I.I.I. chief actuary James Lynch brings us a grim story on drug abuse and how it affects insurers:
This week Contingencies magazine published my article tracing how America’s latest drug epidemic has affected workers compensation insurance.
The epidemic comes from 20 years of gradually increasing use (and abuse) of opioids, a special class of prescription drugs that mimic many of the effects of heroin. Some you may have heard of, like Vicodin or OxyContin. Prescribed legally but highly addictive, they have become the most commonly abused class of drugs in America.
More people die from drug overdoses in America than from car accidents, and opioids lead the tragic parade. In 2010, for example, 16,652 people died from opioid overdoses, more than from heroin and cocaine combined. Opioids toll has tripled since the late 1990s.
My article shows how the growing epidemic played out in workers comp. Narcotics make up 25 percent of workers comp drug costs, and more than 45 percent of narcotics dollars pay for drugs containing oxycodone, according to the National Council on Compensation Insurance.
Insurers have acted as the crisis emerged, and now they as well as federal, state and local officials may be making headway against the problem.
Last week, after my article went to press, AIG’s new chief executive, Peter Hancock, noted his company had teamed with Johns Hopkins University to study opioid abuse among the company’s 23 million workers compensation claims.
“It is a terrible cost to the industry, a terrible cost to employers, and it’s a terrible cost to society,” Hancock told The Wall Street Journal. AIG has medical professionals working with doctors to find ways to alleviate pain without turning to opioids.
The most recent federal action reclassifies any drug containing the opioid hydrocodone as a Schedule II drug, meaning its prescriptions are more tightly controlled than before.
Unfortunately, these actions may be too late to prevent many opioid addicts from switching to heroin. Opioids tantalize the same brain receptors as heroin, and there are signs that addicts deprived of their Oxys switch.