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Workers Compensation Issues

"Closing Care Gaps" for an Aging Workforce

Joe Galusha | October 16, 2020

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Three senior employees

For employers across the country, workplace-related injuries sustained by aging workers are having a significant impact on workers compensation loss experience. Chronic health conditions, such as obesity, high blood pressure, diabetes, and arthritis, that can affect many older workers add complexity to workers compensation claims, often resulting in higher treatment costs and longer periods of lost work time.

Meanwhile, unfortunately for employers, traditional discount-based medical approaches used extensively in the past no longer are yielding acceptable returns on investment. As US employers look for new and more effective cost-containment techniques, innovative approaches that focus on prevention, health, and wellness are delivering exciting returns that may point the way to the future.

An Aging Workforce

Overall, since 1980, the US workforce has been aging and generally becoming less healthy. Unless the country's birth rates or immigration rates change, employers are going to have to navigate the challenges associated with an older workforce for the long term. Consider the following statistics.

  • Low US birth rates. According to the Pew Research Center, fertility has been hovering close to 1.8 births per woman in comparison to the replacement fertility rate of about 2.1. Thus, without considering net immigration, each new generation will be smaller than the last and the United States will have an increasingly more mature population.
  • More Americans are working into their later years. Generally, individuals across the country are planning to retire much later than they did in the decades of the 1970s and 1980s. At present, 44 percent of the US workforce is age 45 or older, per the US Source Bureau of Labor Statistics.

The following chart was created from information provided by the US Bureau of Statistics—Labor Force Statistics from the Current Population Survey.

Industry Total 16 years and over 16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years and over Median age % over 45 % over 55
Total employed 157,538 5,150 14,172 35,807 33,127 32,042 26,893 10,347 42.3 44.0% 24%
Agriculture, forestry, fishing and hunting 2,425 85 152 424 444 400 500 420 47.8 54.4% 38%
Mining, quarrying, and oil and gas extraction 750 3 40 198 212 140 124 28 41.8 39.7% 20%
Construction 11,373 193 875 2,502 2,831 2,454 1,909 609 42.6 43.7% 22%
Manufacturing 15,741 228 1,078 3,447 3,383 3,646 3,196 762 44.1 48.3% 25%
Wholesale and retail trade 19,742 1,181 2,671 4,447 3,494 3,402 3,163 1,384 39.9 40.3% 23%
Transportation and utilities 8,991 103 641 2,011 1,854 2,032 1,819 530 44.4 48.7% 26%
Professional and business services 19,606 219 1,372 4,953 4,405 3,993 3,254 1,410 42.8 44.2% 24%
Educational services 14,193 237 1,138 2,934 3,173 3,217 2,516 978 43.6 47.3% 25%
Health care and social assistance 21,701 358 1,666 5,271 4,759 4,462 3,797 1,408 42.7 44.5% 24%
Hospitals 7,425 40 484 1,930 1,750 1,507 1,312 352 42.3 42.7% 22%
Health services, except hospitals 10,846 201 833 2,514 2,334 2,257 1,928 780 43.1 45.8% 25%
Leisure and hospitality 14,643 2,124 2,666 3,412 2,298 2,012 1,453 679 31.9 28.3% 15%
Note: Median age represents the midpoint in the age distribution such that half of workers are younger and half are older. Updated population controls are introduced annually with the release of January data. Dash indicates no data or data that do not meet publication criteria (values not shown where base is less than 50,000).

Chronic Health Conditions' Impact on Workers Compensation Costs

Although older workers bring job experience and tend to be reliable and productive, they also may be more likely to suffer from chronic health conditions. These increased health conditions appear to have a significant impact on workers compensation claim costs.

A recent study by Aon finds the average cost of workers compensation claims nationally, for workers age 45 or older, is 73 percent higher than for younger workers. The study found that these workers are away from work (on average) 14 days more per lost-time injury and are 30 percent more likely than younger workers to have a medical-only claim convert to time away.

In addition to age factors, medical studies have shown how various health conditions can affect recoveries. According to the US Centers for Disease Control, it is estimated that 1 in 4 US workers have at least 2 chronic health conditions.

The most frequent of these conditions—diabetes and high blood pressure—are known to complicate recovery from injury and illness. According to the American Diabetes Association, more than 30 million Americans, or 9.4 percent of the population, have diabetes; alarmingly, the number of Americans with diabetes is projected to grow to more than 40 million people by 2030.

Fast Facts on Diabetes

  • 30.3 million people have diabetes (9.4 percent of the US population)
  • 23.1 million people have been diagnosed with diabetes
  • 7.2 million are undiagnosed (23.8 percent of people with diabetes)

Source: American Diabetes Association

Blood sugar level is a significant factor in how quickly an individual's wound will heal. Elevated blood sugar levels prevent nutrients and oxygen from energizing cells. They also prevent the patient's immune system from functioning efficiently and increase inflammation in the body's cells.

Meanwhile, according to the National Center for Health Statistics, 1 in 3 American adults suffer from high blood pressure (HBP), but just 54 percent of these cases are controlled. HBP also is a serious complicating factor with respect to workers compensation injuries. HBP and accompanying poor circulation reduce needed oxygen flow to cells through the arteries and capillaries, which regenerates and heals the cells.

Graph showing the percentage of population 45 and older from 1978 to projected 2030

An additional complication for employers is the increasing average age of US workers. In losing the long-time favorable youth-to-aged worker ratio of past decades, US employers now must find new ways to utilize the valued knowledge and experience of their older workers while keeping them healthy and safe. They also must plan for the long-term outlook of a continued mature workforce. As they contemplate their options, many employers—particularly those in the most labor-intensive industries—are finally coming to grips with the limitations of traditional discount-based medical cost-containment practices.

Innovative Approach to Disease Management Shows Promise

Despite the challenges posed by a worker population increasingly affected by various chronic health conditions, employers may be able to see some light at the end of the tunnel.

Consider the approach used or "baked into" Kaiser Permanente's model of care, which is gaining widespread recognition for its success in disease management and medical cost reduction. A leading healthcare company based in Oakland, California, with more than 12.4 million members spread across nearly a dozen states, Kaiser Permanente designed and implemented an innovative health plan that connects all caregivers in its system and provides meaningful incentives for delivering quality of care.

The company's breakthrough approach involves transitioning from a traditional occupational health model to an organization-wide focus on total health and well-being. A key element of the success of the approach, according to Steven Wiesner, MD, chief of occupational health, involves "closing care gaps." Besides proactively advocating for early detection of common health conditions, there should be an emphasis on achieving increased compliance among its members with treatment regimens to manage chronic conditions.

To accelerate this initiative, the organization rewards its physicians for quality outcomes and for focusing on preventative care by closing care gaps at every encounter with a patient and/or injured employee. This represents a stark contrast to traditional discount-based medicine, where the volume of services performed and revenue generated are typically rewarded.

A compelling example involves the success of Kaiser Permanente's treatment of HBP, where experts agree that "adherence rates of 80 percent or higher are needed for optimal therapeutic efficacy. Yet, according to estimates, adherence to chronic medications is only around 50 percent." (US Pharm. 2018; 43(1)30-34).

In this case, the initiative has dramatically increased blood pressure control from 68 to 89 percent. Using the same approach to address other chronic health conditions, Kaiser Permanente has been able to deliver measurable results that have translated into superior workers compensation experience.

A recent benchmarking study by Aon Global Risk Consulting of the costs of workers compensation claims involving Kaiser members over the age of 45 revealed outcomes using the "Kaiser Permanente On-the-Job™" (KPOJ) integrated care medical model were 20 percent lower in average paid costs than the industry benchmark. In addition, for workers compensation within the model across all age groups, work-related injuries and illnesses were reported more promptly (13 percent faster than average) and 80 percent resolved within 12 months, outperforming the industry benchmark of 70 percent within 12 months. While many factors likely contribute to these outcomes, such as organizational workers compensation claim management practices and effective return to work programs, it is difficult to argue against the success of the medical model.

This evidence-based medicine that is practiced appears to also have an impact on such frictional costs as litigation. Another independent study conducted by MedMetrics in 2016 of a large retailer revealed locations within the KPOJ network not only had a significantly lower direct cost per medical claim but also 64 percent fewer litigated claims when compared to locations that were outside of the network ("Macy's Workers' Compensation Claims Costs in California," MedMetrics, 2016).

While Kaiser Permanente's exciting experience represents yet another validation of the adage, "an ounce of prevention is worth a pound of cure," it also may blaze a pathway for employers and providers across the country to examine and follow in their quest to keep aging workers healthy and contain their workers compensation costs.

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