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One issue that is not being explicitly mentioned in the current healthcare reform discussions is the impact of changes in national healthcare policies and infrastructure on workers compensation insurance.
Workers compensation insurance covers the cost of medical care and rehabilitation related to workplace injuries. WC insurance also compensates employees for lost wages and provides death benefits for their dependents in case of death due to work-related accidents, including terrorist attacks. The workers compensation system is the “exclusive remedy” for on-the-job injuries suffered by employees. The social contract embedded in each state’s law requires the employee to give up the right to sue the employer for injuries or death caused by the employer’s negligence. Workers compensation is almost entirely a state controlled arena whereby state statutes, court decisions and regulatory bodies determine crucial aspects, including the handling of claims, evaluation of impairment and damages, adjudication of disputes, reimbursement structure for providers, rates for insurers, and overall cost control strategies.
Since workers compensation policies and costs are set outside the general healthcare arena , on the surface it appears that workers compensation insurance is not directly linked to health insurance and healthcare costs. In fact there are several significant ways that they are connected. Three of the key linkages are (1) the extent of health insurance coverage, (2) the employee’s share of healthcare costs, and (3) the general health status of employees.
Our research, data analysis and modeling has shown the following significant relationships: (1) the more people are covered by health insurance the less the incidence of workers compensation claims filed; (2) the lower the share of health insurance costs borne by the employee the less are both the incidence and severity of claims filed; and (3) the better the general health status of employees the lower the number of incidences and cost of workers compensation related cases.
In light of the above, a healthcare system that is pervasive, costs less for the employees and provides the means and incentives for workers to be healthier would lead to lower workers compensation related costs which in turn would lead to reduced risk for insurers. The big unknown at this stage is whether the three factors just mentioned can be achieved by any healthcare framework. The ultimate result, of course, would be dependent on the combined effect of the actual manifestation of the three factors.
What are your thoughts on this topic? Please post a comment.
Healthcare Reform and Workers Compensation Insurance
| JMV |
| 2009-08-06 22:47:40 |
| I would also add that healthier employees have faster recoveries and return to work after an occupational injury than employees with one or more significant pre-existing medical condition (e.g., diabetes, obesity). It is important for health reform to have provisions for wellness and preventive care--ideally to have certain services where there are no deductibles or co-payments such as annual physical exams and routine screenings. |
| Pathfinder |
| 2009-08-07 19:45:00 |
| Agree completely with JMV's comment. Preventative healthcare reduces both health insurance and workers compensation related costs. |
| Marya |
| 2009-08-21 13:11:06 |
| A thought-provoking post, thanks! I am not sure what methodologies you used in your analysis,but would be concerned with major confounding by work force type. That is, white collar workers more likely to have insurance, less likely to have occup. hazards, less likely to collect workers' comp. Would be interested in your response. At the same time, universal healthcare can only be good for everything, including worker's comp insurance. |
| Matt H |
| 2009-08-22 07:29:57 |
| With reference to Marya's comment and question about our methodology, a 3 stage modeling framework was utilized which involved cluster analysis, logistic regression and CART techniques. Class Codes which are representative of the type of profession and business activity was found to be one the key significant predictors of workers compensation claims. |
| jhh-pvd |
| 2009-08-26 10:39:46 |
| This is a little off topic but I wonder why don't have a health care system that emulates workers comp in terms of compensation (not malpractice liability) for poor outcomes. Meaning, let's eliminate all damage claims for poor medical outcomes, compensate doctors for focusing on the health of their patients (the healthier their cohort of patients, the bigger bonus they get), and eliminate the need for that portion of testing that is only for medical malpractice defensive purposes. If a patient has a bad outcome, a panel determines whether the doctor is at fault - too much fault, lose your license - and the patient is compensated for loss on a scale similar to workers comp without compensation for pain and suffering and without the need for intervention by lawyers. |
| Matt H |
| 2009-08-27 07:13:32 |
| Very interesting and thought provoking post from jhh-pvd. It is based on sound economic principles. A key challenge in implementing this type of a structure would be achieving agreement on who governs the "panel". Any ideas there? |
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