Workers Compensation in 2030 Scenarios Please cite or quote as - PowerPoint PPT Presentation

Workers’ Compensation in 2030 Scenarios Please cite or quote as “Preliminary Results – subject to change”

Not Today’s Approach This Photo by Unknown Author is licensed under CC BY-ND Please cite or quote as “Preliminary Results – subject to change”

Questions Addressed  Can we imagine a plausible scenario for 2030 where  Systems fall grossly out of balance  WC Reform process is ineffective in adapting  What caused the imbalance?  Why was the Reform Process unable to respond effectively? Please cite or quote as “Preliminary Results – subject to change”

 WC costs to employers triple Scenario for  Benefits for injured workers are little changed or even 2030 reduced System is badly out of balance Please cite or quote as “Preliminary Results – subject to change”

 Baseline WC costs and scenario for 2030  Examine the external forces that triple WC costs Outline  Examine the external forces that limit system adaptation by WC Reform  Scenarios for WC after 2030 Please cite or quote as “Preliminary Results – subject to change”

# of Lost Work-day Injuries, 2016 = 100 120 100 Baseline 2030 100 0 vs 2016 80 80 5 60 Injury Frequency: 40 75 -20% 20 0 2016 frequency baseline 2030 frequency baseline 2016 baseline secular trend Population growth Please cite or quote as “Preliminary Results – subject to change”

Please cite or quote as “Preliminary Results – subject to change”

Average Claim Cost, 2016 = 100 300 Baseline 2030 250 vs 2016 200 150 Average Claim Cost 125 100 8 17 100 +25% 50 0 2016 average cost 2030 average cost baseline 2016 baseline medical price inflation wage growth Please cite or quote as “Preliminary Results – subject to change”

Total WC Costs, 2016 = 100 300 Baseline 2030 250 vs 2016 200 Total WC Cost: 150 100 100 No change 100 Total Cost = 50 # injuries x Ave Cost 80% x 125% = 100% 0 2016 total cost 2030 total cost baseline Please cite or quote as “Preliminary Results – subject to change”

350 Total WC Costs, 2016 = 100 290 300 Scenario 2030 250 200 Total WC Cost 190 150 100 100 100 Nearly triples due to external forces 50 0 2016 total cost baseline 2030 total cost baseline 2030 total cost scenario Please cite or quote as “Preliminary Results – subject to change”

Total WC Costs, 2016 = 100 300 Scenario 2030 250 105 200 Costs Driven By External Forces 150 83 100 --Labor market 50 --Healthcare system 0 2016 Baseline 2030 Baseline 2030 Scenario 2016 Baseline 2030 Baseline External Labor Market Forces External Healthcare System Forces Please cite or quote as “Preliminary Results – subject to change”

Effect on WC Costs Historic labor shortages More injuries Slower RTW Medical provider shortages Delays in care Labor Market Higher medical prices Forces Driving Restrictive immigration Magnifies effects of practices and rhetoric shortages Costs Upwards *Aging population Small direct effect Will automation alleviate the shortages? *not addressed today Please cite or quote as “Preliminary Results – subject to change”

Unemployment Rate, 1990-2018 12 2030: Historic 10 Labor Shortages 8 Very Low 6 Unemployment Rate 4 “full employment” – 4.6% 2 Heading Lower 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Please cite or quote as “Preliminary Results – subject to change”

State Unemployment Rate Historical Low In 2018, (August 2018) Rate Unemployment Idaho 2.8% 2.8% Rates Hit Historic Lows Oregon 3.8% 3.8% in 16 states Washington 4.5% 4.5% Please cite or quote as “Preliminary Results – subject to change”

to Fill Are Harder Job Openings 2,000 4,000 6,000 1,000 3,000 5,000 7,000 Please cite or quote as “Preliminary Results – subject to change” 0 Tech Boom Jan 2001 July 2001 Jan 2002 July 2002 Jan 2003 Non-farm Job Openings and Hires, 2001-2018 July 2003 Pre-crisis Boom Jan 2004 July 2004 Jan 2005 July 2005 Jan 2006 Hires July 2006 Jan 2007 July 2007 Jan 2008 July 2008 (thousands of workers) Job Openings Jan 2009 July 2009 Jan 2010 July 2010 Jan 2011 July 2011 Jan 2012 July 2012 Jan 2013 July 2013 Jan 2014 July 2014 Jan 2015 Shortages Labor July 2015 Jan 2016 July 2016 Jan 2017 July 2017 Jan 2018

Annual Average Growth Rate in Labor Supply, 1970-2030 2010-2030: 3.5% 3.0% Unusually Slow 2.5% Growth in 2.0% Labor Supply 1.5% Causes 1.0% Shortages 0.5% 0.0% 1970-79 1980-89 1990-99 2000-09 2010-17 2017-30 Please cite or quote as “Preliminary Results – subject to change”

 Employers hire workers who would not otherwise be hired for a given job  Less qualified – skills, experience Why Labor  More concerns about organizational “fit” Shortages  Weaker attachments to the workforce Increase Injuries and  These workers have . . . Slow RTW  More injuries  Less likely to RTW  Longer durations of disability Please cite or quote as “Preliminary Results – subject to change”

Survey Data  2018 Manpower Inc. survey of hiring managers  46% difficulty recruiting qualified employees – 36% in 2014 Says Hiring  29% lowered education/experience requirements – 20% in 2014 Has Changed  44% now recruiting “outside of the talent pool”  2016 Survey of HR managers and recruiters Two examples  53% hired “not well-qualified applicants” – urgency to hire Please cite or quote as “Preliminary Results – subject to change”

 Study by Gardner, et.al., Workers Compensation Research Institute, 1996  Cost drivers in Massachusetts during a period of rapid Evidence That cost growth Labor  Hiring was very difficult -- unemployment rate was as Shortage low as 3.1%  1983 1984 1986 1987 1988 1989 1990 Raises  6.7% 4.5% 4.0% 3.1 3.2% 4.2% 6.3% WC Costs  Study found  Injuries rose by 2.8% per year due to shortage  Duration of disability grew by 25% over 5 years Please cite or quote as “Preliminary Results – subject to change”

 Aging population raises demand for healthcare providers Shortages of  Shrinking supply of providers as many Boomers retire Medical  Resulting shortages raise WC costs Providers  Delay care and return to work  Increase medical prices paid by WC to access care Please cite or quote as “Preliminary Results – subject to change”

Positions to Fill by 2030 as % of 2016 Staffing Levels 70 Nearly 500,000 60 Positions for 50 31 40 Physicians, PA 15 37 30 & NP Need 20 Filling by 2030 29 27 10 13 0 Physicians & Surgeons Physician Assistants Nurse Practitioners % Nearing Retirement (age 55+) % new positions to fill Please cite or quote as “Preliminary Results – subject to change”

New Immigration  All of the projected growth in U.S. labor supply is Restrictions immigration (2010-2030) Worsen  29% of physicians and 16% of all healthcare workers Shortages and are immigrants Magnify Effect on WC Please cite or quote as “Preliminary Results – subject to change”

Growth of Working Age Population, by Nativity, 1960-2030 30 25 Immigration 20 Restrictions 15 Millions Worsen Labor 10 Shortages 5 0 1960-70 1970-80 1980-90 1990-2000 2000-10 2010-20 2020-30 -5 -10 1st generation immigrants 2nd generation immigrants native born Please cite or quote as “Preliminary Results – subject to change”

Profession % of US Workers Who The U.S. Are Immigrants Healthcare Physicians and surgeons 29% Systems RNs 16% Depends Medical technologists 13% Heavily on PT, OT 10% Immigrant LPNs, home health aides, 24% Workers psych aides Please cite or quote as “Preliminary Results – subject to change”

 Talented immigrants have many choices about where to live and work Lessons From  Rhetoric matters, as does the law and its British implementation Experience  When potential immigrants feel unwelcome or face added uncertainty, immigration falls  Same applies to resident immigrants, accelerating out- “Brexit” migration Please cite or quote as “Preliminary Results – subject to change”

Net Migration to Britain By E.U. Citizens 800,000 700,000 Brexit Rhetoric 600,000 and Vote 500,000 400,000 Net migration Brexit approved on June 23, 2016 300,000 fell by 30% 200,000 100,000 0 2010 2011 2012 2013 2014 2015 2016 2017 Please cite or quote as “Preliminary Results – subject to change”

Immigration of EU Nurses to Britain Fell By 85% Please cite or quote as “Preliminary Results – subject to change”

External Forces Effect on WC Costs Labor Market Historic labor shortages More injuries Forces Slower RTW Medical provider shortages Delays in care Impact on WC Higher medical prices injuries and Restrictive immigration Magnifies effects of costs practices and rhetoric shortages Please cite or quote as “Preliminary Results – subject to change”