It's Apparently Not Just Medicare that Work Comp Routinely Burdens
Monday, June 11, 2012 | 0
Medicalxpress.com recently reported on an interesting article in the April issue of the Journal of Occupational and Environmental Medicine that finds that most occupational injury and illness costs are paid by the government and private payers.
University of California, Davis researchers have determined that almost 80% of these costs are paid by employer-provided health insurance, Medicare, Medicaid, Social Security and other disability funds, employees and other payers. Using 2007 data, the study found that total annual cost for occupational injury and illness that year was nearly $250 billion, broken down to $67 billion in medical and $183 billion in lost productivity. Of the $67 billion medical costs, it found that work comp covered only $30 billion, Medicare $7 billion, Medicaid $5.5 billion, and group health $14 billion with the workers and their families paying the remaining $10 billion. Of the lost productivity, comp paid only $22 billion with the remaining $161 billion was absorbed by other sources such as SSDI. Due to the cost shifting, the study basically concluded that we all pay higher Medicare and income taxes while employers benefit from artificially low workers' compensation premiums because those prices do not accurately reflect the reality of these expenses on society, which ultimately leads to the total disregard for workplace safety.
The author provides three suggestions that will reduce the cost shifting, ensure workplace safety, and possibly bring world peace:
- Eliminate the stigma often associated with filing workers' compensation claims by openly acknowledging the legitimacy of using workers' compensation insurance for occupational injuries. [guess UC Davis doesn't require those posters be placed in a highly visible area]
- Encourage more states to adopt single-payer government-managed workers' compensation systems to save administrative costs. [perhaps the next study should look at how well those state programs worked in the past]
- Link premiums with company-specific injury experience rather than industry-wide estimates, which would encourage companies to lower premiums by reducing workplace hazards. [is my understanding of an experience mod off?]
I'm not saying that there aren't numerous injuries that go unreported to the comp carrier because employees are afraid to file a claim or lose time from work or because employers are worried about their experience mods and premiums, but I do think the article makes a lot of assumptions about what comp doesn't pay for and fails to address what it does pay for and what it shouldn't have to pay for. The fact that comp has to pay to stabilize a claimant's unrelated medial condition just to preform a related treatment or that a hereditary degenerative condition is suddenly a work injury because it was reported as an incident that occurred during the work day should count for something to offset some of these allegations that it does not carry its weight. And I've never heard of employers throwing caution to the wind because their premiums were too low, so I'm not even sure what to say about that. Why would they need rate-based safety programs to incentivize employees to be safe if their rates are already too low?
While I often feel that the workers' compensation system in general could use some significant modifications, I have never felt it doesn't carry its own weight. In my limited experience, comp seems to frequently pay for more than it should. Given that Medicare has a statutory right of recovery for its expenses, Medicaid has subrogation rights and Social Security has off-set rights, the data here feels slightly skewed to make a point. Somehow I don't expect to get a tax break if comp starts to voluntarily pay more.
Jennifer Jordan is general counsel of Medval, a Maryland-based Medicare set-aside consulting firm. This column was reprinted with her permission from the firm's Official Medicare Set Aside Blog.
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