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).
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.