January 28, 2008

Weblog roundup: recession and WC; cost of physicians; undocumented workers; and heath & safety

Recessions effect on WC - Joe Paduda offers his analysis of what the recession will mean for workers comp. Citing a 2002 Minnesota study, he notes that costs rise during recessions for two reasons: claims rates and disability duration both increase. He notes that other factors may well have a larger impact on costs than the recession. Some of these include rising drug costs, a de-emphasis on loss prevention, the soft market, and declining investment returns.

The cost of physician services Maggie Mahar of Health Beat has been examining the issue of health care spending, specifically how much we spend on physicians services (and part 2). Of the $2.1 trillion that we spent on health care last year, 22 percent year went directly to doctors. Maggie notes that is up from 19.4 percent in 1960. She raises the question as to whether the expenditures for physician’s services need to be redistributed. She makes the case that the perverse financial incentives in our fee-for-service system mean that we are paying physicians for the quantity of work that they do rather than the quality, leading to overtreatment. She uses data from physicians in other countries as a point of comparison:

Stowe, a research fellow at Americans for Generational Equity, points out that primary care doctors and other “generalists in the United States earn on average $173,000 a year or 4.2 times gross domestic product (GDP) per capita. In other countries of the Organization for Economic Cooperation and Development (OECD), generalists earn roughly half as much – or $94,000 on average –based on purchase power parity dollars.” Thus, Stowe puts the salaries in the context of what these earnings can buy in each country.
Meanwhile, he continues, “specialists in the United States earn an average of $274,000 a year or 6.5 times GDP per capita. In other OECD countries, specialists earn on average less than half that at $129,000 or 4 times GDP per capita.” So, Stowe concludes, “even adjusted for higher wealth and earnings in the United States, the gap between what physicians earn here and elsewhere in the developed world is large, as is the gap between physician earnings and the average American’s earnings.” (Stowe recognizes that American doctors pay more for malpractice insurance than their peers abroad, but in his comparisons, this is already factored into the numbers.)

These small snippets and summaries of her thoughtful posts don't do them justice - there's much food for thought. It's well worth setting aside the time to read them both.

Undocumented workers and workers comp - We've blogged about Edgar Velázquez and Billy G’s Tree Care, an undocumented worker seeking workers compensation from a rather unscrupulous Rhode Island employer. Now, Peter Rousmaniere of Working Immigrants brings us the news of a $30,000 settlement awarded to Velázquez in a groundbreaking case against his former employee. One highly unusual aspect of this case was the matter of an injured undocumented worker having been allowed to return to the U.S. to face an employer in court. In commenting on the ruling, Chief Workers’ Compensation Judge George E. Healey Jr. said the settlement should put employers on notice.

“I think that it’s important that employers realize they cannot employ undocumented workers without consequence,” Healey said.
“My concern in this whole process is that unscrupulous employers will assume that they don’t have to provide a safe workplace and don’t have to be answerable for injuries which occur in the workplace,” he said. “And the resolution of a case like this demonstrates otherwise.”

This is the second recent case of state courts upholding undocumented worker rights to compensation for work injuries. last week, Peter reported on South Carolina's Supreme Court unanimous ruling in favor of benefit eligibility for an illegal immigrant.

Health and safety - The Pump Handle is fast becoming one of our important weekly reads for occupational health and safety issues. In a recent post, Celeste Monforton follows up on with more information on December's massive explosion at the T2 Laboratories plant in Jacksonville, Florida. The Chemical Safety Board recently issued a report that in addition to the 4 fatalities, 33 people were injured, more than double the number originally reported. And in another post, occupational health news roundup, Liz Borkowski links to a variety of news reports about problems that injured veterans face in getting appropriate services and care for injuries. She also links to a story about injured soldiers being redeployed to Iraq on "light duty. "

| 2 Comments

2 Comments

Sorry, but the literature on claim frequency in recessions is quite consistent: claims rates generally decline in recessions and go up in periods of expansion. This pattern has been noted by numerous economists, state researchers, NCCI, and BLS. The Minnesota report is fairly equivocal on this.

Mike - I'd agree that the MN report is somewhat equivocal, and also note that it specifically analyzed the recession in the nearly nineties. From my reading of the study, there is clear evidence that rates did go up, as did costs - "a 1% decline in hours worked will lead to an approximately 1% increase in the per hour costs of workers compensation..a temporary one-month increase".

On injury rates, again I'd note that the study was specific to the early nineties recession; "John Burton says prior to the 1990s, injury rates usually declined during recessions but during the recession of the early 1990s, injury rates increased."

My take is the data aren't conclusive, as it is quite difficult to separate out confounding factors from the impact of the recession itself. And as the economy evolves, historical perspectives' applicability to today may be questionable.

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This page contains a single entry by Julie Ferguson published on January 28, 2008 5:32 AM.

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