The Federalization of Workers' Comp: Seriously?

Tuesday, March 22, 2011 | 0

By Joe Paduda
CompPharma and Health Strategy Associates

This afternoon I was a lunch time speaker at the International Association of Industrial Accident Boards and Commissions Conference in St Louis, where I was asked to opine on the chances of a major federal incursion into the (mostly) state regulated world of work comp. I've noted (way) more than once that this is one of those "never-gonna-happen" things, so here was an opportunity to make my case in front of a very knowledgeable and engaged group. There was a lively and informed discussion after the talk, and I'll dive into that in a later post.

Here's the first of several excerpts from that talk. I welcome your comments and contrasting opinions.

Workers' comp is a tiny, all-but-insignificant industry that accounts for less than 2%  of total U.S. medical spending. Sure, it may be wildly important to you and me, but, really, does anyone else give two hoots about work comp?

Didn't think so.

Insurance segments that tend to be regulated or addressed (in a meaningful way) on a national basis are those that are so large or complex or federally specific that only the federal government has the interest and resources and capacity required to address the riskwhich is how flood insurance came about, and nuclear plant risk guarantees, terrorism risk insurance, and coverage for the beryllium industry.

WC doesn't fit the profile. It's relatively small, has an active, vocal, and effective group of stakeholders from across the political spectrum and both political parties (plaintiff attorneys and the Chamber of Commerce are two examples), and isn't perceived by anyone in a position of authority to be anywhere close to broken.

Why would anyone in Congressexcept Joe Bacahave any interest at all in taking on workers comp?

And if they did, which they don't, where exactly would this fit on the priority list? Above the budget bill? Just below immigration reform? Senior to the Medicare physician fee fix bill, or not? More, or less, important than the nuclear non-proliferation treaty? If less, now that the treaty is passed, can we expect some major action?

Somewhat less significant than the Israeli West Bank settlement issue, or more? More critical than the energy bill, or no?

If Congress(wo)man X has to spend time thinking about comp, or Afghanistan, or the U.S. nuclear industry, or Iran, or China's refusal to adjust its currency valuation, or bank regulation, what do you think s/he will do? Where will s/he spend her time?

As to any interest at the Centers for Medicare and Medicaid Services in taking over WC, wouldn't you think they have enough to do what with dealing with Congressional oversight hearings, implementing health reform, expanding Medicaid by a third, revising hospital reimbursement, drastically changing physician compensation, completely redo-ing Part D, developing and implementing over a dozen pilots and trial programs, and revamping Medicare Advantage?

Next, we'll review a bit of history and discuss some of the new 'news' that is generating excitement among those concerned about a federal takeover.

<i>Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers, and owner of Health Strategy Associates, a Connecticut-based employer consulting firm. This column was reprinted with his permission from his Managed Care Matters blog at http://www.joepaduda.com/</i>