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For health insurers, 9/11 started small but might have a long tail

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The terrorist attacks that hit New York and Washington on Sept. 11, 2001, did not seem to have a big, direct effect on major medical insurance claims in those communities.

Related: Ratings Analysts Narrow 9-11 Losses To About $3 Billion For L&H Industry

Insurers and insurance industry observers never even bothered to calculate a widely circulated health insurance 9/11 claim total.

In 2004, when analysts at the Santa Monica, California-based Rand Corp. wrote a report on the impact of the attacks, they had to put asterisks in place of a health insurance benefits payment total.

The impact of the 9/11 attacks looked small because ordinary health risk is big. Obesity alone leads to about $150 billion of the United States’ $3 trillion in annual health spending, according to the U.S. Centers for Disease Control and Prevention.

Residents of the New York City metropolitan statistical area spent about $100 billion on health care in 2001.

It’s possible, looking at figures for government health programs and projections for workers’ compensation programs (which are operated by property-casualty insurers, not health insurers) that the country may have spent less than $15 billion, and possibly less than $10 billion, on all types of insured and uninsured attack-related health care.  

But the attacks did get health insurance company executives thinking more about catastrophic risk. When actuaries mention the 9/11 attacks in papers on the website of the Schaumburg, Illinois-based Society of Actuaries, that’s often part of an argument about why health insurers should take the flu seriously. Jim Toole, the author of a flu impact analysis on the SOA site, estimated that, around 2010, ordinary season flu could cost U.S. health insurers about $2.6 billion per year, that a moderately bad flu epidemic could cost $7.4 billion, and that a severe pandemic could cost $38 billion.

Related: Is This Flu Season Worse Than Usual?

The attacks could also have a hard-to-predict effect on claims for health-related products sold to people in the New York and Washington areas in the future, if lingering effects that seem like rounding errors now grow over time.

For a look at the numbers that are available on what the attacks meant for health risk, read on:

Two memorial fountains now stand where workers once searched the World Trade Center ruins for the remains of the 9/11 victims. (Photo: Allison Bell/LHP)

Two memorial fountains now stand where workers once searched the World Trade Center ruins for the remains of the 9/11 victims. (Photo: Allison Bell/LHP)

1. Direct immediate impact

Janet Henrich, a director at the U.S. Government Accountability Office, estimated in written testimony delivered at a hearing in September 2004, that the attack on New York City’s World Trade Center had affected at least 16,000 people who were in the complex at the time of the attack and about 40,000 rescue and recovery workers.

Deborah Draper, another GAO director, said in a letter sent in August 2011 that the National Institute for Occupational Safety and Health then had identified about 55,000 World Trade Center responders who were eligible for government-paid health care services.

Thousands of people were in the Pentagon when a plane hit that building on Sept. 11.

The attacks on the World Trade Center and the Pentagon led to a total of about 3,000 deaths, including about 2,600 deaths in New York and 125 deaths at the Pentagon.

The Greater New York Hospital Association found that 103 hospitals in New York state handled 6,232 emergency room visits and 477 hospitalizations related to the New York attack. New Jersey hospitals handled 1,018 attack-related emergency room visits and 84 hospitalizations, Heinrich said. Washington-area hospitals treated 106 people injured in the attack on the Pentagon, according to the 9/11 Commission.

Congress created two separate funds to help 9/11 attack victims: A September 11th Victim Compensation Fund of 2001, which operated from 2001 through 2003 and handled claims related to the immediate effects of the attacks, and a second fund, the September 11th Victim Compensation Fund, which started up in October 2011 and has been accepting claims for long-term attack-related health problems, and claims for the health problems suffered by the emergency workers who responded to the attacks and by the workers who helped clean up the attack debris.

The first fund received 2,680 claims for attack-related personal injury claims, estimated that the claimants were entitled to a total of $1.5 billion in relief, and made $1 billion in actual personal injury benefit payments after applying offsets for the effects of private insurance and pension plan payments, according to a paper by Gillian Hadfield. The federal government has also helped pay for a number of small monitoring and care programs aimed mainly at rescue and recovery responders. 

Meanwhile, at private health insurers, the effect of the 9/11 attacks on claims seems to have been too small even to show up in footnotes.  

Oxford Health Plans, a Norwalk, Connecticut-based carrier that was active in the New York City area in 2001 and was later acquired by Minnetonka, Minnesota-based UnitedHealth Group, said in its financial report for the third quarter of 2001 that one problem it faced was difficulty with collecting premium payments from customers with operations disrupted by the 9/11 attacks. The company warned that it might face higher costs due to terrorism, but it did not receive enough attack-related claims for the claims to cause a noticeable increase in its health care services expense figures.

Aetna, which is based in Hartford, recorded a $9 million attack-related charge in the third quarter of 2001, but the charge was connected with group life benefits payments, not medical claims.

New York City-based Empire Blue Cross and Blue Shield, which is now part of Anthem, had about 1,900 of its 6,500 employees at the World Trade Center on Sept. 11. The attack on the complex killed nine of its employees and two consultants. Three employees were severely burned and needed extended care. Four others also spent a significant amount of time in the hospital, according to a New York state examination report.

But Empire and its examiners did not mention anything about the attack having a significant effect on the company’s claims.

Related: Fitch Asks New York Workers To CallNAIC: Our WTC workers are safe and Aon: 900 Of 1,100 WTC Workers Accounted For

When builders completed the Oculus, the heart of the World Trade Center's new subway station, they hung American flags over the two main entrances. (Photo: Allison Bell/LHP)

When builders completed the Oculus, the heart of the World Trade Center’s new subway station, they hung American flags over the two main entrances. (Photo: Allison Bell/LHP)

2. Lifetime impact 

Determining exactly which health problems are the result of the 9/11 attacks is difficult. Doctors would expect to see hundreds of people in any given group of 55,000 adults who were alive in 2001 develop cancer, heart disease and other serious health problems by 2006.

One indicator of the health status of 9/11 attack survivors is spending at the second attack victim compensation fund, which, in many cases, may be helping attack survivors who developed cancer or other health problems too late to file claims with the first compensation fund.

As of July, the second fund had paid about $1.8 billion to personal injury victims, or about $199,000 for each of the 9,111 personal injury claims processed, according to a fund report

Henrich noted in the 2004 GAO written testimony that researchers found, shortly after the 9/11 attacks, that about 22 percent of World Trade Center responders and about 10 percent of fourth- through sixth-graders in the New York reported having symptoms of post-traumatic stress disorder. Good baseline figures are hard to find, but, normally, only 3.6 percent of U.S. adults have a PTSD diagnosis during the course of a year, Henrich said.

High PTSD rates could have already driven up the survivors’ medical claim costs. 

One research team reported in May 2014, in the American Journal of Epidemiology, that people who experienced multiple injuries during the attack on the World Trade Center and also suffered from PTSD were about twice as likely as other survivors to develop lung problems, and about three times as likely to develop heart disease. 

But, in February this year, researchers reported in the American Journal of Industrial Medicine that the all-causes death rate for World Trade Center rescue and recovery workers is about the same as the all-causes death rate for other adults.

A set of U.S. Centers for Disease Control and Prevention survey data that goes back to 2002 shows that the percentage of New York City residents who described their health as excellent or very good was 50 percent both in 2002 and in 2012.

Related: For Every Life, a Story

Shops are already starting to sell skin care products, men's clothes and luggage in the New York City World Trade Center's new mall. (Photo: Allison Bell/LHP)

Shops are already starting to sell skin care products, men’s clothes and luggage in the New York City World Trade Center’s new mall. (Photo: Allison Bell/LHP)

3. Possible lingering effects

Health problems that seem like a nuisance one year can become more dangerous over time.

In New York City alone, Henrich said, as many as 250,000 to 400,000 in the area surrounding the World Trade Center complex were close enough to be eligible for a city-run survivor registry. Many have not even bothered to register.

Wind carried attack site smoke and dust far away from the attack sites, and, in the long run, the worst effects might occur wherever the dust fell, wherever that was, rather than in the places that an insurance underwriter might think.

A team is reporting this month, in the American Journal of Industrial Medicine, that the workers who handled World Trade Center debris in Staten Island and on barges were about as likely to develop asthma to workers who were exposed to World Trade Center dust while working at the World Trade Center site.

Exposure to wind-blown dust may also be a problem for the prime New York City- and Washington-area insurance prospects of the 2020s: People in those areas who were under 5 on 9/11. Small children who were exposed to World Trade Center dust and had irritated eyes were much more likely to develop asthma after 9/11 than other attack survivors living near the World Trade Center, even if those other children lived closer to the attack site, according to a paper in Environmental Health Perspectives.

Fear of terrorism, and the tension created by the aggressive security measures used to defend against terrorism, could also affect people’s health.

At the World Trade Center site, for example, the Los Angeles-based Westfield Group is spending $1.5 billion to develop a shopping mall over a subway station. Commuters, shoppers and shopping mall store workers have to pass by armed, watchful guards as they go about their business.  


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