The Population is Abusing Drugs, but are Drugs Abusing Insurance?

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1 Image licensed from Shutterstock The Population is Abusing Drugs, but are Drugs Abusing Insurance? 01/30/2018 Gina C. Guzman, MD, DBIM, FALU, FLMI, VP and Chief Medical Director Tim Morant, FSA, MAAA, 2 nd VP & Actuary

2 Opioids in the news August 23, 2017 Are Drugs Abusing Insurance? Guzman/Morant MUD January

3 Agenda what does this mean to life insurers? 1. Introduction to opioids 2. Opioid epidemic: how did we get here? 3. General population mortality trends 4. Results of Munich Re mortality study 5. Screening for Opioids Cost/Benefit Analysis 6. Where s the risk? Are Drugs Abusing Insurance? Guzman/Morant MUD January

4 1Introduction to opioids Image licensed from istock.com

5 What are opioids? Drugs containing opium or its derivatives, used in medicine for inducing sleep and relieving pain Any sedative or narcotic All substances both natural and synthetic that bind to opioid receptors Inhibit the transmission of pain signals Can be prescribed by doctors Can be illegal Licensed from istock.com

6 Opiate vs. opioid? Opiate Derived from opium poppy codeine morphine heroin opium Opioid Synthetic or semi-synthetic hydrocodone* oxycodone* hydromorphone methadone* fentanyl illegally-made fentanyl * most common drugs involved in prescription overdose deaths Are Drugs Abusing Insurance? Guzman/Morant MUD January

7 Categories and potency of opioids Category Generic name Strength comparison Natural opioid analgesics (opiates) Semi-synthetic opioid analgesics Synthetic opioid analgesics codeine morphine hydrocodone* oxycodone* hydromorphone methadone* fentanyl Illicit illegally-made opioids heroin illegally-made fentanyl ,000 * most common drugs involved in prescription overdose deaths Are Drugs Abusing Insurance? Guzman/Morant MUD January

8 Where s the risk with opioids? Accidental or intentional overdose Side effects Drowsiness Respiratory depression Nausea and vomiting Constipation Motor vehicle accidents Drug abuse and addiction Death Licensed from istock.com

9 Opioid epidemic: how did we get 2here? Image licensed from istock.com

10 Shifts in pain control Prior to mid- 1990s Cancer Surgery Trauma Mid- 1990s Pain control awareness Low back pain Headaches Chronic pain Are Drugs Abusing Insurance? Guzman/Morant MUD January

11 Opioid prescriptions vs. opioid-related deaths >200 million prescriptions 16,000 deaths/year 4 billion prescriptions USA in 2010 Opioids = 5% Opioid Prescriptions and Opioid-Related Deaths From Data compiled from National Institute on Drug Abuse, 2014, and National Prescription Audit, JAMA Neurol. 2016;73(5): doi: /jamaneurol Date of download: 4/26/2017 Copyright 2016 American Medical Association. All rights reserved. Are Drugs Abusing Insurance? Guzman/Morant MUD January

12 Are Drugs Abusing Insurance? Guzman/Morant MUD January

13 Opioid overdose deaths by state Are Drugs Abusing Insurance? Guzman/Morant MUD January

14 Substance abuse death rate trend in the US Are Drugs Abusing Insurance? Guzman/Morant MUD January

15 Are Drugs Abusing Insurance? Guzman/Morant MUD January

16 Risk factors for prescription opioid abuse and overdose Overlapping prescriptions from multiple doctors and pharmacies High daily doses Mental illness or a history of alcohol or other substance abuse Family history of substance abuse Source of misused opioids Highest risk group = Age y/o Non-Hispanic whites Men > Women 4x more likely to buy the drugs from a dealer or other stranger Own Rx Free from friend/relative Bought from friend/relative Stole from friend/relative Bought from drug dealer Unknown Source: 2015 National Survey on Drug Use and Health, Table 6.56B Are Drugs Abusing Insurance? Guzman/Morant MUD January

17 Opioid risk progression Tolerance Dependence Addiction Death? Are Drugs Abusing Insurance? Guzman/Morant MUD January

18 What does this mean to life insurers? Opioid Epidemic Should we screen for opioids? Has Munich Re done a cost-benefit analysis? Are Drugs Abusing Insurance? Guzman/Morant MUD January

19 General population mortality trends 3drug abuse Image used by permission

20 Trend in drug overdose deaths in US Source: Are Drugs Abusing Insurance? Guzman/Morant MUD January

21 Substance abuse death rate trend in the US Opioid vs non-opioid Death per 100,000 Population Substance Abuse Population Deaths Rates (Ages 0-84) All Substance Abuse Opioid Abuse Non-Opioid Substance Abuse > 460,000 substance abuse deaths > 250,000 opioid abuse deaths Data Source: Mortality Multiple Cause-of-Death Public Use Record from the CDC Are Drugs Abusing Insurance? Guzman/Morant MUD January

22 Substance abuse vs other causes of death year olds: # 2 COD year olds: # 1 COD year olds: # 3 COD Cause of death (COD) rankings Rank / Age Accidents Substance Abuse Circulatory system Neoplasms 2 Substance Abuse Accidents Neoplasms Circulatory system 3 Suicides Circulatory system Substance Abuse Digestive system 4 Crime Suicides Accidents Respiratory system 5 Neoplasms Neoplasms Suicides Nutritional & metabolic Data Source: Mortality Multiple Cause-of-Death Public Use Record from the CDC Are Drugs Abusing Insurance? Guzman/Morant MUD January

23 Results of Munich Re drug abuse 4mortality study Image used by permission

24 Substance abuse death rate trend in the US Education Level Death per 100,000 Population Substance Abuse Death Rates by Education Level High School or Less Some College BA/BS Graduate Work Data Source: Mortality Multiple Cause-of-Death Public Use Record from the CDC Are Drugs Abusing Insurance? Guzman/Morant MUD January

25 Substance abuse death rate trend in the US Education Level Death per 100,000 Population Substance Abuse Death Rates by Education Level College Educated High School or Less Some College BA/BS Graduate Work Data Source: Mortality Multiple Cause-of-Death Public Use Record from the CDC Are Drugs Abusing Insurance? Guzman/Morant MUD January

26 COD ranking Substance abuse age and education level General Population Rank / Age Accidents Substance Abuse Circulatory system Neoplasms 2 Substance Abuse Accidents Neoplasms Circulatory system 3 Suicides Circulatory system Substance Abuse Digestive system 4 Crime Suicides Accidents Respiratory system 5 Neoplasms Neoplasms Suicides Nutritional & metabolic College Educated Population Rank / Age Accidents Neoplasms Neoplasms Neoplasms 2 Suicides Suicides Circulatory system Circulatory system 3 Substance Abuse Accidents Suicides Digestive system 4 Neoplasms Circulatory system Accidents Suicides 5 Circulatory system Substance Abuse Digestive system Accidents Data Source: Mortality Multiple Cause-of-Death Public Use Record from the CDC Are Drugs Abusing Insurance? Guzman/Morant MUD January

27 Substance abuse death rate trend Compare population to insurance experience - Year Deaths per 100, Drug Abuse Death Rate Insured Population Population College Educated (Population) Insurance - Durations 16+ Insurance - Durations 1-15 Population Date: Mortality Multiple Cause-of-Death Public Use Record from the CDC (> 460,000 substance abuse deaths) Insurance Data: Munich Re Internal Data (~300 claims in durations 16+, > 1,400 in all durations) Are Drugs Abusing Insurance? Guzman/Morant MUD January

28 Substance abuse death rate trend Compare population to insurance experience Attained age 25 Drug Abuse Death Rate Deaths per 100, Population - All Population - College Educated Insurance - Duration16+ Insurance - Durations 1-15 Population Date: Mortality Multiple Cause-of-Death Public Use Record from the CDC (> 460,000 substance abuse deaths) Insurance Data: Munich Re Internal Data (~300 claims in durations 16+, > 1,400 in all durations) Are Drugs Abusing Insurance? Guzman/Morant MUD January

29 Substance abuse death rate trend insured lives by smoker status and attained age Smoker Qx / Non-Smoker qx 900% 800% 700% 600% 500% 400% 300% 200% 100% 0% Smoker Class Differentials by Attained Age Count Amount > 1,400 substance abuse deaths Data Source: Munich Re Internal Data Are Drugs Abusing Insurance? Guzman/Morant MUD January

30 5 Cost / benefit analysis Image licensed from istock.com

31 Cost / benefit Cost Insurance labs now offer opioid screening for insurance applications Total cost for the full panel is about $12 Benefit Calculate select mortality rates for opioid deaths Assume screening is 100% effective at selecting all remaining opioid deaths in year 1 Assume the effect wears off over time NPV of claims savings over the wear off period Decision If NPV of claims savings > $12, screening could provide a benefit Are Drugs Abusing Insurance? Guzman/Morant MUD January

32 Cost / benefit based on the population statistics Expected Savings (with 100% Effective UW Protocol) Age Male Female 25 $40.72 $ $46.74 $ $45.93 $ $43.04 $27.71 The expected savings are calculated over 10 policy years for a $100,000 life insurance policy. Are Drugs Abusing Insurance? Guzman/Morant MUD January

33 Cost / benefit by education level and insured Male Expected Savings (with 100% Effective UW Protocol) Age General Population College Educated Insured 25 $40.72 $9.70 $ $46.74 $10.43 $ $45.93 $11.02 $ $43.04 $11.15 $4.25 Female Expected Savings (with 100% Effective UW Protocol) Age General Population College Educated Insured 25 $29.55 $3.83 $ $27.01 $6.31 $ $29.66 $8.75 $ $27.71 $9.64 $4.44 The expected savings are calculated over 10 policy years for a $100,000 life insurance policy. Are Drugs Abusing Insurance? Guzman/Morant MUD January

34 Cost benefit for smokers Male Expected Savings (with 100% Effective UW Protocol) Age Aggregate Non Smoker Smoker 25 $6.83 $6.66 $ $4.54 $4.10 $ $4.07 $3.15 $ $4.25 $3.40 $28.33 Female Expected Savings (with 100% Effective UW Protocol) Age Aggregate Non Smoker Smoker 25 $3.60 $3.25 $ $2.20 $1.50 $ $3.27 $2.91 $ $4.44 $3.93 $17.98 The expected savings are calculated over 10 policy years for a $100,000 life insurance policy. Are Drugs Abusing Insurance? Guzman/Morant MUD January

35 Cost / benefit analysis for dummies Younger ages Smaller face amount Benefit Smokers Middle Market Benefit Are Drugs Abusing Insurance? Guzman/Morant MUD January

36 6Where s the risk? Image licensed from istock.com

37 What does this mean to life insurers? Population Mortality Opioid Epidemic College Educated Mortality Insured Mortality Should we screen for opioids? Smokers Middle Market Are Drugs Abusing Insurance? Guzman/Morant MUD January

38 What about the risk with automated underwriting? Mitigants Claims Are Drugs Abusing Insurance? Guzman/Morant MUD January

39 Move to automated underwriting Fluidless environment No blood, no urine Screening tools Smoking Predictor Tool Urine nicotine Urine drug screen Are Drugs Abusing Insurance? Guzman/Morant MUD January

40 Summary Mortality National epidemic Epidemic is more severe for lower socio-economic groups Epidemic has not hit the individual life market in a significant way Cost-Benefit It s not clear that a broad screening program would bring great benefit at this time There could be a big benefit for screening smokers for Opioid use Automated Underwriting & Middle Market Sales All the analysis presented was based on fully underwritten experience As we move to AUW or Middle Market sales, we may find a greater benefit from screening for opioids Are Drugs Abusing Insurance? Guzman/Morant MUD January

41 More to come White papers: Opioid Epidemic - How did we get Here? July 2017 Drug Abuse Mortality in the Insured Population Sept 2017 Heroin - the Other Opioid Nov 2017 Cost-benefit Analysis for Drug Screening Jan 2018 Treatment of Opioid Addiction Alternative Therapies for Chronic Pain Are Drugs Abusing Insurance? Guzman/Morant MUD January

42 Questions? Licensed from istock.com

43 7Appendix Image licensed from istock.com

44 Definitions Chronic opioid therapy daily or near-daily use of opioids for at least 90 days, often indefinitely Tolerance need to increase medication dose to achieve the same effect Dependence ability to function normally only in the presence of the drug Abuse any use of an illegal drug, or the intentional self-administration of a medication for a nonmedical purpose e.g. getting high Misuse use of a medication (for a medical purpose) other than as directed or as indicated (willful or unintentional, harmful results or not) Addiction compulsive, difficult to control, drug-seeking behavior despite harmful consequences Diversion legitimately prescribed drugs rerouted for illicit purposes Opioid-Use Disorder a problematic pattern of opioid use that causes clinically significant impairment manifested by at least two of 11 DSM-5 diagnostic criteria (may include tolerance, dependence, or addiction) Are Drugs Abusing Insurance? Guzman/Morant MUD January

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