March 23, 2009

Health Care Reform and the Cost of Comp

The Mercury News offers some potentially bad news for California employers. After four years of comp reform, with rates dropping a staggering 63 percent, the trend is now headed - perhaps precipitously - in the other direction. The Workers' Compensation Insurance Rating Bureau is requesting an increase of 24.4 percent, due mostly to sharp increases in medical costs. The gist of the editorial is simple: we need health care reform in order to tame workers comp costs in California (and, presumably, the nation).

Most people would agree that reform of conventional health insurance is needed. There are millions of people without coverage across the states and the number is growing by the minute. But the relationship of any such reform to the cost of workers compensation is by no means linear. As we saw during the aborted attempt at health care reform during the Clinton administration, solving one problem (access to health care) might well create others (soaring costs for workers comp).

The Deciders
In conventional health insurance, treatment decisions are made primarily by doctors and patients, along with the patient's family. Insurance carriers review the decisions to make sure they are within treatment guidelines. There are two fundamental sticking points: insurer approval for exotic, untested treatments (lots of push back here) and insurer approval for expensive drugs/treatment protocols (push back here as well).

The decision process in workers comp has one additional over-riding factor and one additional party: the factor is the goal of return to work (which may or may not be the goal of conventional healthcare); the additional party is the employer, who is paying the bills (either as a self-insured or through the experience rating process for comp premiums).

The Mercury News assumes that solving the health care problem will naturally solve the comp problem at the same time. This may not be the case. The medical portion of workers comp has a unique and relentless focus: returning injured workers to productive employment as quickly as possible. Under conventional health care, this goal might seem simplistic or even counter-productive: the workplace might aggravate the health problem, in the form of repetitive movements, physically demanding tasks, toxic exposures or even stress. In some circumstances, caring physicians will hesitate sending their patients back into these compromising situations. Where occupational medicine assumes that return to work is almost always a positive goal, family medicine may differ.

Comp Is DIfferent
The medical portion of workers comp is only 2 or 3 percent of total health care costs, so it will be tempting to ignore the comp factor as new national health policies are developed. This would be a mistake. Unless policy makers are prepared to undo nearly 100 years of workers comp protection, they must take into account comp's unique benefit structure, which includes lower cost of treatment for workers, the involvement of the employer in decision-making, and indemnity payments during the period of disabilty. For injured workers and their families treatment under comp is always cheaper than treatment under conventional health plans, because there are no co-pays and no deductibles in comp. In addition, treatment decisions for work-related injuries include input from the employer, who is generally not a participant in conventional health care decisions. Finally, comp offers a virtually universal indemnity plan for injured American workers; they are paid during the period they are unable to work.

Comp requires a special focus. Even if policy makers succeed in achieving universal health care for all Americans, they will not necessarily solve - indeed, they may aggravate - the problem of rising costs for workers comp.

As Washington tackles the problem of health care for Americans, the Insider will continue to focus on the policy implications for workers comp. It's a small piece of the puzzle, to be sure, but one of paramount importance to us.




Health insurance companies and their employees, consultants, advisors and contractors are all going to be obsolete in the next few years.

Single payer (government) program makes workers comp redundant for medical care. It is all covered by a universal Medicare with little or no copays for the poor, high copays and taxability of benefits for the rich (your guess is as good as mine on the income level required to be rich).

I suspect that paid leave for injuries may just get thrown in under the Paid Family Leave acts that will be enacted soon also.

Of course we can't afford any of this, but since when has that stopped the government.

90% tax rates on AIG bonuses are only the first step. I remember, in my lifetime, marginal tax rates above 90%. Look forward to them again.

The younger people at Lynch Ryan may want to evaluate career opportunities or they will end up as government employees. I assume every employee there is smart enough not to be counting on Social Security for retirement. We can't afford that price tag either.

Congress giveth to the poor and take away from the rich. Blessed be the names of Congress for they are eternally reelected.

Personally I am looking for land with water and game that can support small-scale farming.


Comp offers a " virtually unversal indemnity plan"?

Have you forgotten that there are 50 different sets of comp. laws, one for each state? I know of no state where injured workers are paid indefinitely; here in MA an accepted, so called, injury will pay the injured worker for 3 years only. If unable to return to work, they will have no comp.monies coming in, as the statute allows benefits to be cut off after 36 months and the infighting between employer and employee/lawyer can stretch out many years.

As for the employer's role in health care for the injured worker, have you ever tried to get your injuries treated without resorting to the legal system? You are mistaken if you think employers want injured workers back on the job, unless the injury is minor and self limiting; if it isn't the employer will do all it can to minimize further risk by trying every dirty trick to make it appear so.

How many serious injuries, resulting in serious damage to the worker, are later said by the bogus physician to be nothing but a sprain or strain that has resolved, and that the underlying degenerative condition is the real culprit, and of course no employer who has literally made money off of an employees back for 3 decades will admit that repetitive physical work accelerates the degenerative process; yet it gives them great leverage within a system that can only be described as criminal. These employees cannot get the medical care needed. A herniated disc can turn into complete drop foot if neglected. The worker who might have returned to the job becomes totally disabled from it and will spend a decade battling for total permanent comp; getting that is an iffy proposition.

Don't blame Washington for this mess nor turn to it for help. The blame falls on business and insurance companies who stonewall injured workers into oblivion.


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This page contains a single entry by Jon Coppelman published on March 23, 2009 1:07 PM.

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