Workers Compensation: Take control of your pool funding in an uncertain market What we’ll Cover • Developing Workers Comp issues • Emerging issues to watch • Steps you can take to reduce claims and protect your bottom line Workers Comp Issues • Claims frequency is expected to rise as the economy recovers – 20 years of declines are slowing • Frequency declines in a recession, and increases as employers add workers – Severity increasing during past 30 years • Indemnity tracks opposite the economy; medical doesn’t - NCCI Workers Comp Issues • Injured employees are staying out of work longer – Mean duration for injuries increasing: • 123 days in 2006 • 141 days in 2009 – Unemployment nearly doubled in the same period • Impact of: – Economy – Litigation – Cultural mindset Workers Comp Issues • Medical costs continue to rise – They are 58% of total claims – Medical treatment costs are rising – Prescription costs are 18% of total • Use of compound drugs skyrocketing in many states • Repackaging or physician dispensing increases cost, usage, and duration Workers Comp Issues • Narcotics abuse rampant – 25% of all prescribed drugs – Claims costs rise along with litigation, lost time – Workers treated with narcotics stay away from work up to 69 days longer • Most jurisdictions require payment for rehabilitation Workers Comp Issues • Mental stress claims are compensable in a growing number of states – California and Oregon mental/mental claims may be a spreading trend – Medical marijuana legislation being considered in several states Workers Comp Issues • More claims being litigated • Economy reduces job options • Additional consequential injuries – Stress, sleep disorders, sexual dysfunction – Ability to compete in the labor market Emerging Trends • Presumption legislation – More jurisdictions eliminating need for medical evidence – May reflect the influence of unions – Do you need to fund for change? • NCCI expects an increase in comp legislation this year Emerging Trends • Medicare set asides – Actuarially difficult to determine • Difficulty settling claims • Claims taking longer to close – Legislation not likely to help make this easier Summary • Cost trends on rise – The number of claims is rising slightly – The cost of those claims is raising slightly • Medicare set asides are a growing issue • Funding for pools must increase – Base funding decisions on your state’s political pressure points Impact of Health Care Reform • Health care reform – Will comp claims decrease because everyone is insured? – Will the cost of claims decrease because of medical fee schedules? – Community health centers and wellness Opportunities • Wellness programs – Multiple benefits to promoting wellness • Benefit plan savings • Healthy workers heal more quickly • Improves employee morale Your Greatest Opportunity • An engaged workforce will reduce the cost of claims – – – – – Frequency Severity Duration Medical costs Litigation Why this Matters • Municipal employees have more reasons to be disengaged – – – – Layoffs Furloughs Pension reforms Public criticism Why Engagement is Critical “The Relationship between Engagement at Work and Organizational Outcomes” - Gallup 2009 study – Difference between the top quartile of employers with engaged workforces vs the bottom quartile of disengaged workforces • 18% gain in productivity • 37% reduction in absenteeism • 49% reduction in safety incidents Why Engagement is Critical • American Society for Training and Development report – Engaged employees 5x less likely to have a safety incident – 7x less likely to have a lost time incident – Cost per claim of disengaged employees was 7x higher Employee Engagement What you can do to help improve employees’ level of engagement • Your role as leaders in the process • Result: Combination will save your pool’s money • Improving Engagement • What front line employees care about • 4 most important responses for engagement – Best friend at work – Someone cares (supervisor) – Praised on my performance in past 7 days – Supervisor discussed performance in past 6 months What You Can Do As Leaders • Engagement comes from leaders – Mediation effect • Frontline employees are 59% more likely to be engaged when supervised by highly engaged managers - Gallup – Spend more time leading people, not managing tasks - Clint Swindoll, Engaged Leadership – Focus on two areas: • Mission • Purpose What the Pools can do • Large group meetings –The level of engagement skyrockets when employees representing all parts of an organization gather together to give input… – North East Human Resource Association • Train managers • Assign a point person • Promote awareness –Everyone wants to like their job Employee Engagement Summary • Creating and maintaining an engaged workforce – Improves productivity, retention – Reduces sick time, claims Summary Is it really so grim? • You can reduce your pool funding needs • – – – – • Return to work programs Medical cost containment Wellness Culture Improving these areas benefits everyone, from the pool to the worker Resources • Engagement: – – – – “Drive” Daniel Pink “The 8th Habit” Steven Covey “Integrity” Henry Cloud Gallup Organization and the Gallup Management Journal • Wellness: – Welcoa.org – Limeade.com – Gallup-Healthways Well-Being Index