What Health Reform will do to Workers' Comp ... Not what you Think

Wednesday, December 15, 2010 | 0

By Joe Paduda
CompPharma and Health Strategy Associates

Earlier this month, SwissRe published their analysis of the impact of health reform on workers' comp. The full report is available here: http://www.workcompcentral.com/pdf/2010/misc/HCReformPaper.pdf

It's good to see an international player in the workers' comp market consider the potential direct and indirect impact of reform on workers' comp. That said, my sense is SwissRe's perspective is narrow and flawed in several respects.

For example, in one section the report states: "Major reductions in the uninsured population could have a positive effect on workers' compensation costs. Those newly insured may be less likely to attempt to bring a non-work injury into the workers' compensation system."

That's not correct. Studies indicate those with insurance are less likely to file a comp claim, although the correlation appears to be statistical and not causal.

SwissRe missed a much more significant issue the increase in the number of people with insurance will have a significant and positive impact on comp.

Healthier claimants

What may well be the most significant long-term impact of reform is the likelihood that workers will be healthier, their underlying conditions and comorbidities will be addressed by their health plan, and therefore comp payers won't have to pay for treatment of those conditions in order to resolve the work injury. Think diabetes and surgery, spinal stenosis, and hypertension.

Degenerative conditions

For some diagnoses, identifying the cause of the injury is becoming increasingly problematic. It is often difficult for a physician to determine the "cause" of back pain or dysfunction; it may, or may not be wholly or partially related to a work injury and different physicians often reach different conclusions about the cause of injury. While reform won't clear up those medical mysteries overnight, it will reduce the need for comp payers to pay for what are clearly non-work-related conditions.

Less need to cost shift

Workers' comp is the most profitable payer for many facilities; margins are much higher for comp than for Medicaid (which pays below cost) and Medicare (which pays right around cost). When more people have health insurance, there will be less need to shift cost to workers' comp to cover the expense of providing care to the uninsured. Sure, the ACA will not cover everyone, but it will cover about two-thirds of those currently without health insurance. And most of those newly-covered folks will be the employed (and dependents thereof).

This isn't to take shots at SwissRe, merely to point out that their perspective reflects a lack of understanding of the broader problems with the current environment, and the potential positives of reform at least for workers' comp.

Joe Paduda is principal of Health Strategy Associates, a Connecticut employer consulting firm, and co-owner of CompPharma, a consortium of pharmacy benefit managers. This column was reprinted with is permission from his blog, http://www.managedcarematters.com