Many tools to treat chronic disorders have been introduced in America. Drugs today work on high blood pressure, schizophrenia, persistent pain and situational anxiety, among many other conditions. We are struggling to catch up with the risk-management implications of this fundamental change in the health-care landscape.
The hazards of mistaken risk identity are likely to be most costly when drugs and mental health are involved. Too much risk may be associated with a mental condition that is being treated by drugs.
Howard Bolnick, a past president of the Society of Actuaries, poses the challenge that health and disability insurance risk classification systems "may be committing a fundamental design error" by failing to account for successful treatments of chronic conditions. Bolnick suggests that individuals who are being treated may be much better risks than those untreated or undertreated but are being misclassified as higher risks.
In a recent issue of Contingencies, Bolnick cited a hypothetical case study of two 45-year-old men with high blood pressure. The men apply for individual health-care insurance. John has successfully controlled hypertension with the help of his physician. His medical record is proof. Matt, however, has not seen a doctor for 10 years. His high blood pressure has never been noted. The insurance underwriter, medical data at hand, prices John's premium higher than Matt's and adds an exclusion for circulatory problems.
Studies have shown that use of mental health services--visits or drugs--are often predictive of physical health problems such as heart conditions and back pain. But health plans and employers can be effective once they learn of mental health issues by timely interventions in counselling and preventive care. This response strategy is just catching on.
Psychotropic drugs have emptied chronic mental health hospitals. Health Affairs reports that about one out of seven persons with health insurance use a psychotropic drug. Some are prescribed to cope with stressful events; some to steel against crippling, chronic mental conditions.
Robert was diagnosed 20 years ago with bipolar disease. His enrollment in the federal Social Security Disability Insurance pretty much labeled him totally and permanently disabled. He is now working. Psychotropic drugs enable many of the 500,000 adults like Robert, living with schizophrenia, to work. SSDI's rules and culture have yet to accommodate what might be a whole city of beneficiaries wanting to lead much closer to normally productive lives.
Brenda seeks to join the police department. Evelyn applies for a firefighter opening. In the past, both sought help for depression. According to initial-hire medical rules in Massachusetts, Brenda has a disqualifying condition for a police officer. Evelyn, upon a psychiatric review, is accepted by the fire department. Without recent revisions in their medical rules, Evelyn as well would have been denied her job.
A lesson to be drawn from this crazy salad may be that any risk assessment used in employment, insurance underwriting or plan design might be mistaken at the point when innovative approaches to chronic conditions come into the picture. Severe mental illness is especially tricky, as the ghost of Lizzie Borden is still in the building.
America's most prominent team to study return-to-work by people with schizophrenia is run by Dr. Robert Drake at Dartmouth. He cannot recall a single instance of hearing about a misadventure of violence or confrontation involving an individual placed, using a supported work model, by vocational programs throughout the United States.
Robert, the patient noted above, was abused by his stepfather and spent much of the first 15 years of adulthood homeless and intermittently employed. He was almost destroyed by bipolar disease, a disorder of mood. He is now employed in hospital housekeeping. He told me that "work is my medication." In contrast to Robert, Jim started out near the top--an undergraduate at Yale. Similar to John Nash, the Beautiful Mind mathematician, Jim became afflicted with schizophrenia, a disorder of thinking. He dropped out, returned to earn a doctorate in physics, and worked in low-level jobs for decades. Using graduate-school contacts, he later obtained a research fellowship at a university.
For December 2003, SSDI reported 1,662,500 beneficiaries who had mental disorders other than mental retardation. This is 28 percent of all SSDI beneficiaries, the largest single diagnostic group, larger than musculoskeletal disorders (24 percent of the total). Advocates estimate that most of these men and women, now using Social Security as their primary source of income and health benefits, want to work and can work. A hairline fraction of them today hold down regular jobs.
One might fault the SSDI for saddling too many individuals with a diagnosis of schizophrenia, except that many professionals in the field of disability prevention struggle to comprehend the normalizing effects of recently introduced drugs.
I approached a dozen people active in the fields of risk, disability management, occupational medicine and mental health. I invited them to rank eight characteristics of job applicants in terms of degree of challenge thrust upon a prospective employer. They were: paraplegia due to prior accident, illiteracy, recently released from five-year prison sentence for violent crimes, recently released from five-year prison sentence for nonviolent crimes, five-year to 10-year history of schizophrenia, five-year to 10-year history of drug addiction, limited knowledge of English and less than eighth-grade education.
Applicants with schizophrenia were ranked generally near the midpoint. Paraplegia tended to be regarded as the least difficult, and history of addictions or violent crime the most difficult.
Workers with schizophrenia troubled all but one of the respondents. This exception had, from previous experience, come to agree in effect with Drake. One of the worried respondents, fluent in preventing and managing disability for a large employer, wrote: "(If they are) ... 'medically controlled' ... I wouldn't expect them to be at higher risk; if not, I'd be concerned about attention to following directions, safety instructions, etc." A second respondent, a well-informed occupational-medicine specialist, expressed this worry: "Risk of relapse and then, risk of violence. If they're OK when I hire them, will they stay that way?"
Disability-insurance designs, private and public, may be overdisabling individuals with severe mental illness. Tom Foran, an executive with Integrated Disability Resources, a group disability claims firm, finds incentives misaligned throughout--among physicians, insurers, lawyers and advocate groups. The system that works to document beyond the shadow of a doubt that a person is totally unable to work for the remainder of his or her life, is then asked to restore the individual's capacity to be productive.
Long-term disability policies usually convert their claimants in part or entirely to coverage by SSDI. It may be easier to shift financial burden to SSDI than to labor with its beneficiaries to re-enter employment.
It is difficult for an SSDI beneficiary to voluntarily withdraw from the system, as Robert did, because he or she may face a catastrophic, irreplaceable loss of benefits that would, at a minimum, cover psychotropic medication. Once employed, persons with schizophrenia usually need ongoing supervision, for instance, to monitor compliance with medication regimes.
Disability insurance plans have yet to figure out how to combine two seemingly contradictory features: a lifetime commitment because many conditions are chronic, and an easy way for covered individuals to work at private-sector jobs. SSDI provides the first feature and has effectively failed to provide the second feature. Its Ticket to Work program, an intended corrective, has failed to make a meaningful impact.
Thus, mistakes in risk assessment may be rooted not only in actuarial methods, but also in a myriad of professional and institutional practices. Correcting the mistakes will take time.
a Vermont-based consultant and writer, is the workers' comp columnist for Risk & Insurance®.
September 1, 2005
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