Extreme weather is impacting healthcare cost – what’s your risk? 

With the increase in extreme weather events in the US that are causing significant property damage and supply chain disruptions, we began to wonder if climate is becoming yet another driver of healthcare cost increases. As part of our work with the National Commission on Climate and Workforce Health, our actuarial and data analytics teams dug into a lot of data and created the Climate Health Cost Forecaster. The Forecaster projects the potential impact to medical claims cost over 10 years specifically due to four major weather perils:  Extremely high temperatures, poor air quality, flooding and hurricanes.

To help employers better understand the potential impact of these perils on their medical claims cost, we’re releasing a free version of the Forecaster.

To run a forecast, you’ll need:

• Expected annual medical and prescription drug cost (PEPY) – if you don’t have it handy you can use the default built into the Forecaster
• Total number of employees 
• Industry 
• Four zip codes with the greatest number of employees 
• Number of employees at each zip code 
• Percent of employees in each zip code that work in a climate-controlled environment 

The Forecaster offers a unique, localized view of workforce vulnerability across industries and geographies. Certain industries, in particular those with outdoor workers such as agriculture, utilities and construction, face significantly higher healthcare cost risks due to climate-related factors, while certain locations face higher risk of severe weather.

When we analyzed the healthcare claims risk posed by all four weather perils in major cities around the country (without any adjustments for industry), we found the employers in New York, Washington DC, Boston, Phoenix, Pittsburgh, Charlotte and Philadelphia to be the most at-risk — they are projected to incur approximately 2.5 times more in incremental healthcare claims related to extreme climate than cities in the bottom quartile for risk, which includes Chicago, Dallas, Orlando, Minneapolis, Oakland, Detroit, Kansas City and Milwaukee.

While the city rankings above are based on all four risks, when you use the Forecaster, you will learn what the top risk is in each of your four largest locations. This may yield surprising results for some organizations. For example, the top risk across all industries in Portland, OR, is air quality, due to wildfire smoke, smog and temperature inversion (which traps particulates near the earth’s surface). The top risk in Hartford, CT, and Burlington, VT, is extreme heat. While you might not expect these cities in the Northeast would experience the extreme temperatures that we see in the Southwest, they are experiencing more days where the temperatures exceed 87 degrees or hotter, which increases the risk of heat-related illnesses.  

Of course, even in a given location, results can widely depending on an employer’s industry and the portion of their workforce in climate-controlled environments. Still, they illustrate the importance of knowing the risks in the locations where you do business. You have to know the risk to address the risk. For example, employers in Portland that may expect to see increased claims related to asthma or COPD might decide to send out focused communications and tip sheets in advance of air quality risks to raise awareness about actions to take. They might add disease-specific chronic condition management support and consider options to address air-quality issues in their work environment. Employers seeing higher risks related to extreme heat, like those in Hartford and Burlington, might consider investing in more effective climate-control systems.

We hope you will give the Forecaster a try -- and that you find the data useful as you consider where to focus resources to support the resiliency of your workforce. We will continue to blog about weather-related health risks and disasters and our experience using the Forecaster to help businesses prepare for the health impacts of extreme weather.

The Climate Health Cost Forecaster is part of a growing portfolio of free tools, training and events offered through the National Commission on Climate and Workforce Health. Mercer is proud to be a presenting sponsor of the commission and their work to help employers address the risk of extreme climate on employee health and business performance.

About the Climate Health Cost Forecaster

All estimates based upon the information available at a point in time are subject to unforeseen and random events. Therefore, any projection must be interpreted as having a likely range of variability from the estimate. Any estimate or projection may not be used or relied upon by any other party or for any other purpose than for which it was issued by Mercer. Mercer is not responsible for the consequences of any unauthorized use.

Mercer used and relied upon data and information available from the CDC, Climate Actuaries Index, O*Net Vivid Economics, Center for American Progress, EPA, FEMA, NIH National Library of Medicine National Center of Biotechnology Information, Healthcare Cost and Utilization Project, USDA, American Medical Association, Harvard Schools of Public Health, NRDC, HealthAffairs, and the Mercer Compass claims data warehouse.