Obesity Is Driving Disability Claims

Disability claims have increased significantly over the past 10 years for joint disorders and musculoskeletal issues in the U.S., according to data from Unum. Greg Breter, senior vice president of benefits at Unum noted that aging Baby Boomers are staying in the workforce longer, and more than a third of U.S. adults are classified as overweight or obese. “Almost everyone over 55 begins to feel the twinges in joints and backs. But research is showing that obesity is contributing to a dramatic increase in knee replacement surgery and exacerbates other conditions like arthritis, back injuries and joint pain. We also see obesity contributing to other issues, like heart disease, stroke, type 2 diabetes, sleep apnea and respiratory problems, and certain types of cancer.” Aging and obesity tip scales in Unum’s 10-year review of disability claims. For musculoskeletal issues, there has been a 33% increase in long term disability claims and a 14% increase in short term disability claims. There has been a 22% increase in long term disability claims and 26% increase in short term disability claims for joint disorders. While Unum has seen an increase in joint and musculoskeletal issues, cancer has stayed the number one reason for long term disability claims over the past decade, and pregnancy continues to top the list of reasons for short-term disability.

Here are the top long-term disability causes for 2015:

  • Cancer 16.5%
  • Back disorders 13.9%
  • Injury 10.4%
  • Cardiovascular 9.6%
  • Joint disorders 9.2%

Here are the top short-term disability causes:

  • Pregnancy 27.4%
  • Injury (excluding the back) 11.3%
  • Joint disorders 2%
  • Back disorders 7%
  • Digestive system 6.6%

How the ACA Is Driving Telehealth

Virtual medical visits are growing due to the Affordable Care Act (ACA) and a rising prevalence of chronic conditions, according to an analysis from Frost & Sullivan. The market is expected to achieve a compound annual growth rate of 17.8% from 2015 to 2021. Telehealth virtual visits are gaining traction among health plan providers, payers, and employers for non-emergency conditions, such as allergies, colds, ear aches, upper respiratory infections or skin conditions. Telehealth is also attractive to parents who want to avoid dragging young children to a pediatrician. Some services focus on providing second opinions by specialists. Doctors’ and patients’ familiarity with desktop and mobile video services is driving telehealth. Since early adopters are satisfied with the services, providers are encouraged to establish telehealth services for behavioral health and other specialized therapeutic areas.

Teladoc, American Well, MDLive, and Doctor on Demand are the four major competitors attempting to build a virtual telehealth service on a national scale. Each company believes that telehealth virtual visits will become a preferred method of seeing a doctor or behavioral health professional over the next five years. As companies pursue diverse business models and strategies, they have vastly different ratios of video visits to phone calls or secure messaging. Numerous smaller participants are focusing on specific geographic areas or medical specialties.

Costs, Not Utilization Are Driving Children’s Healthcare Spending

In 2014, rising prices were largely to blame for the growth in children’s health care spending, according to a report from the Health Care Cost Institute (HCCI). Health care spending  for children under employer-sponsored plans grew 5.1% a year from 2010 to 2014, reaching $2,660 in 2014. But the use of health care services declined from 2012 to 2014. HCCI senior researcher Amanda Frost said, “The decline in children’s use of health care services is a relatively new trend…While we know that prices have fueled much of the spending growth in 2014, future research should examine whether these higher expenditures are leading to better health care outcomes for children.” The survey also reveals the following:

  • Out-of-pocket health care spending on children increased 5.5% a year to $472 in 2014. This growth was due partly to higher out-of-pocket spending on ER visits, which increased 11.7% annually.
  • The average price for brand prescriptions went from $7 a day in 2010 to $16 a day in 2014.
  • The rise in the average price of brand prescriptions drove spending increases. In 2014, spending for brand prescriptions rose 6.8%. The average price for generic prescriptions remained stable.
  • In 2010, the average price of a surgical admission for a child was $35,423, and jumped to $53,372 in 2014.
  • ER visits accounted for 8% of health care spending for children in 2014.
  • The average price of an ER visit increased $298 from 2010 to 2014. At the same time, the number of ER visits dropped from 181 visits per 1,000 children in 2010 to 177 visits in 2014.
  • In 2014, there were 3,228 doctor visits per 1,000 children, down slightly from the previous year.
  • Doctor visits accounted for 12% of spending in 2014 ($339 a child), and made up the largest share of health care spending for the average child.

How Major Players Are Driving Regional Networks

healthcare copyFollowing implementation of the Affordable Care Act, large players are consolidating the control of hospitals and physician organizations in the San Francisco Bay area, according to a recent report by the California HealthCare Foundation (CHCF).

In a region with many segmented submarkets, major providers are expanding to manage care efficiently, serve more patients, and compete with Kaiser Permanente. The number of independent hospitals is shrinking as financial problems mount. Independent practice associations are seeking to diversify, raise capital, and keep private practice viable, especially for primary care physicians. Though none of the region’s remaining private safety-net hospitals appear threatened by imminent closure, several face an uncertain future. The safety net is strong, but faces capacity and access challenges resulting from Medi-Cal expansion. Safety net providers are particularly hampered by their limited ability to recruit and retain clinicians. For more information, visit www.chcf.org/almanac.

How the FDA Is Driving Drug Price Hikes

The FDA’s backlog of 4,000 generic drug applications is hindering competitors who could hold prices down, according to a study by the National Center for Policy Analysis (NCPA). Also, older generic drugs are often made on aging production lines, which are sometimes shut down for maintenance. Lines can be stopped after the manufacturer is warned by the FDA that the facility is out of compliance with good manufacturing practices. The resulting shortage often drives prices higher.

Thousands of drugs predate the FDA’s approval process required under the 1938 Food Author and Drug & Cosmetics Act; many were grandfathered, but never officially approved.  NCPA senior fellow Devon Herrick says, “The FDA wants these cheap drugs off the market and replaced with more costly approved versions from any drug makers willing to conduct clinical studies on them.”

State regulations also bite consumers in the wallet. Generic substitution laws in some states make it harder for consumers to save. In the face of rising drug prices, many states have passed laws that worsen the situation, such as banning efficient pharmacy networks, restricting mail-order pharmacies, and restricting maximum allowable cost lists.

The NCPA study highlights several ways to lower America’s drug bills, including the following:

  • Clear the FDA’s backlog of applications to manufacture generic drugs.
  • Resist passing perverse regulations designed to protect local business.
  • Promote competition in the production of generic medications.

“Much of the recent rise in the price of generic drugs can be directly linked to regulatory and legal causes,” says Herrick. This study is Part II of Herrick’s in-depth examination of the rising costs of generic drugs.

Last Updated 08/10/2022

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