Insight, analysis & opinion from Joe Paduda

Jul
21

2023 predictions for workers’ comp – how am I doing?

Posted by Joe Paduda on Friday, July 21st, 2023 | Comments

Time to check in and see how well/poorly my predictions for 2023 are panning out…

  1.  The soft market continues…
    And it won’t harden in 2023. Medical costs remain very much under control (with  an exception), rates continue to drop, employment remains very strong (essential for return-to-work) and there’s lots of payers fighting for market share.
    So far so good…this is a done deal.
  2. Medical spend is NOT a problem – and will NOT be in 2023.
    With a couple notable exceptions – to be covered in a future post – medical inflation will remain under control. In part this is driven by much lower drug spend and more specifically the continued decline in opioid spend. The latter has a big impact on claim closure and total medical spend.
    Yep. Done deal #2
  3. Behavioral health and its various iterations will gain a lot of traction.
    More State Funds, carriers and TPAs will adopt BH programs, more patients will benefit, and more dollars will be spent. There’s a growing recognition that medical issues aren’t hindering “recovery” near as much as psycho-social ones. This is great/wonderful/long-needed and will really benefit patients and payers alike. Kudos to early adopters, and LETS GO to you laggards!
    No conclusive evidence one way or the other…
  4. One Call will be sold. 
    I keep forecasting this…and one day I’ll be right.  It has to be this year. CEO Jay Krueger and colleagues have OCCM on a better track, but structural problems (i.e. declining claim volume) and internalization of One Call-type services by Sedgwick and others make the future…less than promising. Couple that with recent ratings actions by Moody’s and S&P and it’s time to do the deal.
    Not yet…but increasingly likely.
  5. New technology will make its impact felt.
    Wearables, chatbots (I HATE THEM), and Virtual Reality-driven care are three ways tech platforms/systems/things will significantly ramp up in ’23. Expect several large/mid-tier payers to adopt new tech in a major way – aka not just a small pilot.
    Structural issues with health care (try to find a LCSW or Psych-trained counselor), lack of trained adjusters, and frustration with rising rehab expenses are all contributors.
    Ramping up is happening…albeit from a pretty low starting point.  Expect more to come in coming months

Monday – the rest of 2023 projections…

Jul
20

Hospital misdiagnoses harm or kill 800,000 Americans a year

Posted by Joe Paduda on Thursday, July 20th, 2023 | Comments

A just-published research study found:

Annually almost 800 000 Americans are permanently disabled or die annually due to misdiagnoses.

That is equivalent of a fully loaded (318 passengers) 787 crashing with about a 50/50 split between deaths and serious injuries every three and one half hours every day (24/7) for an entire year.

At that rate, how many tickets do you think the airlines would sell? So why does Big Med get away with it? (thanks to a very insightful reader for this analogy)

And this was based on a study of hospital discharges BEFORE COVID and its attendant staffing crises.

The study in the British Medical Journal comes on the heels of an HHS analysis of diagnostic errors in Emergency Departments that estimated:

  • 7.4 million misdiagnosis errors are made every year,
  • 2.6 million people receive a harm that could have been prevented,
  • another 370,000 are permanently disabled or die because of the misdiagnosis…
  • This equates to about 1,400 diagnostic errors every year per emergency room across the country.

In general diagnostic accuracy is pretty good; 1 in 18 patients are inaccurately diagnosed (5.7%).

What’s pretty scary is the diagnosis error rate across hospitals varies “up to 100-fold.”

Notably fractures were among the most commonly misdiagnosed conditions…(p 18)

HHS’ full report is here.

What does this mean for you?

Be your own healthcare advocate and don’t be afraid of questioning physicians.

Jul
18

The cost of heat

Posted by Joe Paduda on Tuesday, July 18th, 2023 | Comments

While ignoramuses continue to deny we humans are changing the planet’s climate, folks with P&L responsibilities are calculating the cost of heat and heat-related injuries.

The direct cost of one “heat prostration” claim is about $38,000.

The average company has to generate $1.2 million in revenue to cover each heat prostration claim.

Want specifics?

Excessive heat also creates more injuries of all types…injuries to cherry harvesters in Washington State increase 1.5% for every 1 degree C above 25 C (77 degrees F) – mostly from falling off ladders.

California data shows:

    • compared to days with temps in the 60s,
      • on days when the temperature was between 85 – 90 degrees Fahrenheit…the overall risk of ALL types of workplace injuries was 5 to 7 percent higher.
      • when temps topped 100 degrees, the overall risk of injuries was 10 to 15 percent greater.

OSHA has a very handy calculator employers can use to estimate their costs – especially useful for the half of the country broiling under record temps.

Oh, and the workers most affected by heat? That would be the lowest paid workers, those leases able to afford time away from work…you know, the ones the work comp industry should be “advocating” for.

What does this mean for you?

Ignore science at your financial peril.

Jul
14

Work comp and workplace mass shootings

Posted by Joe Paduda on Friday, July 14th, 2023 | Comments

Sorry to end the week on a bad note – kudos to Texas’ Department of Workers’ Comp for highlighting workplace mass shootings in their just-concluded annual conference. The presentation is here.

The Lone Star state is all too familiar with these awful events [subscription required]…the most recent saw 23 killed and 22 others injured when a racist gunman opened fire in a Walmart store in El Paso.

It isn’t just Texas; we’ve had more than one mass shooting every day during the first three months of this year, with more than 600 victims.

California’s State Fund insured the Borderline Bar & Grill back in 2018; the State Fund’s handling of the awful situation provides a blueprint for all insurers…you would be well-advised to study up on that.

Compassion, creative engagement, empathy and doing the right thing no matter what were the basis of the State Fund’s response.

Until some measure of sanity emerges from Congress, the work comp industry will have to rely on improving the way it handles these disasters.

What does this mean for you?

Once again, work comp is left to handle society’s failings.

Jul
12

Quick hits – AI in WC, Automating construction, Junk healthplans and other misadventures

Posted by Joe Paduda on Wednesday, July 12th, 2023 | Comments

A week away from the blog is now past…here’s what I missed.

myMatrixx’ Chief Innovation Officer Cliff Beliveau – one of the smartest and most articulate tech people I have ever met – penned an excellent summary of AI’s potential uses in and impact on workers’ comp in yesterday’s WorkCompWire.

Cliff highlights key opportunities and challenges in claims, medical management, fraud detection and claims oversight…download his piece and save it.

Will automation disrupt construction? A better question might be “when will automation disrupt construction?”

Even better “when will what parts of the construction industry be disrupted by automation?”

All are addressed here.

Net is this – the author isn’t convinced we’ll see massive automation within the next decade...but points to a key use of technology that is already speeding up construction  – and making it more efficient to boot.

Surprise! medical bills and Junk healthplans – defined as plans with significant limits which often aren’t clearly identified up front – are facing increasing scrutiny. The White House is proposing strict disclosure standards and time limits on junk plans…

“The new proposed rules would close loopholes…that allow companies to offer misleading insurance products that can discriminate based on pre-existing conditions and trick consumers into buying products that provide little or no coverage when they need it most,”

The two – surprise! bills and junk plans, sort of complement each other…the junk plans don’t protect families from healthcare providers’ aggressive billing practices.

The proposed rule would highly limit duration of the plans, requiring clear disclosure of policy terms (as in written in English), and close coverage loopholes.

And one more note of interest for smaller employers looking at self-funded plans, and especially level-funded plans...AM Best’s April 28 2023 Market Segment Report indicates:

  • 2 out of 5 small employers (3 – 199 employees) are in level-funded plans
  • Just a year ago it was 1 out of 8 employers…
  • stop loss insurance loss ratios jumped to 85% in 2021 driven by new and very expensive specialty drugs and a lot more million dollar claims.

Just in the last year, 5 specialty drugs, each costing more than a million dollars annually per patient – have come to market.

What does this mean for you?

Smaller employers be very, very careful of self-insuring… 

Jun
29

Tilting at windmills

Posted by Joe Paduda on Thursday, June 29th, 2023 | Comments

Is an apt metaphor for my ongoing and – so far – futile effort to get industry “thought leaders” to focus on the impact of human-caused climate change on worker health – and workers’ comp.

But, never one to admit a cause is hopeless (see my past battles to stop physician dispensing)…here we go again.

KFF just published an analysis identifying the:

occupations that are at increased risk of climate-related health impacts, examines the characteristics of workers in these jobs, and discusses the implications of these findings

This should be required reading for actuaries, underwrites, and risk managers…especially those in states:

  • with record high temperatures – looking at you, Texas;
  • vulnerable to hurricanes – looking at you, southeastern coastal states;
  • and under air quality alerts due to wildfire smoke – looking at most of the midwest and northeast – and western states too.

so much for my rowing workout this morning…or construction work, or agricultural work, or roadway maintenance, or utility upgrades, or forestry, or sanitation, or first responders…

Key takeaways from KFF’s research…

  • there are over 65 million nonelderly adult workers in occupations at increased risk for climate-related health risks, accounting for over four in ten of nonelderly workers.
  • workers in occupations with increased climate-related health risks are more likely to be uninsured, contributing to challenges accessing health care.

For risk managers, actuaries…and anyone a) committed to worker health and/or b) with dollars at risk, ere’s a handy list of occupations with high exposure to climate-change related health risks…

What does this mean for you?

Reality always wins. 

Ok trolls, have at it…

Jun
26

Wildly off-topic…what just happened?

Posted by Joe Paduda on Monday, June 26th, 2023 | Comments

If you’re wondering what the heck happened in Russia, join the crowd.

Here’s what I’ve been able to “learn”…

first – the actors

The Wagner Group – a private company that is a combination of a mercenary, terrorist organization, and exploiter of poor countries that supplies Russia with tens of thousands of fighters. Wagner is the most effective fighting force in Ukraine. Wagner is really, really awful.

Yevgeny Prighozin is Wagner’s leader – he’s the former hot-dog stand operator now old bald guy commanding a huge criminal enterprise while always wearing full tactical gear even though he’s never been anywhere near actual fighting.

nice look, eh?

Friday:

  • Prighozin called for the firing of Russia’s top two military leaders,
  • Wagner Group troops took over critically important supply bases near Ukraine,
  • advanced on Moscow with convoys of his troops,  artillery and armored fighting vehicles;
  • was met with cheers, flowers, food and drink by Russian citizens;
  • shot down a super-sophisticated Russian surveillance plane and several Russian helicopters;
  • then Prighozin abruptly turned those convoys around and ostensibly went into exile in Belarus (a neighboring country that is essentially a Russian protectorate) after
  • Belarus’ president – a Putin lackey – negotiated some kind of deal between Putin and Prighozin.

Yeah, the entire US and NATO intelligence world is as confused as we are.

As I am far from “expert” in eastern European politics and “strategery”, I’ll just share what credible experts are saying:

  1. Putin is much weakened…he relied on a lackey/puppet – Belarus’ president – to end the crisis.
  2. Russia is also weaker than many including me thought – and likely getting weaker…
  3. Hard to see how merging Wagner’s troops into Russia’s Army will make the Army stronger – there’s too much mutual suspicion and distrust…
  4. Our efforts to recruit Russian intel sources seem to be ramping up…

Lastly, there’s this.

“Mr Putin was counting on a long war in which the West would grow tired of arming and funding Ukraine. There is now strong evidence that the war’s prolongation is also accelerating the fragmentation and decay of his regime.”

 

Jun
22

How much is too much?

Posted by Joe Paduda on Thursday, June 22nd, 2023 | Comments

The average family of four’s healthcare insurance and related costs are more than $31,000.

Which begs the question – how much is too much?

At what point do workers, employers, taxpayers make that call?

Because it is going to happen.

Look at your budget, your income, your future expenses…when does healthcare become unaffordable? a quarter of your income? a third?

Sure, you aren’t paying the entire $31k…

  • your employer pays a big chunk,
  • taxpayers subsidize employee benefits so
  • taxes are higher due to that subsidy,
  • but your deductible/coinsurance costs are likely several thousand dollars.

What does this mean for you?

I’d ask you to think hard about this – because we will all have to make this choice.

Sooner than we’d like.

Jun
21

Quick hits….

Posted by Joe Paduda on Wednesday, June 21st, 2023 | Comments

Healthcare costs for the average family of four topped $31,000 in 2023.

That’s the latest from Milliman.

Think about that – what percentage of your annual income is $31,000?

a third?

a quarter?

a fifth?

to calculate your total costs, click here.

Climate change’s impact on worker health and workers’ comp is getting more attention every day.

It is now hitting the C-Suite…

This morning, Harvard Business Review called out increasing focus by business execs around wildfires:

we are seeing a rapid rise in employer inquiries related to employee health and the best practices around air quality concerns.

The piece has excellent recommendations.

Word to the wise – whether you are an insurer, TPA, risk manager or captive manager, regardless of your view on human-caused global warming, when the C-Suite comes calling you’d best have a plan. 

Even better, you’d best have implemented it.

good news…

339,000  – that’s May’s increase in employment. That is spot on the average monthly increase for the last 12 months…

over the last year over 4 million jobs have been created. 

That, dear reader, is just terrific.

More than 1.35 million Americans have been kicked off Medicaid to date…and that’s without totals from Texas and several other states yet to report.

This will:

Argh.

 

Jun
16

Solving Texas’ healthcare problems…or not.

Posted by Joe Paduda on Friday, June 16th, 2023 | Comments

Yesterday we dug into the difficult position Texas Mutual is in thanks to Texas’ Legislature and Governor.

Today – as promised, why forcing Texas Mutual into a business it has zero experience in will NOT solve Texas’ healthcare mess – and may actually make it worse. (note this is NOT TM’s fault…it is stuck in a very difficult situation through no fault of its own)

First, TM is planning to sell stop-loss and Level Funded plans…let’s be clear – Level Funded plans have been sold in Texas for years; there are a lot of brokers offering these plans throughout the state.

In a phrase, Adverse Selection.

I’ve written about this a LOT – mostly back in the 2000s before the Affordable Care Act came into being and effectively ended adverse selection and the insurance death spiral it creates.

Here’s the Cliff Notes version…

  1. Thanks to the ACA, health insurance companies cannot:
    1. charge people or their employers more if employee(s) have pre-existing medical conditions
    2. refuse to pay for care for those pre-existing conditions
    3. refuse to insure the employer if its workers or their family members have pre-existing conditions.
  2. Back in the pre-ACA days, health insurers got really good at “medical underwriting”  aka identifying and refusing to insure or upcharging anyone who might have the temerity to file a claim. Why?? well, capitalism baby!.
  3. What happens when employers with young, healthy workers drop health insurance or don’t buy it, self-insuring instead of joining other employers in a health insurance “pool”?
    1. the “mix” gets worse; without that employers’ premiums helping cover other employers’ costs, health insurance premiums rise for all the employers left in the pool.
    2. over time,
      1. the number of employers in the pool drops,
      2. healthcare costs zoom (as only sick people who really need insurance stay in the pool)
      3. eventually the insurer goes bankrupt as it can’t charge enough.

Let’s suppose Texas Mutual’s program to sell self-insured health benefit plans (NOT HEALTH INSURANCE) to smaller employers is a rousing success, and hundreds/thousands of employers ditch health insurance and sign up. (TM is proposing to sell “level-funded” health benefits plans, a type of self-insurance)

Remember, TM will be medically underwriting employers that apply for health benefits plan. As the incredibly knowledgeable (and friend) Louise Norris writes;

Medical underwriting refers to the process by which a life or health insurer uses an applicant’s medical history to decide whether they can offer them a policy, and whether the policy will include pre-existing condition exclusions and/or a premium that’s higher than the standard rate.

Costs will be lower for TM’s health benefits customers because their employees’/families’ heath risks are lower than the average Texas employer’s.

Good for those healthy employers! – they get health benefits for their workers and their families at a lower price.

But…costs for employers left in the health insurance pool go up. And Up. And Up.

So, those employers apply for a Level-Funded plan…but

…some of their workers/workers’ families have pre-existing conditions, so at best they will pay more, at worst those conditions won’t be covered OR they won’t be offered a plan.

What does this mean for you?

this, dear reader, is why forcing Texas Mutual to offer smaller employers health benefit plans will NOT solve Texas’ health care problems.

For a much more detailed discussion of adverse selection, see here.

Joe Paduda is the principal of Health Strategy Associates

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