Boomer Health Status Intrigues Disability Insurers And Producers
One of the big questions facing disability insurers and producers is the true health status of the baby boomers.
Will efforts to encourage boomers to exercise, eat healthier diets and stop smoking pay off by decreasing the likelihood that working boomers will file short-term and long-term disability claims?
Or will genetics or new health threats, such as skin cancer, or a general retreat from community involvement, somehow increase the likelihood that a given boomer will file a claim?
Either way, the aging of the boomers probably will lead to an increase the overall incidence of claims, experts interviewed say.
“Theres a natural progression of the types of conditions that people get as they get older,” says Dr. Ronald Leopold, medical director of MetLife disability at MetLife Inc., New York.
The nature of that progression could affect any financial advisor who sells disability insurance. If boomers are sicker in middle age than the actuaries expect, advisors could find that disability coverage is harder to find, rates are higher and commissions are lower. If boomers are healthier, advisors that sell disability coverage could be the belles of the ball.
Today, 9.4% of U.S. workers between the ages of 35 and 44 are either at home with a disability or continuing to work despite suffering from a serious disability, says Donna Otten, vice president of benefits management services and strategy implementation at Aetna Inc., Hartford.
The share with disabilities rises to 23% for workers between the ages of 55 and 64, Otten says.
MetLife reports that employees over age 55 are about twice as likely to submit diabetes claims as are younger employees and about four times as likely to submit claims for cardiovascular problems.
The solution is not to fire all the older workers, Leopold says. Even if employers could ignore age discrimination laws, most would find that the value of keeping old workers knowledge and contacts far outweighs increased benefits costs, Leopold says.
But the healthier the boomers are, the better the results will be for disability insurers and for the employers that pay the premiums.
Leopold is convinced that boomers really are smoking less, exercising more and working harder to control conditions such as diabetes and high blood pressure.
“People are living healthier longer,” he says.
Disability actuaries might be able to forecast the propensity of the boomers to file disability claims by comparing 1990s disability claims rates for workers born between 1945 and 1964 with 1970s claims rates for workers born between 1925 and 1940s.
In the real world, making solid, apples-to-apples statistical comparisons across generations is difficult, Leopold says.
“We dont know everything we would like to know about an aging population,” Otten says.
Finding published examples of that type of comparison is difficult. Data from the Current Population Survey, an annual survey conducted by the Census Bureau, tell a contradictory story.
For U.S. residents between the ages of 45 and 54, for example, the percentage who say they are disabled fell to 12.8% in 2002, from 13.3% in 1995. Over the same period, the percentage who say they have a severe disability increased to 8.9%, from 8.1%.
But the Census Bureau says respondents have severe disabilities if they are unable to work because of their disabilities or they collect disability-based Social Security or Medicare benefits. That means that the disability statistics depend on political and economic factors as well as the actual abilities of the respondents.
Social Security actuaries wrote in a 2001 actuarial study that the overall Social Security disability incidence rate was 4.6 disability cases per 1,000 insured U.S. residents in 2000, and that they estimate political and economic factors could cause the rate to vary from 4.0 cases to 5.5 cases per 1,000 insured residents by 2010.
One complicating factor is the turmoil in the major medical insurance market. Some working boomers have no coverage at all. Others have coverage set up so that sticking with doctors or hospitals in the health plans network is difficult. Still others have coverage designed so that out-of-pocket costs are high even when patients get all their care within the provider network.
Older boomers with serious health problems and poor health coverage, or no coverage, might feel that they have to try to qualify for disability-based Medicare health insurance, even when they would prefer to go back to work.
Employers can play a part in holding down age-related increases in disability claims costs by taking return-to-work programs seriously, experts say.
These days, at some employers, getting time to talk to benefits managers about benefits other than major medical insurance is difficult, Otten says.
But employers might be able to lower disability claims costs by taking relatively simple steps, such as providing special chairs for workers who have trouble sitting in regular chairs, Otten says.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.