November 19, 2007

Your Government at Work - Worker injury research you can actually use

A cornerstone of Lynch Ryan's work for more than twenty years, a long-held mantra, has been that employees who work for good employers -- employers who care for their workers and show it by the way they treat them -- report all work injuries when they happen, get expeditious treatment and return to work faster. Moreover, their injuries cost significantly less than those of employees who work for less caring employers. A major driver for low workers' compensation costs is the quality of the relationship between employer and employee.

We've seen this in our consulting work time and again, but it's nice to have independent research confirm the mantra.

In the mid-1960s, the Department of Labor's Employment and Training Administration (at that time called the Office of Manpower, Automation, and Training ) wanted to understand specific issues pertaining to the U.S. labor market, such as retirement, the return of housewives to the labor force, and the school-to-work transition. To do that it began conducting longitudinal studies, studies that look at a random group of like people to see how they develop over time. The Office began four such studies following groups of young men, older men, young women and, no, not "older" women, but rather "mature" women. The studies were originally targeted for five years, but, because they were yielding a mountain of data, they were extended until 1983, allowing other agencies to piggy-back along to glean even more information about how these first baby-boomers and World War II veterans were maturing in post-war America.

Because of the success of these studies, the Bureau of Labor Statistics decided to conduct an even more ambitious project, and in 1979 it launched the "National Longitudinal Survey of Youth 1979," (NLSY79)

NLSY79 randomly selected and interviewed a cohort of 12,686 young Americans, 14 to 22 years old, all born between January 1,1957 and December 31, 1965, and it has been interviewing them regularly ever since, for nearly three decades now. As of 2004, there were 7661 people still in the survey group. These people have provided profound and relevant data about the aging of the last of the eighty million American baby-boomers.

What does this have to do with workers' compensation? Actually, quite a lot.

Until I read Joe Paduda's recent blog post, I was unaware that any researchers had ever mined the NLSY79 data for workers' compensation insights. Thanks to Joe I have been enlightened. Thank you, Joseph.

In 2005, Darius Lakdawalla, Robert Reville and Seth Seabury of the Rand Institute for Civil Justice published "How Does Health Insurance Affect Workers' Compensation Filing" (this is a Working Paper, meaning it has not been formally peer-reviewed). Using NLSY79 data, they confirmed Biddle and Roberts 2003 Michigan study (purchase required), which found that only about 55% of workers sustaining lost time injuries ever file claims for benefits, as well as an Oregon state-sponsored study of the 2002 Oregon Population Survey suggesting that 54% of workers reporting workplace injuries filed claims. They also found that unionized workers were more likely to file claims following work injuries.

Moreover, the Rand researchers found that workers without health insurance are about 15% less likely to file a claim than injured workers with health coverage.

A still more surprising finding may be that workers at companies that merely offer health insurance benefits are 50% more likely to file a claim after suffering a work injury than workers at companies that do not offer health insurance benefits.

However - and here is the major finding for me - lost time, as well as the cost of lost time for these workers who file more claims is about 20% less than for the workers who are not offered health insurance.

Finally, other types of fringe benefits - like paid vacation days - also seem to be associated with higher filing rates. For example, when both health insurance offers and paid vacations are present in the same employer, both variables are significant (at the 95% confidence level) and both have coefficients around .10 for claim filing.

What does this tell us? Well, for me it reinforces our mantra. These employees may report more injuries, but, as the NLSY79 data show, they return to work faster and their injuries cost significantly less than do the injuries of employees who work for employers who do not provide these benefits. Quod est demonstrandum.

The Rand study is compelling and instructive, but you do have to know a few things about statistical research to get the most out of it. Nonetheless, it should provide fuel for further workers' compensation research using the NLSY79 treasure chest of demographic data. This stuff is too good to sit on a shelf gathering dust.

| 2 Comments

2 Comments

There is also a 2004 update to the Oregon Population Survey findings, which also asked about reasons for not filing a claim. The two most frequently cited:
-Injury not serious enough;
-Medical costs covered by medical insurance.
Link to 2004 study:

http://www4.cbs.state.or.us/ex/imd/reports/rpt/index.cfm?fuseaction=version_view&version_tk=175547&ProgID=OPSRA001

Thanks for this information, I have been doing some research in Australia on the flow on effects of denying compensation for stress to workers who then make claims on our social security systems and health care systems. This information gives me a lead

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This page contains a single entry by Tom Lynch published on November 19, 2007 7:38 AM.

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