Workers’ Comp Affected by Changing Workforce

The workers’ comp industry is in for big changes as older workers continue to stay on the job longer and more Latinos are employed in the workplace. These changes to the U.S. workforce present employers with challenges to safety and retention, according to Rich Ives, Travelers vice president of workers’ compensation claims.

According to a U.S. Bureau of Labor Statistics 2017 career outlook report, older employees (ages 65 and up) are staying on the job longer and, as a labor group, are expected to grow the fastest of any other age group through 2024. Employees between the ages of 25-54 are expected to grow at a much slower rate during that time. Ives said the slow growth is likely due to a slowdown in birth rate, as well as people opting or needing to work longer.

“Older workers are staying in the workforce longer because they either can’t afford to retire or people are living longer, so they are choosing to work longer,” Ives said. “Today, when you think about it, roughly one out of every four people in the workforce is retirement eligible.”

Besides workers staying on the job longer, Hispanics will account for a significant portion of the workforce, according to statistics provided by the BLS. As of 2011, there were nearly 23 million people of Hispanic or Latino ethnicity representing 15 percent of the U.S. labor force. By 2020, Hispanic and Latinos are expected to comprise 19 percent of the U.S. labor force, according to the BLS.

Risks of an Evolving Workforce

These changes will be especially challenging for millennials, as well as for Hispanic employees, who will be expected to replace retiring baby boomers, the largest demographic group in today’s workforce.

Experienced workers being replaced by less skilled workers pose a challenge for employers that are already investing less time training new employees. One expectation is that there will be an increase in serious first year accidents.

“I think people think, generally, that the workforce is going to start to get a little younger with 10,000 people becoming retirement eligible everyday over the next 17 years,” Ives said. “We believe the workforce is going to continue to age.”

With an older workforce, the risk of injury is greater. The frequency of workplace injury increases with an older worker, said Ives.

In addition, the average American worker is not as healthy as they once were, Ives said.
“We find roughly 50 percent of every workplace claim today comes with an instance where the injured worker had a chronic condition prior to that injury, which certainly adds to the rising cost of medical,” said Ives.

As a result, it’s no longer a matter of getting older workers back to work, he said. A chronic condition changes everything.

“That all goes out the window depending on…their state of physical condition before the injury. When an injured worker has at least one chronic condition, things like obesity, smoking, diabetes, cancer, those types of things, chronic pain will be another one,” said Ives. “When an injured worker has at least one chronic condition, the workers’ compensation claim cost doubles. If they have two or more, the cost of the work comp claim goes up fivefold.”

When a catastrophic injury happens to a younger worker, Ives said the payout will be for a much longer period of time.

“Therefore, the frequency of the injuries for the younger demographic is actually less, but the severity is a lot higher,” he said.

Stakeholder Considerations

Ives said there are things stakeholders, government agencies, employers and insurers can do to address these changes.

For example, having employees who are fluent in Spanish and other languages offers insurers and others the ability to engage with foreign business owners and workers. Ives said it will be increasingly important for employers to culturally connect and communicate with employees.

“We find that aligning our Hispanic accounts and those Hispanic injured workers with claim professional and nurses whose natural language is Spanish…is very significant,” Ives said.
That’s why, he said, many insurers have language lines.

“If there’s a language barrier, they’ll dial the language line. Then, through that translation service, they’re able to communicate,” Ives said. “We’ve seen out of that program, an eight percent reduction in overall claim cost. Eighty four percent of those injured workers return to work in the first 30 days, which compares to 66 percent of all the rest of our claims in the first 30 days.”

He said Travelers has 670 claims professionals fluent in other languages.

For insurers, having both pre- and post-injury tools to identify problematic claims early and to maintain engagement with the injured worker after an injury can be valuable tools, he said. Workforce engagement is important, he added, especially in a labor market shortage.

Ives said current buying behavior needs to be examined since some larger businesses are shifting toward a focus on fixed expense cost.

“It’s a lot easier to make that fixed…annual period of time cost decision. We think that’s very dangerous,” Ives said. “Especially in workers’ compensation, those decisions will play out over a longer period of time and the fixed expense is much less of a ratio to the total cost of risk.”

Regional safety conferences offer an opportunity for businesses to acquire additional safety education.

Insurance company risk control engineers can work directly with customers, fine tuning their needs and training specifically to their businesses, Ives said.

“As you can imagine, not all industry types are going to have the same types of injuries or the same types of risks,” said Ives.”

In addition, he said determining the right corridor of care is important. It’s a term for a Travelers’ program that identifies the medical provider and type of specialty for the injury sustained in the customer’s local area.

Then there’s the opioid issue. Ives reiterated the need for specific guidelines that need to be in place for the treatment of chronic pain. During a conversation with Claims Journal last month on Travelers’ Early Severity Predictive Model, he said guidelines need to address the initial prescription, active administration and ween-off period.

“To be more effective, we believe further guidelines are needed to address the continual prescribing of opioids and also to provide direction for the eventual weaning from opioids,” said Ives. “There also needs to be some way to enforce those guidelines.”