In 2020, we kick off our sixth year of Out Front Ideas with Kimberly and Mark, and we begin the year by discussing the issues we feel are going to be critical this year.
You will notice many of these issues reach beyond our usual focus on workers compensation and health care to risk management, workforce management, and employee benefits as each actively affects employers.
The upcoming election will undoubtedly have an impact on our industry. With 11 state governors, 35 Senate seats, the entire House of Representatives, and the presidency of the United States up for grabs, there could be a significant change. The impact on businesses could include changes in health care, tax laws, leave of absence regulations, independent contractor classifications, and more.
Democratic control could lead to an increased federal focus on state workers compensation laws, including federally mandated workers compensation coverage for farmworkers.
Virginia will likely have significant workers compensation reforms with 17 bills already introduced. California also has many workers compensation-related bills, although recently few have become law.
As health care continues to be the hot-button issue of the 2020 elections, it brings uncertainty of what our future coverage model may look like. Regardless of uncertainties, we know coverage is complicated, and any system-wide changes will require years of effort before implementation. Notably, healthcare.gov saw its first rise in new enrollment since 2016, up 1.8 percent, while renewing enrollees were down 2.9 percent.
Expect to see the continued rise of employer-led solutions in 2020, with healthcare programs like Walmart's significantly saving costs, decreasing disability durations, and promoting the best of care for common conditions. Community and local care are also emerging with the continuation of new entrants into the market. New benefit solutions are also expanding, including apps and platforms, such as the following.
Workers compensation is one of the most regulated lines of insurance, and this bureaucracy adds to the system costs. Industry engagement with regulators and legislators is increasingly important to ensure we have a voice at the table when change is contemplated. To make the system more efficient and effective, it is critical that third-party administrators, insurers, and employers engage with regulators and legislators at industry events like those held by the International Association of Industrial Accident Boards and Commissions, and the Southern Association of Workers' Compensation Administrators.
Technology's place in the evolution of health continues to expand, as seen at this year's Digital Health Summit at the Consumer Electronics Show (CES). With tools that track health metrics and protect personal health information to artificial intelligence, machine learning, and blockchain all being major topics, the future seems to hold limitless possibilities. A few remarkable devices introduced at the CES were the following.
You hear much about this term in the risk management marketplace, referring to the phenomena of significantly increased liability costs due to societal changes. The impact has been associated with the following.
A continuing trend of social pressures could make it very difficult and expensive for companies to secure liability coverage, as insurers continue to increase rates and reduce capacity in the marketplace.
Influence can be impacted by cultural competencies, personal beliefs, and how we feel about ourselves. Personal beliefs play a key role in influencing the level of participation and compliance, trust, and communication and outcome of a workers compensation case. While technology advancements, wellness programs, and regulatory requirements are impactful, an unsupportive environment, where an employee feels dismissed, will affect their engagement. Companies are evolving their advocacy models and improving how they engage with injured workers and patients to accommodate the impact that personal beliefs can have on these cases.
With 11 states and the District of Columbia legalizing recreational marijuana, it seems only a matter of time before it becomes federally legal. The Marijuana Opportunity, Reinvestment, and Expungement Act, which would federally legalize marijuana, has passed the House Judiciary Committee but will need to pass through the House and Senate for any further advancement.
State legalizations have created challenges for law enforcement and employers since there are no easy tests for impairment with the drug and no agreed-upon standards of what level of tetrahydrocannabinol (THC) would constitute impairment. The Occupational Safety and Health Administration also restricts blanket postinjury drug testing policies. New THC breathalyzer tests are set to hit the market this year that could assist employers and law enforcement with setting an actionable standard.
Industry engagement affects your marketing efforts, sales, client relations, customer service operations, and governmental affairs. One critical area to take advantage of is educational conferences. They bring incredible value to stakeholders but keep in mind that attendees want to see new sessions and topics presented without presenters selling their services. Additionally, using social media to not only promote your brand recognition and thought leadership but as a platform for real-time engagement with consumers only advances your customer-service model.
The easiest way to engage the industry and ensure relevancy is getting involved with organizations such as the Risk and Insurance Management Society, Public Agency Risk Management Association, Public Risk Management Association, American Society for Health Care Risk Management, Disability Management Employer Coalition, and University Risk Management and Insurance Association.
New emerging technologies are assisting in safety and risk management. We are seeing advancements in tech, such as wearables, that promote safer behaviors and drones that can view dangerous working conditions.
For all the advances we've made with technology, there is little that has been done to decrease workplace violence-related injuries. This challenge has been especially prevalent in the health care, retail, hospitality, and K–12 industries.
There is no ignoring the opioid epidemic in our country, but the fact remains: the pain is still very real with patients. In 2020, pay close attention to the evolution of pain management as the pressure increases greatly to limit the prescribing of opioids. Focusing on patient-centered care and taking an interdisciplinary and individualized approach to pain care are valuable options to advance patient needs.
Risk managers are facing rising insurance costs across multiple lines of coverage for the first time in a decade. This means that they have to show their value to the C-suite without the associated benefit of decreasing insurance costs. Additionally, there are many discussions taking place on the structure of risk management programs, including what duties they should perform and where they should reside within the corporate structure.
Often referred to as upskilling, talent reskilling could help with talent gaps as well as provide further internship opportunities and assist with the training of newer employees and older workers. Moreover, training in empathy and communication furthers engagement. Organizations that are taking advantage of these particular training areas, in addition to using new technology and on-demand environments, will have a decisive advantage.
It is estimated by 2021 that there will be $6 trillion worth of damages due to cyber-security attacks. While it has become increasingly difficult for company information technology departments to stay ahead of hackers, timely corrections—like updating systems to install patches and correcting known flaws—can help prevent major shutdowns.
With the introduction of the California Consumer Privacy Act, the most extensive and restrictive data policy regulation in the United States, the insurance community will need to make adjustments. Elements of this law are in contradiction to industry records retention regulations.
An estimated 1-in-6 Americans are assisting with the care of a disabled family member, with more than half of these employees working full time. Although paid caregiver leave of absence programs are not widely adopted with employers, they are gaining traction with those employers that are more forward-thinking.
When the responsibility of care for someone significantly disrupts the life of an employee, the impact can weigh heavily on their productivity and absence in the workplace. Companies like Wellthy, a digital communication hub focused on family care coordination, link families with a virtual care coordinator. Often a social worker, this individual advocates and schedules to take over many caregiving responsibilities that can alleviate the strain on a caregiver, leading to less absenteeism on the job.
The average public entity pension is less than 73 percent funded, leaving over $1.6 trillion in unfunded pension liabilities nationwide. Many public entities also have millions in workers compensation liabilities without funds set aside for payment of the claims. While there are no easy solutions to these challenges, increasing taxes and reforming pensions may be necessary. Public entity insolvencies is also a threat that has happened in the past.
While we often debate varying state regulations and the resultant inadequacies, we do not ask ourselves enough whether our system does harm. Misaligned incentives, complex claims processes and procedures, and a daunting and intimidating system can all affect recovery for the injured worker. Emergent technologies and an abundance of data offer solutions to systemically improve our industry. These solutions need to be implemented to fulfill the industry's obligations.
For several years, there has been a downward trend in the rates for workers compensation guaranteed cost insurance. Claims costs have been steadily increasing, but a decline in accident frequency has offset these increasing costs. However, the focus of the retention marketplace (self-insured and high deductible) is on accident severity. The combination of increased accident survivability, longer life expectancies, and new medical technologies means that the industry is seeing more expensive individual workers compensation claims than ever before.
Additionally, lower returns on investments in bonds, especially municipal and government bonds, could impact premium rates as the insurance industry invests heavily in these instruments.
Access to proper care and a lack of providers continue to be major roadblocks for the mental health crisis in our country. As we continue to break down the stigma, promote well-being, and assist in improving access to care, many workers compensation companies and health providers are offering unique and meaningful crisis management and behavioral health case management and working to create a well-being program for your firm.
Organizations like the National Alliance on Mental Illness are collaborating with businesses and public entities to shed light on issues such as suicide awareness and prevention to push a stronger culture of well-being. It is also imperative that our own workforces focus on their own mental health. We cannot be good advocates for others if we are not taking good care of ourselves.
The reliance of data in our industry is more important than ever, but is our data accurate? There is no single source for accurate information on the entire workers compensation industry as the National Council on Compensation Insurance and the independent bureau states all have only a piece of the puzzle. Data from self-insured employers is also missing from most analyses.
The accuracy of data is very important for risk management decision-making. Risk managers should be asking what stories their data is telling, including the following.
Ongoing changes to regulations, litigation, and risks make this an ever-present challenge for employers. Conditions such as obesity, diabetes, pregnancy-related impairments, depression, and stress-related mental health impairments continue to be addressed.
Leave programs continue to evolve across the country with nine states (California, Colorado, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington) and two municipalities (San Francisco and the District of Columbia) enacting paid leave. The District of Columbia's program is going live in July this year, Connecticut in 2022, and Oregon in 2023. This makes it increasingly critical to understand how these policies run concurrently with a workers compensation claim. Alignment between leave programs must be outlined so our claims teams are aware and properly engaging the necessary resources.
To listen to the archive of our complete "Issues To Watch" webinar, please visit https://www.outfrontideas.com/ and follow @outfrontideas on Twitter and Out Front Ideas with Kimberly and Mark on LinkedIn for more information about upcoming events and webinars.
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