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

2. 2 The Collision of Competing Self Interests

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

4. 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. 5 The Age Tsunami Source: U.S. Census 1930 1940 1950 1960 1970 1980 1990 4.5 4.0 3.5 3.0 2.5 2.0 Birth in Millions The Boom Years: 1946-1964

6. 6 Social Security and Medicare’s Cash Deficits Medicare HI cash deficit 2004 Social Security cash deficit 2017 Billions of 2005 dollars 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. 7 Long Term Challenges of the Social Security System DateEvent 2009 Social Security cash surplus begins to decline 2017 Annual benefit costs exceed cash revenue from taxes 2027 Trust fund ceases to grow because even taxes plus interest fall short of benefits 2041 (SSA) 2052 (CBO) Trust fund exhausted, annual revenues sufficient to pay about 74% – 78% of promised benefits 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. 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. 9 Private Pension Forces Change in Employer Pension Philosophy Employee Retirement: A Personal Responsibility Defined Benefit vs. Defined Contribution Increasing Number of Defaults PBGC Deficits I BM United Airlines Verizon General Motors Delta Airlines I BM United Airlines Verizon General Motors Delta Airlines Long Term Trend? Leaders? Survivors? A New Paradigm? Ultimate Impact? Long Term Trend? Leaders? Survivors? A New Paradigm? Ultimate Impact?

10. 10 Labor Market Dynamics C hanging 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. Source: Employment Policy Foundation analysis and projections of Census/BLS and BEA data. Millions of People Expected Labor Force and Labor Force Demand Palpable by the End of This Decade A Growing Shortage of Workers in the US:

12. 12 Age of Workers Percent Growth in U.S. Population by Age: 2000-2010 Dramatically Different Patterns of Growth by Age 1.Declining number of mid-career workers 2.Few younger workers entering the work force 3.Rapid growth in the over-55 workforce Source: US Census Bureau International Data Base

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

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

15. 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. 16 Medical Conditions & Productivity Connections Ambiguous Impairments Ambiguous Impairments High Scores Prevalence = % of ee’s reporting condition Prevalence = % of ee’s reporting condition

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

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

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

20. 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. 21 Retirement Expectations… At what age do you plan to retire? Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004

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

23. 23 Productive Aging – A New Life Stage Prospectively aligning work demands with worker capacities to achieve continuous productivit y 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

24. 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. 25 Increase fitness of workers Protect work capacity Create H&P culture Where & When Can an Employer Make a Difference? Full work Productivity Working but Productivity Impaired Intermittent & Cyclic Lost time Lost Time < 3 - 5days Lost Time < 26 weeks Health Promotion Risk Reduction Disease/Condition Management Disability Management Leave Managemen t Increase compliance with law Track & monitor absences Reduce admin burden Reduce onset of chronic disease Reduce sudden death in workforce Reduce work related injuries Reduce impairment Reduce medical/ pharmacy costs Reduce Presenteeism Reduce STD Incidence & duration Reduce LTD incidence & duration Reduce WC med & Ind’ty costs

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

27. 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. 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. 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