Appraising the Grand Bargain

03.20.2017


At the 2017 WCRI Annual Issues and Research Conference, a panel debated the state of the workers’ compensation “grand bargain” in 2017. The panel was:

This session was conducted question and answer style:

Question: Why now are people so concerned about the “grand bargain” of workers compensation?

Answers:

The debates today really go back to key policy decisions that were made 20 years ago where a number of states changed their workers compensation systems in an effort to control costs. At that time, workers’ compensation was in crisis with significantly high rates for insurance and a high percentage of employers having to obtain coverage from the assigned risk pools because of the limited marketplace. Reforms also sought to reverse court decisions that it was felt expanded workers’ compensation beyond its intended scope. Certain media outlets recently have been focused on these law changes highlighting the “erosion of exclusive remedy”, but these law changes are not new news.

The reason for these discussions now is that “the worker” has been left out of the equation in all these law changes. They focused solely on cost savings for employers without giving any consideration to the experiences of the injured worker.

It is important to consider balance in the system. Costs to employers have to balance with benefits to workers. You cannot completely ignore one at the expense of the other.

Causation standards are a challenge and this varies significantly by states. In some states a minor aggravation of an underlying preexisting condition is a compensable claim, while in other states the work has to be 50% of the cause for it to be compensable. There is debate on how to balance the no-fault aspect of workers’ compensation with preventing workers’ compensation from paying for ordinary diseases of life.

Question: 2016 OSHA report said workers’ compensation does not pay for most costs of workplace injuries. How is this possible?

Answers:

Many people do not report injuries or occupational diseases because they do not realize it is work related. In addition, workers are afraid to report claims out of fear of losing their job. In addition, there are many costs associated with a claim that is not covered under workers’ compensation including impact to the household and long-term wage loss.

The question is what costs SHOULD be in the workers’ compensation system that are not and why is this happening? One can debate whether many of the uncovered “costs” discussed are actually the responsibility of the workplace injury. There are many factors that can cause long-term wage loss that have nothing to do with injury. It is also debatable whether increases in people receiving SSDI is due to cost shifting from workers’ compensation vs the fact that SSDI lowered their threshold for coverage with the intention of having more people eligible for benefits.

Workers’ compensation really has never been set up to cover the costs of long-term disability claims. There is a policy question over whether workers’ compensation should bear the costs of all long-term injuries or whether this is the role of SSDI. This gets back to what SHOULD workers’ compensation pay for? A prior study showed 20% of workers that suffered amputations did not file for workers’ compensation. Whose fault is this?

Question: In October 2016, the US Department of Labor issued a report critical of state workers’ compensation systems. One area of their focus was medical management protocols that have been implemented such as treatment guidelines, utilization review, and medical control.  What are your thoughts on the quality of care delivered to injured workers?

Answers:

I do not feel the quality of care delivered to injured workers is as good as what they can get in the general healthcare setting, but this is not caused by things like utilization review, treatment guidelines, and medical control. The issue is more the fact that the workers’ compensation system has continued to diverge from group health. In group health you cannot focus on costs without also focusing on outcomes. The two things are tied together. That doesn’t happen in workers’ compensation. Relatively few states have any measures of quality and outcomes in their workers’ compensation systems.

Would you roll workers’ compensation into group healthcare if you could?  Would this solve the problems of medical treatment in workers’ compensation?  The panelists felt this may be a potential solution.

Question: Have the links between workers’ compensation and employer safety been weakened?

Answers:

Yes, previously OSHA would list the name of the workers’ compensation carrier in press releases around serious violations. Carriers protested saying they were not involved in any way in the injury. The question is why not? Should carriers be held more accountable for the safety of the workplaces they insure?  Carriers are not focused on injury prevention only underwriting. This is especially a problem for smaller employers. Carriers should be reaching out to OSHA reporting problems with employers. State regulators do this, unions do this, but carriers do not.

Carriers spend a significant amount of money on loss control services and they are focused on preventing injuries as they ultimately benefit from this. It is not practical for carriers to serve the role as the “OSHA posse” reporting claims as this would undermine the relationship between employers and carriers and lead to less accidents being reported.

Question: Are there debates within states to address the disparity of benefits between workers’ compensation state systems? Do we need federal standards for workers’ compensation?

Answers:

These debates are mostly focused on scheduled injuries for permanent partial disability as it is easy to highlight the “value” of a both part in one state vs another state.  That is really not a good measure of one state vs another. There are many different elements that go into a state’s workers’ compensation system.

Having states control workers’ compensation means that they can respond quicker to changes in the workforce. Look at the federal workers’ compensation systems. Most have not been amended since the 1970’s or 1980’s. States are better equipped to deal with workers compensation.

It is silly to talk about federal intervention in workers’ compensation as this is not going to happen.

Where does the continued erosion of benefits end? Will we eventually reach the point where we scrap workers’ compensation and revert back to a tort system?

The workers’ compensation system is the ONLY part of the social safety net with no federal oversight. In other systems states have a level of influence, but the federal government imposes minimum standards those states must meet. OSHA and unemployment benefits are two examples of this.

Question: Why are there not industry studies drawing upon claims data to evaluate the effectiveness of things like no-lift policies or driver safety programs?

Answers:

On some level these studies should come from the National Institute of Safety and Health (NIOSH). But they do not have all the access to the data and have limited funding.

Question: How much of this debate over workers’ compensation is tied to an overall erosion in our social safety net?

Answers:

There are troubling signs here. Employees no longer have pensions provided by employers, they have 401Ks which come out of their own pocket. Health insurance has higher deductibles and significant costs.

Increases in the gig economy and more workers’ being classified as “independent contractors” means there are less workers subject to workers’ compensation.

Question: What is the impact of rampant medical fraud on the workers’ compensation system?

Answers:

Medical fraud is not just a workers’ compensation issue. It is an issue in the entire healthcare system. You cannot blame all the issues with workers’ compensation medical on fraud. It is not the biggest issue we face.

Question: How do we re-engineer workers’ compensation to ensure the new gig economy workforce is covered?

Answers:

Most of these workers’ should be covered. They are being misclassified as independent contractors. However we may need to consider a federal temporary disability program for employees not in traditional employment relationships. SSDI does not cover this as it only deals with long-term disability.

Final Comments from Panelists

There are tremendous opportunities to improve medical care in workers’ compensation based on what is happening in group health.

We need to focus more on the adequacy of the cash benefits to injured workers and the inequities across state lines on these issues. Workers’ compensation is part of the employment relationship and if the employee does not trust the employer it will lead to problems in the workers’ compensation system. There are too many employees who do not file for workers’ compensation benefits when they are eligible to do so for a variety of reasons.

You cannot hold the workers’ compensation system accountable for claims that are not filed. The system can only respond to what it knows about. Workers’ compensation needs to be concerned about it’s image as a credible social system.

Injury prevention needs to be emphasized and carriers need to play a bigger role in this. How can we use the data available in the workers’ compensation system to improve workplace safety?

The foregoing was originally published on Safety National's Conference Chronicles Blog and is reproduced here with permission of the author. No further republication is permitted without the author’s consent.


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