And it is coming from all directions. California may be in the process of significant changes due to recent court decisions and the hangover from reform. Texas continues to debate, discuss, and deliberate alterations to their current system. The regulatory and legislative fronts in other states are noticeably quieter, but that silence is more than overcome by the noise from outside the regulatory system.
Brutal competition continues for what little self-insured business is left, while TPAs struggle to differentiate in a market crammed full of me-toos. Complacent carriers have invested little in adjuster education, training, systems, and decision support tools – partly because they have little to invest, but also because they aren’t thinking strategically.
The soft market is going to end – its got nine to fifteen months at the outside. Yet few insurers or TPAs are ready – they’ve been so busy cutting costs, reducing overheard, laying off talented and experienced WC pros that they are in no way shape or form ready to respond to rising medical costs, a renewed emphasis on return to work, loss prevention, and basic claims management. Not to mention the personal angst experienced by the folks left after the reductions – they’re so busy concentrating on keeping their heads down and staying out of the line of fire many aren’t worrying nearly enough about the next turn of the cycle – when costs start to head back up, and payers are woefully unprepared to do anything about it.
Add to the mix health care reform and its attendant impact on workers comp (cost shifting, changes in Medicare’s RBRVS, pharma price increases), a sharp rise in work comp medical expense, and a surge in claims that will come when employment rises once more, and you’ve got the makings of a pretty ugly picture.
The stuff isn’t going to hit the fan until mid 2010 at the earliest, and early 2011 at the latest.
Are you preparing?
What does this mean for you?
If your company isn’t ready, get your resume updated…
Nov
17
Joe–
Doomsday would happen more often if it didn’t require so much cooperation from so many parties. agree with your analysis of where much of the WC industry is right now, but the question of what comes next and what the sequelae will be remains wide open. If there is no real recovery, if unemployment levels bump along around 10% for the next several years, if American jobs continue to either move overseas or simply vanish down the ratholes of time, the WC managers who have been focussing on cost cutting will be visionaries, not clowns. Given the macro economic problems of the US, there is a very good chance that the WC business will continue in the doldrums for years. The Day of Reckoning that you suggest is imminent may be canceled for lack of interest.
Why do you say there is little self-insured business left? I thought it was still 25% of the workers compensation market?
Marissa – One example – Florida has lost over 2/3rds of registered self-insureds since 2003. What’s the source for the 25% figure?