The Health & Productivity of the Aging American Workforce: The Politics of Incapacity

1. The Health & Productivity of the Aging American Workforce: The Politics of Incapacity Kenneth Mitchell, Ph.D..Chattanooga, TN

2. The Collision of Competing Self Interests

3. Set a Course for the Aging Workforce The Reality: Economic, Demographic and Labor Market Issues The Health, Productivity & Disability Connection Productive Aging: A Program Blueprint Productive Aging: A New Life Stage

4. The Reality Economic & Demographic Influences Summary Points: • The Age Tsunami • Social Security Solvency • Medicare/Healthcare Impact • Disability Risk Patterns • Pension Program Metamorphosis New Reality

5. 1990 1980 1970 1960 1950 1940 1930 The Age Tsunami 4.5 The Boom Years: 1946-1964 4.0 Birth in Millions 3.5 3.0 2.5 2.0 Source: U.S. Census

6. Social Security and Medicare’s Cash Deficits Billions of 2005 dollars Social Securitycash deficit 2017 Medicare HIcash deficit2004 Note: Projections based on the intermediate assumptions of the 2005 Trustees’ Reports. Source: GAO analysis based on data from the Office of the Chief Actuary, Social Security Administration and Office of the Actuary, Centers for Medicare and Medicaid Services.

7. Long Term Challenges of the Social Security System Sources: Social Security Administration, The 2005 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds. Washington, DC, March 2005. Congressional Budget Office, The Outlook for Social Security: Potential Range of Social Security Outlays and Revenues Under Current Law. Washington, DC, June 2004 (updated April 2005).

8. Healthcare Cost Pressures * • Demographics (+1% annually) • An aging population/work force with greater longevity • Emerging Technologies (+ 2% annually) • New diagnostics and treatment, new devices, new medications • Change in Status of Drugs( -0.5% annually) • Generic and OTC applications • Mandated Benefits (+0.5% annually) • Legislation affecting medical costs (e.g. . Colorado move from no fault auto insurance to tort system = +2.0% • Medical Price Inflation (+ 6.0% annually) • 2.5% general inflation plus Medical inflation @ 3.5% • Baseline Utilization (+2.0% annually) • Changes in patient behavior – Changes in provider behavior • Benefit Plan Changes (-2% annually) • Risk and cost transfer to patient * Reported by the American Academy of Actuaries, 2005 Rising healthcare cost Briefing

9. Private Pension Forces IBM United Airlines Verizon General Motors Delta Airlines Long Term Trend? Leaders? Survivors? A New Paradigm? Ultimate Impact? Change in Employer Pension Philosophy Employee Retirement: A Personal Responsibility Defined Benefit vs. Defined Contribution Increasing Number of Defaults PBGC Deficits

10. Labor Market Dynamics Changing Work Force Dynamics are Redefining Work Options & Opportunities Summary Points: • Work Force Growth • Shortage of Workers in the US • Changes in Future Growth Patterns • Older Worker Industries • New Verbs – Out Source – Off Shore An Employer Paradox

11. A Growing Shortage of Workers in the US: Expected Labor Force and Labor Force Demand Palpable by the End of This Decade Millions of People Source: Employment Policy Foundation analysis and projections of Census/BLS and BEA data.

12. Dramatically Different Patterns of Growth by Age Percent Growth in U.S. Population by Age: 2000-2010 • Declining number of mid-career workers • Few younger workers entering the work force • Rapid growth in the over-55 workforce Age of Workers Source: US Census Bureau International Data Base

13. . . . Continuing for Our Working Lives! Percent Growth in U.S. Workforce by Age: 2000-2020 Age of Workers Source: US Census Bureau International Data Base

14. Median age of Employed Population Selected Industries Source: 2003 Current Population Survey, U.S. Department of Labor

15. Disability Dynamics Aging, Disability and Healthcare Cost Connections Summary Points: • Presenteeism is the First Indicator • Healthcare Costs & Risk Factors • LTD dominated by older workers • Musculoskeletal/Chronic Pain • STD Durations Extended with Age Challenges or Opportunities

16. Medical Conditions & Productivity Connections Prevalence = % of ee’s reporting condition Ambiguous Impairments High Scores

17. Short (STD) and Long (LTD) Term Disability Distributionby age Source: UnumProvident Disability Database, 2002-2004.

18. STD Lost Days by Selected Impairments Source: UnumProvident Disability Database, 2002-2004.

19. Top 4 STD impairments with the Greatest Lost Time Workers over the age 40 Source: UnumProvident Disability Database, 2002-2004.

20. Productive Aging – The Impact of A New Life Stage Age is not a Disability - Aging is not a Disease Summary Focus • Funding for Longevity • Retirement & Productivity Expectations • Benefits & Entitlements Trends • Productivity Barriers & Enhancers • Productive Aging Building Blocks A New Way of Thinking

21. At what age do you plan to retire? Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 Retirement Expectations…

22. Time for…….Expected Years Spent in “Retirement:” 30 25 20 15 10 5 0 30 + Years 20-25 19.4 13.6 1.2 Source: Age Wave, based on U.S. data, and The Concours Group

23. Productive Aging Program Focus Emerging Primary Transitional 45 to 55yrs * 55 – 70 yrs* > 70 yrs* * or determined based on health, functional capacity and work issues Productive Aging – A New Life Stage Prospectively aligning work demands with worker capacities to achieve continuous productivity

24. A Productive Aging Benefit Blueprint – Key Themes • Targeted Benefits • Create a capped or limited LTD period (e.g. 5 - 7 years) • Shared Risk • Share lost time risk to employee combined with stay at work Incentives • Combine Benefits • Shared healthcare coverage (private/public/part time) with access to focused healthcare services to reduce the impact of chronic disease and protect functional capacity • Unique Linkages • Align life balance programs (dependent long term care, elder care etc.) with need for employee to support family members. • Retire Retirement • Support career/ retirement transitions, work/learning/leisure cycles, flex work, mentoring, research, education, training, application of new technologies

25. Where & When Can an Employer Make a Difference? Disability Management Disease/Condition Management Leave Management Health Promotion Risk Reduction Reduce impairment Reduce medical/ pharmacy costs Reduce Presenteeism Increase fitness of workers Protect work capacity Create H&P culture Reduce onset of chronic disease Reduce sudden death in workforce Reduce work related injuries Increase compliance with law Track & monitor absences Reduce admin burden Reduce STD Incidence & duration Reduce LTD incidence & duration Reduce WC med & Ind’ty costs Working but Productivity Impaired Intermittent & Cyclic Lost time Lost Time < 3 - 5days Lost Time < 26 weeks Full work Productivity

26. Injury or illness Event Employer Disenfranchisement Employee Disengagement Premature Disability & Excessive Healthcare Costs The Intangibles: Here in Lies the Rub

27. Productive Aging: Target ROI • Qualitative • Fully engaged employee • Appropriate utilization of corporate human capital • Improved functional capacity of older workers who do leave the work place • Quantitative • Reduced lost time • Reduced healthcare costs • Continued contribution to the organization

28. Summary Trends • Greater Employee Responsibility • Reduced Employer Funding • Longer EPs for disability • Implement Higher co-pays if “unmanaged • Greater Need for support services to control work disruptions and presenteeism • Greater Need to manage the organization’s human capital assets held by the older worker group

29. This Can Happen to You! If we do not protect the productivity options of the boomer generation, we will have roaming bands of bored, annoyed, grumpy, unemployed but physically fit elders leading to social upheaval and mayhem