While it clearly presented challenges, 2020 looks like it may not have been such a bad year for workers' indemnity insurers and policyholders.
Insurers collected less premium, but paid less damage. They managed to achieve one of the lowest combined ratios in history. More and more employees could be treated via telemedicine, eliminating the need to travel. Injured workers, including COVID claimants, appear to have received their medical care without much delay. And the vast majority of COVID-19 claimants required only limited treatment.
On the other hand, there may have been a return of overprescribing opioids in 2020.
Experts from the industry's data and assessment organization, the National Council on Compensation Insurance (NCCI), recently shared their preliminary analysis of claims data for 2020. In a virtual round table, COVID-19 and employee compensation: data and insights, Donna Glenn, Chief Actuary at NCCI, was joined by colleagues Len Herk, executive director and senior economist; Raji Chadarevian, Director of Medical Regulations and Informatics; and Vicky Mayen, director and actuary, to discuss what early employee compensation data reveals about the nature of COVID-19 claims, medical care, plaintiffs, and costs to date.
NCCI looked at the results through the third quarter of 2020 and extended them through the end of the year. NCCI uses data from private carriers and state funds in 41 jurisdictions, but the data does not include many public entities such as first responders or health care facilities, including hospitals and nursing homes that are largely self-assured. The NCCI numbers are calendar years and do not reflect the full cost of treating COVID-19 or other health conditions with long-term effects.
Overall, NCCI expects a premium decline of 8% to $ 38.6 billion for 2020, its lowest level since 2014, accompanied by a 7.6% decrease in losses and a favorable combined ratio of 86% for the calendar year.
Worker claims for COVID-19 ranged from no symptoms to critical care, hospital admissions and, unfortunately, in some cases, fatalities.
The overall picture of the COVID-19 claims is by no means dire. "The vast majority of cases we see are minor and only require the injured worker to take leave of work and quarantine or recover at home," Chadarevia reported.
The workers' compensation system usually has few claims for compensation and that continued. While there have been some compensation claims based on the COVID-19 experience, "hospitalization and use of intensive care units are a major expense," he said.
While about 80% of COVID claimants received very limited treatment, 20% of injured workers were hospitalized, which were the most expensive and complicated cases. The typical COVID stay averages about seven to eight days and costs just under $ 40,000, Chadarevia said.
"The most serious cases are those where the injured worker has had to spend at least part of his hospital stay in an intensive care unit," he said. General ICU cases, which make up just under 20% of hospital staff, last about 12 days on average and cost just over $ 62,000.
There have been some extreme cases where workers have been hospitalized for extended periods leading to costs well above average. There has been a situation where an "injured worker has been there for several months and the total cost is over a few billion dollars."
The data reveals some demographics about the employees who made COVID-19 claims. The vast majority, almost 70%, are women. These plaintiffs are also generally older than the typical injured worker, with a high proportion of 55 and older.
Also, injured workers who contracted COVID-19 and needed medical treatment were more likely to have comorbidities such as hypertension and chronic lung disease, Chadarevia said.
"This offers some perspective, but we recognize that this is not the whole story," he cautioned.
Glenn said COVID-19 claims are primarily among frontline workers, including first responders, health care workers and other essential workers. However, she said that teachers are another class of workers who have been "significantly" affected. "
"They are the ones who appear earlier in the data," Glenn said, confirming Chadarevia's observation that many of those hospitalized are also older and have comorbidities.
While the labor compensation industry may be slow to get on board with the latest health care trends, the pandemic has accelerated the use of telemedicine, which could be a lasting change, according to panelists.
Chadarevia said medical data from NCCI shows that the share of active claims with at least one telemedicine service has increased from "next to nothing" by less than a third of a percent before 2020 to about 14% in the second quarter of 2020. Usage varies. by state from about 5% in Arkansas to more than 30% in Maine.
The most notable increase from telemedicine in workers' compensation has been for evaluation and management, things done during office visits, by nearly 12%. There has also been a 10% increase in the use of telemedicine for psychological evaluations.
While some in the industry were concerned about delays in medical treatment for injured workers as a result of the pandemic, NCCI said its early analysis shows only minimal delays.
At the same time, the share of active claims with large or small operations has remained stable (between 12% and 13%) over the past two years and in the second quarter of 2020, with no apparent delay in the proceedings conducted. However, according to Chadarevia, there is a preliminary indication that the mix of operations may have changed.
There is a "potentially troubling trend" in prescribing patterns, Chadarevia continued. The drug's share of medical costs started to rise in 2020 to levels not seen in a few years. “This appears to be partly due to experience with opioids. Opioid use had declined by about 3% per quarter since 2018, but in 2020 opioid use started to increase, ”he said.
In the second quarter, opioid use increased by 10%.
"This is a signal of what I would call a very worrying trend," said Glenn.
On the other hand, active medical claims at at least one medical service or meeting in the employee compensation system declined 15% in the second quarter. New claims in the second quarter were down about 26%, but even older claims activity was down about 9%. This was a time when many businesses were closed or had limited activities.
“Clearly, there is more to it and the story will continue to develop with additional data,” he said.
Loss of data
While data on employee loss of employees may vary from quarter to quarter, the change in the second quarter last year with the blockages and virus spread was even more dramatic.
According to Mayen, the direct damages suffered to private carriers across the country increased by nearly 9% in the first three months of 2020 compared to the first three months of 2019. After that, they "decreased dramatically" in the second quarter, making it worse. cumulative loss change through second quarter to about -8%.
An NCCI survey last fall of large private carriers of private workers suggested that declines in non-COVID loss dollars seem to more than account for the increases directly attributable to COVID. Mayen said these NCCI survey results are consistent with the decline in the loss suffered as seen in the second quarter of 2020. Since the decline in the second quarter, after which the economy began to show signs of recovery, the cumulative changes appear to be up to and including to have stabilized in the third quarter of 2020. at -7.6%.
Mayen estimated that given the reductions in both losses and premium and assuming expense ratios will remain at the same level as 2019, the industry will have a combined ratio of 86% for the workers' calendar year 2020. That, she said, would be the third lowest combined ratio in history and the seventh consecutive year of underwriting gains.