Insight, analysis & opinion from Joe Paduda

Apr
13

COVID infections – what’s the real number?

Posted by Joe Paduda on Monday, April 13th, 2020 | Comments

Ten days ago I wrote:

Ignore anyone who says there will be this many infections and this many deaths – their “models” are based on data that is likely wildly inaccurate and [based on] assumptions that differ wildly.

Not much has changed.

Today we’ll dive into “official” infection rates and why they may be way less than the actual infection rates. (for those wanting a lot more detail, try this.)

How many of us are infected?

According to testing results, in the US about 550,000 people have tested positive for coronavirus.  However, some researchers suggest as many of 12 million may have been infected, with the vast majority showing no or mild symptoms. (original source is Reason magazine, an avowedly libertarian publication)

DO NOT take that as gospel or dismiss it outright; the researchers relied on data from testing from China as well as other sources; some have questioned the reliability of data and testing kits from China. Other scientists have employed mathematical modeling to calculate actual infection rates; their findings indicate we’re identifying about 2/3rds of COVID19 cases.

Remember, all projections rely on data that are woefully inadequate. Reality is we do NOT know how many of us are infected, because here in the US (and in many other countries) the rollout and ramp up of testing has been far too slow. As you can see, after an initial increase, in the US we’ve been averaging less than 150,000 tests per day for more than two weeks.

data from CovidTracking project; source here (btw, this is a highly credible entity with full transparency re data sources)

From the research reported by Reason:

Credible research indicates Insufficient and delayed testing may explain…Germany, which has detected an estimated 15.6% of infections compared to only 3.5% in Italy or 1.7% in Spain. Detection rates [the percentage of people who are actually infected that are tested and counted as infected] are even lower in the United States (1.6%) and the United Kingdom (1.2%)…As of March 31, [research article authors] Vollmer and Bommer calculate confirmed cases represented just 3.5 percent of infections in Italy, 2.6 percent in France, 1.7 percent in Spain, 1.6 percent in the United States, and 1.2 percent in the U.K. [emphasis added]

In other words, the true number of infections was between 29 and 83 times as high as the official tallies in those countries [emphasis added]

The countries with the highest estimated detection rates were South Korea (nearly 50 percent), Norway (38 percent), Japan (25 percent), and Germany (16 percent)…The estimated prevalence of infection ranged from 0.1 percent in India and Japan to more than 13 percent in Turkey; it was 3.6 percent in the United States.[emphasis added]

To be clear, the researchers made several assumptions, some based on other researchers’ work. And, Vollmer and Bommer’s findings are quite different from Rao and Krantz’s.

What does this mean for you?

Net – we do not KNOW how Americans are infected…but it is definitely more than a half-million.

We will not KNOW until testing using a statistically-credible sample size and methodology has been done and reported.

 

Apr
10

COVID, small business, and workers’ comp

Posted by Joe Paduda on Friday, April 10th, 2020 | Comments

The small business sector is in deep trouble – with big implications for workers’ comp – starting with what looks like an 8% decrease in monthly premiums and equivalents due to massive layoffs and business closures.

Without immediate funding from the SBA’s $350 billion Paycheck Protection Program (PPP) and Economic Injury Disaster-Relief Loans (EIDL), many small businesses will disappear. Work comp premium payments will dry up and jobs for laid-off, injured and sick workers will too.

Here are the implications for workers’ comp; details on why small business is in deep trouble follow.

My best estimate is annual premiums and equivalents will be down about 10% by the end of April. Here’s the math:

In December of 2019 average annual income was $48,700. Workers’ comp insurance costs on average $1.30 per $100 of payroll for a total of $633.41 per year or $52.71 per month.

Businesses with less than 500 workers account for about 60 million jobs (I know, 499 workers is a pretty big “small” business, but that is how many entities categorize “small); credible sources estimate we’ll lose somewhere around 12.3 million small business jobs.

note this includes ALL jobs, not just small employers

Multiplying the average payroll cost of workers’ comp by the average monthly wage, then by the number of layoffs adds up to a loss of about $650 million in workers’ comp premiums every month, or roughly $50 million for every million jobs lost.

NASI reports total premiums and equivalents were just over $97 billion in 2017; that equates to about $8 billion per month.

Given earlier job losses coupled with yesterday’s announcement, my best guess is we will be down somewhere around a billion dollars in premium and equivalents by the end of the month.

The small business support situation

Okay, now for the current status of aid for small businesses.

Hundreds of billions of dollars have been earmarked to help businesses stay afloat, and more billions are on the way. That’s great – but only if those dollars actually get into businesses’ bank accounts. So far, that has not gone well.

Business owners were told Small Business Administration (SBA) dollars would be flowing in “days” and depending on their need and the size of their business, they could get loans and grants up to $2 million.

The programs are a clustermess.

Business owners are getting conflicting answers from the SBA – when they get any answers at all. If anything, lenders are worse off, unable to get clear guidance from the SBA. Grant amounts under the Economic Injury Disaster-Relief Loans (EIDL)’s Advance program have been reduced to a maximum of $10,000 – or less (depending on which official you listen to). Banks are already running out of SBA money, making business survival dependent on how fast you get to the front of the line.

Initial loans have also been capped – at a maximum of $15,000. And applications for long-term loans under the Paycheck Protection Program (PPP) are also in limbo, with applicants desperately hoping they’ll get relief before it’s too late.  Many business owners have heard nothing about their applications for grants and loans despite hours stuck on hold. I

It’s easy – but wrong – to point the finger at incompetent government bureaucrats or lenders.

The SBA’s is woefully understaffed, its computer systems haven’t been updated for decades, and went without an official leader for nine months, a permanent leader appointed just three months ago. Neglected for far too long, the SBA just isn’t ready or able to do what needs to be done.

I provide that detail so we’ll understand that things are not going to improve quickly – and improvements will be scattered and spotty.

Implications

Fewer jobs = less payroll, fewer premium dollars for insurers, fewer claims for service entities, less medical care for providers, and less income for others in the workers’ comp ecosystem.

 

 

Apr
8

COVID’s impact on workers’ compensation, Part 4

Posted by Joe Paduda on Wednesday, April 8th, 2020 | Comments

Monday I finished a survey of 16 payers, getting their views and perspectives on a variety of COVID-related issues germane to workers’ compensation. The genesis for the survey was several conversations I had with work comp execs two weeks ago; all were struggling to figure out what the impact would be, how to adapt their organizations to deal with COVID, how to set priorities and a host of other questions.

It became apparent that some were much further along in one area and hadn’t thought of other issues. Ideally the survey will help us learn from each other, accelerate adoption of approaches/policies/ideas that work, and shorten the learning curve.

Here are the top takeaways; note that only respondents receive the detailed survey report.

  • Claim volumes have dropped about 25% on average, with very different decreases depending on the type of employer involved.
  • Tele-medicine in all its versions is exploding as employers seek ways to continue current claimants’ treatment and triage new claims quickly.
  • Unlike injuries, respondents’ take is the vast majority of COVID claims will resolve quickly, with most patients recovering with minimal need for care.
  • However, there’s a growing concern that some patients may have lasting lung damage and other trauma as well as potential cognitive deficits. This could trigger a whole host of future issues and complications.

A couple more complicated findings bear discussion.

Illness v Injury

Several respondents noted that the industry is struggling to shift from injury-caused claims to disease-caused claims. Historically the vast majority of claims have been injuries – trauma, repetitive motion, burns, slip-and-falls and the like. These are (mostly) relatively straightforward to investigate.

Not so with disease. Where did the exposure occur? Could the patient have been exposed outside the workplace? What do the state laws and regulations say? Where is the burden of proof; claimant or employer, and what constitutes “proof” of occupational exposure?

Needless to say, this is a dynamic situation that’s going to evolve over time.

Which brings up point two…

Multiple respondents noted that what they do now may/will have a big impact on how these claims are adjudicated and if/how responsibility is assigned down the road.

Workers’ comp payers are making decisions on the fly, decisions that in times past would have been deliberated, researched, considered, and reviewed by attorneys, committees, boards, and executives.

There’s no time for that now.

That is causing a lot of stress, angst and worry as individuals are forced to figure out what to do in a situation no one ever encountered before, considered, or even thought remotely possible. Decisions on everything from:

  • questions to ask on intake to
  • whether or not to authorize COVID testing to
  • what constitutes occupational exposure to
  • a payer’s potential liability if it rejects a COVID claim

and many others are being made every day by hundreds of workers’ comp professionals who are mostly flying blind.

When the crisis has passed, executives, Boards, regulators and other leaders should not fault front-line staff and their managers for decisions made and actions taken while in crisis mode.

I want to thank the professionals who took time out of their very busy day to share their knowledge and experience with others. We aren’t publishing their names or their organizations’; you know who you are and I deeply appreciate your willingness to share your hard-earned and hugely valuable knowledge with others.

As with all of our surveys, only respondents get a detailed survey report; that’s only fair as they volunteered their time and expertise and this is the only way we can thank them and encourage others to follow their lead.

I will be conducting a follow-up survey in a few weeks; if you are interested in participating please let me know in the comment area below (all comments are moderated, so your information will not be published)

What does this mean for you?

We are learning a lot every day, including how to adapt to a really difficult situation. Don’t be too hard on yourself.

 

Apr
7

Are you paying too much for drugs? Part One

Posted by Joe Paduda on Tuesday, April 7th, 2020 | Comments

With payrolls plummeting and premium dollars poised to follow suit, workers’ comp payers are looking for the proverbial nickels in the couch cushions.

While pharmacy costs have been declining for years, there are several ways payers are losing money by overpaying for drugs.

Here’s one.

Almost all work comp payers pay for drugs based on a discount below AWP. Generics get a much deeper discount than brands, perhaps 45%+ compared to 13% or so. That being the case, you’re getting a much better price on all your generic meds.

Well, perhaps.

First, what is a generic? Again, seems straightforward, but thru the miracle of legalese, it can be anything but. I’ve seen many a PBM-Payer contract where the definition of generic was, well, opaque.

there’s a definition in there somewhere…

A “generic” is a generic… right…?

Well, no. Among the generic definitions I’ve seen are:

And, that definition was buried in the dense print on page XXX, while the pricing referring to generics was somewhere else, and the process and timing of linking the two, and the data source for the actual prices were either nowhere in the contract or buried somewhere else.

Unless you a) know exactly and precisely what the definition should be; b) read and understand the entire contract so you can connect a definition to a pricing level to a pricing basis/compendia/source; c) have the expertise, staff, resources, and time to monitor the actual pricing you are getting, you don’t KNOW if you are overpaying for “generics”.

What does this mean for you?

Do you know what you don’t know?

Apr
6

COVID’s impact on workers’ comp – part 3

Posted by Joe Paduda on Monday, April 6th, 2020 | Comments

We are three months into the COVID pandemic, and the impact on workers’ compensation is altering the entire industry in ways unimaginable just weeks ago (early takeaways are here).

(before we jump into this, you have to watch a few seconds of this video)…leave it to a Brit to come up with the most bizarre way to deal with a lockdown…

Now, back to our regularly scheduled post…There’s a lot of angst and fear over how COVID will affect jobs in workers’ comp and this is both legitimate and warranted.

Claim volumes are plummeting, patients are unable to get treatment and employers aren’t able to re-hire recovered workers.  Some service companies are reducing staff, payers are revising claim intake processes, and tele-everything is surging in popularity.

Here are some of the changes we’re seeing.

Tele-everything

With patients reluctant to enter medical facilities and providers equally reluctant to expose their staff, there’s been an explosion in the take-up of tele-rehab, tele-triage, and tele-medicine.  Sure, providers still struggle to navigate the spider’s web of state-specific regulations, reimbursement schedules and other requirements. Nevertheless reality is forcing change at a pace never before seen.

Concentra CEO Keith Newton and I connected via email to discuss his company’s tele-services.

Newton reported two different tele-medicine “channels” [my word not his] are up and running. National payers are accessing occ med doctors for telemedicine services through the company’s centralized Addison, Tx intake group.  The physicians aren’t physically located in Addison but are 100% dedicated to the group and multi-state licensed.

In the field, local employers and municipalities that already use specific clinics  are starting to use center-based telemedicine and tele-rehab. This was “stood up and live over the last week at all 500+ centers.” So far, most initial injury intake and treatment is in person with followup visits and rehab available by telemedicine by the center-based clinicians.

The company is piloting an initial injury process in a couple of states for initial injuries as well.

Other companies, including OneCall, MTI America [HSA client] and MedRisk [HSA client] are also delivering tele-rehab services.

Staffing changes

In an email conversation with Concentra CEO Keith Newton, we also discussed staffing changes in light of anecdotal reports of a significant drop in new claims. Long story short, while Concentra has – and will continue to adapt to changes in injury counts, Concentra has not laid off any employees and kept furloughs to a minimum.

Given the rapidly evolving nature of COVID and responses thereto, I’d expect Concentra’s clinicians will find more than enough to do as employers seek to screen workers, train workers in exposure control/risk mitigation, and change policies to ensure workers manufacturing PPE [personal protective equipment] and COVID test kits and related materials – and the manufacturing  itself – are safe and protected.

[note a “furlough” and a “layoff are different; A furlough is temporary and requires a worker to take some unpaid time off or work reduced hours. It could last from a couple of days to a couple of months. A layoff is a temporary separation of employment, meaning the worker is removed from the payroll for a limited time. more on this here]

One Call’s furlough has been widely discussed throughout the industry and appears to be driven by two issues – the previously mentioned decline in claim volume and the impact of India’s shutdown on One Call’s document processing operation. The furlough has affected top execs and front-line staff alike. Sources indicate One Call is working to on-shore much of the document processing, a step necessary to keep work flowing and bills processing. This will be a challenge as reports indicate almost half of the company’s US-based workforce was furloughed.

To One Call CEO Tom Warsop and the Board’s credit, the company is continuing to pay premiums for furloughed workers’ health insurance and other benefits and will be sending those workers an $825 check as well. Unfortunately, One Call will keep its non-compete in place for furloughed workers…Warsop did say he would be happy to talk individually with any furloughed workers and consider their individual situations.

I’ve also heard and read reports of significant staff reductions at CorVel; I sent an email to the company three days ago asking for a response by 9 am eastern this morning. No response came.

Friday the company filed an 8-K with the SEC providing notification it was suspending stock buy-backs but there was no mention of the staff reductions; I could not locate any other public report of the furlough/layoff.

Given CorVel’s reaction to a ransomware attack, this isn’t surprising.

The good news is the federal relief program should provide furloughed, laid-off, and terminated workers with much-needed cash while they are off work; the bad news is reports indicate state unemployment phone lines are jammed 24/7 due to unprecedented call volume.

For those who are having tough discussions with management, coworkers, or employees about this situation, here’s a helpful guide to help you make it thru.

Later this week I’ll post a detailed report on a just-completed survey of 15 payers’ reactions to COVID later this week.

Apr
3

Don’t obsess.

Posted by Joe Paduda on Friday, April 3rd, 2020 | Comments

Obsessing over stuff we don’t know and can’t control will make us nuts.

Instead, focus on what you can do to protect yourself and your loved ones, and help others any and every way you can.

Why you should ignore a lot of the “experts” and their models.

Just two days ago I said: Ignore anyone who says we’ll be back to normal by this date or that.

I’ll add – Ignore anyone who says there will be this many infections and this many deaths – their “models” are based on data that is likely wildly inaccurate and make assumptions that differ wildly.

(the model used in White House press briefings assumes all states impose lockdowns similar to China’s and keep them in place for months. Meanwhile, the President is talking about a lockdown that ends in a few weeks and many states were late imposing lockdowns – or haven’t yet.)

A basic rule of statistical analysis is “when different studies of the same thing don’t agree it’s probably because they aren’t counting the same stuff the same way.” (OK, I sort of made that up – but it’s entirely true.)

A percentage is based on a numerator (the top number), which in this case is the number of people who died “of COVID”, divided by the denominator – the number of people “infected”.

First, the numerator – deaths due to COVID.

The “death rate” in Germany is 1%, Italy’s is 10%, China’s 4 percent, and Israel a tenth of that at 0.4%.

What?? How can this be? Is it because Italians are older? no…Germany’s population is older than Italy’s. Are Israelis healthier? Well…

From the BBC – “it might seem simple enough: if a patient dies while infected with Covid-19, they died of Covid-19.” Perhaps – but they may have died from a car accident, or might have an underlying health condition such as COPD or asthma or heart disease. The UK counts ANYONE who dies and has tested positive for COVID as a COVID death. Even if they died in a car accident.

Here in the US, physicians have discretion; they report whether the patient died “as a result of this illness.” So, it’s not surprising that the UK would have a higher death rate than the US.

A related issue – reports from Italy indicate there are a lot more people dying of all causes than usual, and many of those “extra” deaths aren’t attributed to COVID. “Only 12 per cent of death certificates have shown a direct causality from coronavirus,” said the scientific adviser to Italy’s minister of health last week. [source here]

So, we do not know the actual number of people who have died “as a result of COVID.”

Now, the denominator – the number of people  “who have COVID.”

Different countries also report different “infection rates”;

  • China may not report people who test positive but don’t show symptoms (are “asymptomatic”). As a substantial percentage of people who get infected don’t show symptoms, that makes China’s “infection rate” seem a lot lower than it really is.
  • The number of tests isn’t as useful as the percentage of people tested. Reality is, if we aren’t testing everyone, we don’t know the real percentage of people with COVID.
  • Here in the US we are STILL way behind testing; we’re only testing about a hundred thousand people a day – about the same number we tested 9 days ago.

Oh, and there are two different “fatality rates.”

Again the BBC:

There are, in fact, two kinds of fatality rate. The first is the proportion of people who die who have tested positive for the disease. This is called the “case fatality rate”. The second kind is the proportion of people who die after having the infection overall; as many of these will never be picked up, this figure has to be an estimate. This is the “infection fatality rate”.

Head swimming yet?  Yeah, mine too.  Net is no one knows how many of us are infected and we don’t know the number of people who die of COVID-related conditions.

We DO KNOW:

  • social isolation will help keep you safe;
  • sanitizing everything will help keep you safe;
  • helping others will help keep you sane.

What does this mean for you?

Obsessing over stuff we a) don’t know and b) can’t control will just make you nuts. Focus on what you can control.

And be nice.

 

Apr
2

Life after COVID – desperate times, desperate measures

Posted by Joe Paduda on Thursday, April 2nd, 2020 | Comments

Things that are keeping me awake at night (besides the normal problems associated with being a 61 year old guy)

The number of people without health insurance will increase – a lot, driven by:

Note – in yesterday’s press conference, President Trump did make some vague comments about possibly using Medicare and/or Medicaid to pay for COVID treatment. Here’s the quote:

“I’m not committing,” said Trump. “I have to get approval. I’ve got a thing called Congress. It’s something to look at and we have been looking. “

This would require a massive change to Medicare and/or Medicaid laws, followed by an equally massive change in lots of regulations, followed by…who knows what.  Reality is, there are way better ways to address this.

Back to the growth in the uninsured and implications for COVID:

  • some/many will not get tested for COVID as they can’t afford treatment and are terrified of debt.  Some of these folks will continue to work because they have to, which increases the likelihood they’ll spread the disease.
  • hospitals and other healthcare providers – which are already struggling financially because they aren’t doing profitable surgeries for privately insured patients – are going to be delivering a lot of care to people who can’t pay for it.

Net – fewer people with decent health insurance will mean more people will get infected, and the healthcare delivery system is going to have serious financial problems.

A modest proposal.

Here’s a fix.  The federal government makes COVID testing and treatment a federal benefit for all residents (yes undocumented people too) and reimburses providers at Medicare rates.

This would:

a) alleviate the huge financial pressure on hospitals, EMS, and all healthcare providers;

b) increase the number of people tested; and

c) get us back on track sooner than if we do nothing.

Apr
1

The not-April Fool’s post

Posted by Joe Paduda on Wednesday, April 1st, 2020 | Comments

Well, the WORST thing about this damn pandemic is I can’t do my annual April Fool’s post.  So, instead of actually working, I’ve been trolling twitter for the best COVID tweets and the inter-webs for great stories.

This story wins the prize…

 

Ok, now the twitter-verse’s take on Covid!

 

 

Dad joke alert…

Sports fans…

A new sport!

 

 

Zoom meetings ain’t new after all…

Snark alert

The COVID shutdown’s impact on nature

Hoarding alert!

 

 

Sorry!

 

regular COVID jokes…

– People with a cold – “I just want to stay in bed and do nothing, I feel terrible”  People with Corona Virus – “I feel terrible, I think I will go skiing in Austria, visit the Eiffel Tower and maybe do some white water rafting in Camino de Santiago”

– To the people who bought 20 bottles of soap leaving none of the shelves for others, you do realise that to stop getting Coronavirus, you need other people washing their hands too.

– During self isolation.. Dogs: “Oh My god, you’re here all day and this is the best as I can love you, see you, be with you and follow you! I am so excited because you are the greatest and I love you being here so much!

Cats: “What the hell are you still doing here?”

– Mexico is asking Trump to hurry up and build the wall NOW!

 

Tomorrow back to our regular broadcast…

 

 

 

Mar
31

COVID19 – the latest data and the cost of ignoring reality

Posted by Joe Paduda on Tuesday, March 31st, 2020 | Comments

Ignore anyone who says we’ll be back to normal by this date or that.

The problem is straightforward –

  • we don’t have enough data,
  • far too many people are still doing stupid stuff, and
  • there’s still way too much happy talk from people who should know better.

Testing is only now ramping up – six weeks+ into the COVID era there have been less than a million tests in the US; we lag well behind other developed countries in the percentage of residents tested.

The painful reality is the government’s repeated missteps and screwups have left us in the dark about the real dimensions of the spread of COVID19.

Where are we today

We don’t have current, accurate data from an official governmental source on the actual number of COVID19 tests that have been conducted. The CDC’s own database reports a drop in the average daily number of tests since March 17 – but that doesn’t include all tests.

Fortunately, there’s a volunteer project documenting the test count and other key statistics; you can keep updated here. Pretty impressive effort, with data quality ratings as well so you can determine for yourself your level of comfort with the accuracy of the count.

As of 6:42 am eastern yesterday, there were 851,578 tests reported in the US, with 141,232 positive.

As of 6:42 am eastern today, Tuesday March 31, the Covid Tracking project reported 956,481 tests, with 162,399 positive.

Again according to the Covid tracking project, as of 7 am eastern yesterday March 30, 19,839 patients were hospitalized and 2,447 died.

The hospitalization count increased to 22,490 (13%), and the death count increased 21% to 2,981.

Another leading source is Johns Hopkins University; it’s numbers are slightly different than the Covid Project (143,055 positives and 2,513 deaths as of 6:11 am eastern yesterday March 30).

I’ll let you ponder why a group of volunteers and a university are able to do a better job tracking these data than the nation’s disease tracking institution. (fortunately the Trump Administration, which just three weeks ago had sought a $1.2 billion cut to CDC ‘s budget – and an additional $452 million cut to National Institute of Allergy and Infectious Diseases (NIAID)’s budget – changed it’s mind.

Then there’s the report from Wuhan China (the apparent originating location for coronavirus that 5% – 10% of people who a) tested positive, and b) recovered, have now tested positive again.

Communities and institutions that aren’t taking tough measures to control exposure are getting hammered.

Elected officials and many citizens of Fort Myers, FL listened to politicians, not scientists, keeping beaches, restaurants, and a casino open despite warnings. In a county where 30% of residents are over 60, only about 4 out of 10 residents complied with isolation guidelines last week. This may well have devastating consequences – so far there are 171 confirmed cases and 6 deaths in Lee County. with 40 hospitalized.

Those totals will certainly increase.

Many residents of The Villages, a retirement community in central Florida, ignored pleas to avoid socializing; 29 have tested positive as of last Friday.

Liberty University was one of the very few colleges that invited students back to campus after spring break; not surprisingly some showed COVID19-type symptoms, and at least one has tested positive. Yesterday Liberty President Jerry Falwell disputed some of the Times’ reporting; note earlier Falwell dismissed COVID19, comparing it to swine flu and inferring it was a North Korean plot or an effort to harm President Trump.

What does this mean for you?

I bring these to your attention to note that coronavirus doesn’t care about ideology; social distancing reduces infections and saves lives; not enforcing social distancing increases infections and kills people. Places like Ft Myers and Lynchburg VA (Liberty University’s location) – and the people who live there – will suffer from COVID deniers’ decisions.

Mar
30

COVID19 and Workers’ Comp – top 10 takeaways

Posted by Joe Paduda on Monday, March 30th, 2020 | Comments

I’m in the midst of a survey of workers’ comp payers re the impact of COVID19; will update you as we get more information from more participants.

As always, responses are completely confidential and respondents receive a detailed survey report; a public version is also produced which is much less informative.

If you want to participate, please email HelenAtKingKnightDotCom.

I’ve spoken with a number of payers, vendors, and other stakeholders…for now, there are a lot more questions than answers. Here’s what I’m hearing:

  1. Frequency and claims numbers are way down – as in 20-40%. That’s not surprising as far fewer people are working, and those that are don’t want to go out on work comp as they want to keep their earnings coming.
  2. Companies with large offshore workforces – think India – are scrambling to get things working after widespread shutdowns and mandatory workplace closures. This is particularly problematic in document management, scanning and Key-From-Image operations as well as off-shored UR and case management (think Philippines)
  3. COVID claims are starting to come in, mostly from nursing home, medical and first-responder entities.
  4. Disability duration for current claims will likely increase as a) patients don’t want to or can’t access medical treatment; b) some treating physicians are postponing non-essential care and won’t see patients to give them RTW approval; and c; there aren’t jobs to go back to.
  5. On a closely related issue, some payers are (finally) fully embracing tele-services; PT, triage, medical visits, etc. Unfortunately, many slow-walked tele-services for years so they are not prepared to shift patients from on-site services to tele-services, thus contributing to longer disability duration and higher indemnity expense.
  6. Cash is king. Suppliers/service entities in tight cash positions and/or with significant leverage (lots of debt) are in a very tough place. These firms have been paying their debt expense with cash flow from ongoing operations; with new claims counts falling off a cliff cash flow is also way down.
  7. Conversely those companies with little to no debt are in relatively strong positions.  Look for these firms to snap up debt-heavy competitors.
  8. Sectors including PT, home health, transportation and translation are among those feeling the pressure.
  9. Individual industries – think energy, hospitality, healthcare, are showing markedly different impacts from COVID19 and other drivers. While premiums are holding steady for now (from a very small sample set), there will be a big drop in payroll for April which will reduce future premiums.
  10. Generally speaking, US P&C insurers’ statutory surplus is high (about $850 billion) and investment income is in good shape, altho as 23% of US P&C investments are in equities that could change.  Conversely, as most assets are in very secure bonds, the appreciation in bond prices – particularly for high quality bonds – will have a positive effect on surplus.

The key questions are:

How long will this last?  I’ll be posting on this tomorrow – or more accurately posting on why we don’t know and won’t for some time.

How much will COVID claims cost?

Will work comp end up with a large COVID19 exposure?

 

Joe Paduda is the principal of Health Strategy Associates

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