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Study Shows Need for More Focus on Potential Impacts of PPACA on Workforce Disability and Absence Management Programs

DMEC 2013 logo
Pacific Resources logo

ATLANTA, Aug. 20, 2013 (GLOBE NEWSWIRE) -- A new study released jointly today by the Disability Management Employer Coalition (DMEC) and Pacific Resources points to a need for more focus on the potential impacts of the Patient Protection and Affordable Care Act (PPACA) on workplace disability and absence management programs.



Impacts of PPACA on Workplace Disability and Absence Management Programs


An infographic accompanying this release is available at http://www.globenewswire.com/newsroom/prs/?pkgid=20554

The study—the first of its kind to survey benefits policy decision-makers and senior insurance industry professionals on the issue— found that, even though many organizations feel ready for PPACA changes to health care and health insurance, most have not given much thought to its impact on disability and absence management despite agreement that these employee benefits programs can significantly impact a company's bottom line.

"Disability and absence management are not separate issues from health and medical issues and they need to be considered in the context of health care reform," said Pat Purdy, Vice President, Core Benefits Solutions at Pacific Resources. "With 100 percent of disability claims and 60-70 percent of workplace absences linked to an employee's own health, disability and absence management programs play a critical role in helping to manage an organization's overall healthcare costs."

Employers and insurance companies are important stakeholders in the implementation of healthcare reform with 64 percent of the US population receiving private health insurance (Census Bureau, 2010) and 59.5 percent receiving coverage through an employer (Robert Wood Johnson Foundation, 2011).

The study shows that nearly half (48%) of employers and the majority (72%) of disability insurance carriers believe the financial impact of employee disability and absence will increase over the next five years, citing key cost drivers such as increased incidence of disability claims; increased duration of absence; increased use of Family Medical Leave Act (FMLA) benefits; and rising overall healthcare costs.

"Employee disability and absence are intricately tied to health and the professionals managing those programs need to be part of the health care reform discussion and decision-making process within their organizations," said Charles Fox, President and CEO of DMEC. "The study and corresponding report were structured to aid employers in their decision-making by identifying current thinking and providing predictions on how they can expect their programs to evolve in the future."

Key findings and implications include:

Incidence and duration of long-term absences expected to increase

When presented with alternative scenarios, employers and carriers are far more likely to believe that the incidence of long-term absences will increase. Further, more believe the duration of absences will increase as a result of increased waiting times for access to care than decrease as a result of more timely treatment of conditions. There is more uncertainty about how PPACA will impact the number of disability claims, although those who feel knowledgeable enough to predict what will happen are more likely to believe the number of claims will rise due to employees no longer fearing a loss of healthcare coverage from a long-term absence.

More believe it will be more difficult to get access to routine care under PPACA

42% believe that the ability of employees to see a physician for routine care in a timely manner will get worse, while only 21% believe it will improve. A smaller, but still substantial proportion, believes access to urgent care will change, although views on whether this will get better or worse are split. Some changes are also expected in how employees will be able to use their benefits.

According to the Congressional Budget Office (CBO), it is estimated that 27 million people will be added to the US health care system as a result of health care reform. But what hasn't been discussed is the potential unintended impact this may have on workforce productivity, especially when combined with an existing shortage of doctors, particularly primary care physicians (PCPs). The Association of American Medical Colleges (AAMC) says the shortage of PCPs in the US will rise to 90,000 by 2020 and 130,000 by 2025. Even without health care reform, the expected shortage of doctors would be at least 100,000 by 2025. Employers need to be aware of this issue and thinking about how it could potentially impact the delivery of health care to their employee population, including absence and disability related services.

PPACA could impact program outsourcing

Companies currently use a variety of methods to handle their leave management administration, including complete insourcing, complete outsourcing and a mix of the two. While the majority of respondents do not envision changing their method of leave management administration over the next few years, there was some concern that FMLA activity will increase as a result of PPACA and that more employers will look to outsource leave management as a result of PPACA.

There is a belief that with the new healthcare legislation, employee awareness of benefits legislation will continue to grow, including a greater awareness of ability to take job protected leave. If the anticipated increase in incidence and duration of disability occurs and employees become more aware of leave laws, it makes sense that more employers will be rethinking their leave management programs as well as their overall talent management strategy.

Wellness initiatives are widespread and growing

DMEC employer organizations currently have a wide variety of programs to help manage employee benefits and absence. Wellness initiatives are the most common. Many employers are expanding internal programs aimed at reducing absence and promoting employee wellbeing, but few credit PPACA as motivating these decisions – perhaps because many of their wellness initiatives were underway prior to PPACA, which does include financial incentives for wellness programs.

The study results were released at the 18th Annual DMEC Conference in Atlanta, GA.

Former First Lady Rosalynn Carter, the nation's foremost champion for the rights of people with mental illnesses, delivered the keynote address at the conference. Mental health issues are one of the fastest growing causes of disability claims and a leading cause of workplace absence. More days of work loss and work impairment are caused by mental illness than by other chronic conditions, including diabetes, asthma, and arthritis.

"Gaps in insurance coverage, problems with access to care, and the stigma surrounding mental illnesses can contribute to an environment that discourages employees from seeking help and treatment," said Mrs. Carter. "Advances in the treatment of mental illnesses have increasingly led employers to understand that mental health services and benefits are essential to maintaining and improving their employees' health and productivity but there is still much more work to do."

While the study looks at opinions regarding the potential impact of PPACA on employee disability and absence trends, it does not intend to address the social policy value of healthcare equality in the United States. Many consider PPACA to be an important social policy that will result in better access and quality of care, a decrease in disability and absences due to its providing healthcare for all, better preventative care coverage, quality of care, and an ongoing focus on wellness. Additionally, some survey respondents (although not the majority) saw a brighter future for absence management post health care reform, driven by access to coverage for all, focus on preventive care and wellness, and better coverage.

"While there is a lot that remains to be seen as PPACA is implemented, organizations that are aware of the potential impact of this legislation on disability and absence management will likely be at a competitive advantage," said Purdy. "In addition, it will be important to consider how other factors such as an aging workforce, the anticipated shortage of primary care physicians, a tight economy, and a lean workforce will magnify the impacts of healthcare reform on disability management."

For more information on the Impact of Patient Protection and Affordable Care Act on Absence and Disability Policies and Benefits Study:

Download Executive Summary

About DMEC

The Disability Management Employer Coalition (DMEC) is a non-profit organization that advances strategies and resources to improve workforce productivity by minimizing the impact of absence and disability. The association was established in San Diego, California in 1992 and has expanded to include chapters across the country, as well as an annual conference on integrated disability and absence management. The primary goal of DMEC is to assist employers in developing cost-saving programs and returning employees to productive employment. Visit http://dmec.org for more information about educational publications and events.

About Pacific Resources

Pacific Resources is a leading and independent employee benefits advisory firm servicing large, predominantly Fortune-ranked companies. Headquartered in Chicago with locations throughout the country, Pacific Resources partners with clients across industries to evaluate and improve their Life, Disability, Voluntary and other non-medical benefits and the technology platforms that support them. For over three decades, Pacific Resources' unique, evidence-based insights have shaped innovative employee benefit solutions, impacting the lives of millions of employees in rewarding and binding ways. For more information, visit www.pacresbenefits.com.

CONTACT: Kevin Gould 774-545-5142 kgould@conoverandcompany.com

Source: Pacific Resources;Disability Management Employer Coalition(DMEC)