MRO Today - Risk manager cope with aging workforce

Risk Managers Cope With Aging Workforce

by Daniel Hays

Risk managers will need more medical expertise and can expect new types of claims and differing safety requirements as the working population ages, according to experts looking at national workforce trends.

Other factors mentioned as future concerns include new long-term health perils and an expanding number of elderly women in the work population.

Several took note of a study issued by the Workers' Compensation Research Institute in Cambridge, Mass., which found that the age factor would have a minimal effect on future workers’ compensation costs.

The WCRI report, released Dec. 28, 2000, said that while older workers, on average, incurred higher costs per claim than younger workers, "the lower claim frequencies of older workers tend to offset their higher costs per claim."

WCRI noted that the number of jobs held by older workers will double by 2020. Older workers
were defined as those 55 or older. Most of the cost impact to workers’ comp, the study found, occurred as the bulge of Baby Boomers in the workforce came into middle age.

Terry Bogyo, director of corporate planning for the Workers’ Compensation Board of British Columbia, the exclusive workers’ comp insurer based in Vancouver, Canada, said his organization finds that time of recovery for injuries generally matches workers’ ages. For employees aged 60, "on average they will miss 60 working days," he said. "Older people take longer to recover; their bones don’t heal as quickly."

For a firm that hires only 18- to 24-year-olds, the older demographic won’t have an effect, said Mr. Bogyo, although he noted that there will be fewer youthful workers available for hire. He also pointed out that not every sector would be affected equally. Unionized manufacturing firms that have layoffs for automation eliminate younger workers, he said.

Discussing the implications of an older workforce, Mr. Bogyo commented that when a 19-year-old slips and falls while working in a fast food operation they would generally get up unharmed, but "at 50 you might break a hip" so the employer "better keep the floor clean."

"It doesn’t mean you shouldn’t hire older people. It means you have to understand the differences in risk and recovery for people as they get older," he said.

Employers, he advised, should take into account older employees’ diminished vision, hearing and bladder capacity. Mr. Bogyo suggested they insure that warning labels are produced with large print and telephones are equipped with volume controls. They may also want to consider building more washrooms and a work structure that permits more breaks, he said.

Mr. Bogyo noted that after age 50, per-capita health care expenditures increases substantially. In Canada, data shows that "average health care cost per capita triples between the ages of 49 and 65," he said.

Mr. Bogyo also mentioned that as people live longer and work until they are older they will manifest more ailments resulting from exposure to workplace substances as well as previously undiagnosed conditions.

In 1950, he pointed out, no one could envision the problems that use of asbestos would cause. There are now estimates that 15 percent of workers exposed to Beryllium will develop cancer, he noted.

Longer-living employees will also mean more detection of cancers, he said. Mr. Bogyo cited a Louisiana autopsy study three years ago that found among a sample of 1,000 people, 250 had died of cancer--but 111 of the cancer victims had been misdiagnosed.

Technology improvements will mean, "we’re going to find causes were related to some exposure or some agent where people were working," he said, adding that "the longer you live the more chance for you to develop certain diseases."

Mr. Bogyo said his organization has reacted to the changing workforce demographic by trying to improve procedures for younger workers, who have the highest accident rate.

Imbuing them with a safety culture, he explained, will mean fewer injuries later in life. Additionally, "we are determining the right treatment profiles and sensitizing employers to the needs of older workers when they return after an injury," he said.

Mr. Bogyo, who served as a reviewer for the WCRI study, cautioned that in looking at age studies, it is important to examine the data on a state-by-state basis. Some areas, he noted, have already reached a high level of older workers, while a state such as Utah, which was not in the study, is expected to see its over-65 population nearly double over the next 25 years.

Henry Shuford, an economist with

The National Council on Compensation Insurance in Boca Raton, Fla. said, "the jury is still out on the prospects of older people becoming a more important part of the workforce. It’s unclear how big an issue this might actually be."

However, he noted that in absolute numbers there will be more older people in the workforce. While injuries among older workers are more costly in medical cost and time lost, "older employees, either because of more experience, patience or greater caution, have fewer accidents and suffer fewer workplace injuries than younger employees."

Mr. Shuford said a tight labor market and a resulting desire to retain workers with expertise may be what causes employers to reshape the workplace for the elderly. This might include giving them assignments that require attention skills and patience rather than physical requirements, he suggested.

"The real unknown," he said, is how many people in their 60s and 70s will want to keep working, noting there is some evidence that in that age group accident frequency starts to rise again. "If people over 65 become a material part of the workforce, there will be a real need for employers and workers’ compensation insurers to pay attention to the special needs of that portion of the population," he said.

Vincent Armentano, vice president for workers’ comp claims at Travelers Insurance in Hartford, said older workers have more motivation to return to work because many are making more than the top workers' comp benefits. However, he said, as Baby Boomers age "you will see your medical loss-costs go up."

Adam Seidner, national medical director for Travelers, suggested that risk managers should promote lifestyle and fitness programs as well as plans to minimize ergonomic risks. He also mentioned optical programs providing regular eye exams and the importance of having physicians with expertise in geriatrics and arthritis medicine.

Mr. Seidner said that while new medical technology will doubtless come up with expensive new treatments to handle different injuries, risk managers in some cases may be able to avoid the higher costs involved because treating physicians would probably decide that older patients don't meet the criteria. As an example, he said, a cartilage implant would be ruled out in an arthritic knee because an older person's bony overgrowth would interfere with the repair.

Mr. Armentano said risk managers now generally know what appropriate medical treatment is, but with aging patients it will require "more judgment on the risk manger’s part whether to authorize treatment."

Risk managers, he said, will have to become medical experts because, "there’s going to be a lot more debate over which treatment will get you the best return-to-work results. You may have two or three best treatments where now there is one."

Nancy Schroeder, assistant vice president at the National Association of Independent Insurers in Des Plaines, Ill., said that many injuries involving wear and tear on the body have multiple causes. What state workers’ comp systems decide as to which is a work- and nonwork-related injury will have a big impact on costs, she noted.

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