There’s no question the Republican sweep will hugely affect workers’ comp.
There are nothing BUT questions about what that impact will be. Here are a few thoughts based on what little we know so far.
The quick take – huge uncertainty; if Trump delivers on his campaign promises, there’s a high likelihood of higher claims frequency and increased medical expenses.
I preface this by noting Trump is already backing off campaign promises – including repealing “Obamacare”.
The DOL “intervention” in workers comp is dead. There will be no new National Commission, no federal standards, no study or research or advisory panel. There will be much less emphasis on OSHA enforcement and workplace safety as well.
More jobs?
Energy projects will likely be fast-tracked, although there will be big battles in court as environmental concerns rally to intervene in the only way left open to them – civil suits. Pipelines, coal mines, oil will all see more jobs – although the world economy will have much more to say about that than the White House.
Trump has been touting a trillion dollar investment in infrastructure – anathema to Republicans who don’t want any increase in government spending. Where this will end up is anyone’s guess; if it does go forward, premiums, along with claims costs and medical expenses will rise significantly as these jobs are in high-claim-frequency and high-severity industries.
Trade drives jobs, consumer buying, and inflation. All of which impact work comp.
Trump will label China – our largest trading partner – a currency manipulator (it’s been keeping the value of the renminbi low to make its exports more attractive). He has to, as that’s a big part of his campaign. BUT it’s going to be a lot of talk and NO action – this is going nowhere, for four simple reasons.
The law requires three conditions to be met for a country to be declared a currency manipulator; China only meets one.
Second, China has been increasing the value of the yuan for months.
Third, consumer demand has been a big part of our economic recovery. If Trump starts a trade war, consumer goods will get a LOT more expensive, driving down consumer purchasing power and consumer confidence. The working class that supported his election would be hurt the most.
Fourth, China owns a shipload of our debt. China can stop – or greatly reduce buying our debt, which will drive up borrowing costs, triggering inflation and more damage to consumer buying power especially for baby boomers who are already living paycheck-to-pacheck.
Oh, and we have a $28 billion surplus in the service sector. If a trade war does start, China will stop sending students here, stop importing movies and music, and its new moneyed class will find other travel destinations.
That said, even the whiff of a trade war will hurt work comp. Inflation will hurt investment returns and lower the value of claim reserves, export jobs will be lost, and the tourism, educational, and cultural industries will suffer as well.
For a brief and helpful summary of Trump and trade, click here.
ACA
Evidence suggests the Affordable Care Act has helped work comp. Work comp medical costs have declined since ACA’s full implementation despite rising employment and middling cost increases in group health. The newly-insured are in higher-frequency jobs.
If Trump rips out ACA “root and branch”, we can expect medical costs to increase and cost- and case-shifting to ramp up significantly.
There’s a lot more to this and we will be tracking it closely.
What does this mean for you?
Given Trump’s already walking back campaign promises, this is just speculation. For now, expect higher premiums, more claims, and higher medical costs.
Joe, it’s Monday and SURELY you can find one (just one?) positive thing to say about Trump’s plans — maybe the economic growth that is coming, Americans going back to work again (keep an eye on that BOLS Labor Force Participation Rate), doctors coming back into the healthcare industry after releasing them from the bondage of regulations, creating jobs here instead of China and Mexico by repealing NAFTA and TPP, etc… Or is the world really coming to an end and we all should move to Canada after all? Surely you see some great things coming from just steps one thru six of the plan for his first day in office? http://www.npr.org/2016/11/09/501451368/here-is-what-donald-trump-wants-to-do-in-his-first-100-days
C’mon Joe, let’s all pull together and all help to make America Great Again?
John – thanks for the note. Rest assured I – and many others – are trying desperately to see the merest glimmer of silver in a very dark cloud. I’d suggest that with Trump’s backpedaling from multiple campaign promises, it’s just not possible to figure out where this will all end up.
That said, I’ve heard Trump say he likes single payer; he’s also said he wants to preserve guaranteed issue/ban on pre-ex for the continuously insured. that makes a lot of sense – IF the families who are signing up for health insurance can afford it. If not, they get stuck.
Thanks, Joe! I appreciate the professional back-n-forth as I’m trying to get out of my conservative ‘echo chamber’ and hear both sides. So, you will be hearing more from me… (: Your insight is always helpful and I look forward to the day when we can talk all things healthcare and WC and not worry about the politics or ‘being on a side’ (yes, I think it can happen if we all focus on the issues within our control). Have a great day and thanks again for your passion on all things managed care.
John – I admire your interest in hearing all sides, and am working on that myself. Tough to break those habits, but critically important to do so. Relying on you to keep those observations coming!
Joe, I see three more things that could also impact the work comp market at state levels. I don’t judge these as “good or bad” but potential developments.
1) You mentioned a little less regulatory impact from DOL, and I agree. They have been very active on the I/C wage and hour front as well. Look for a relaxation there to open up more opportunities for Sharing economy (good and or bad) as well as a drop in covered payroll and premium.
2) More focus on DHS to reduce the burden of Disability payments. More focus on pushing “work caused” PT claims back out into the state systems and more stringent recovery of monies in SSDI. Maybe leading to more emphasis on Rehab in WC and lower margins for carriers.
3) A push for a National Right to Work Law further eroding the voice of “organized” labor at a state and national level representing injured workers. Leaving Plaintiff attorneys in a stronger position as “the voice” of workers, let that sink in.
Brandon – excellent points all – thanks for sharing your insights.
Oh, I forgot under #3, a renewed push for Opt-out solutions.
I think that Trump managed to ‘chump’ everyone, he has always been a liberal progressive. This is the ultimate Reality Show for him! He has already put ‘Rinse’ on his team, (former GOP) so I just see more of the same status quo. Plus, I am in CA, nothing will change here.
1 positive is that adjusting opportunities will increase!