Yesterday SwissRe published their analysis of the impact of health reform on workers comp. The full report is available here [opens 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. For a more in-depth discussion, click here. [opens pdf]
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.
Dec
8
I really doubt that this will be the case, since many of the work comp patients I see each day are already insured and are actually not seemingly interested in “getting back to work” but rather seeking the “brass ring” of eventual disability benefits.
No question that a healthier workforce would be a great and unambiguous benefit to WC. Both frequency and severity of injury would go down to the extent that obesity, hypertension, diabetes etc were controlled better. Clinical mental conditions with better treatment and substance abuse control would also be big boons to WC.
However, I think it is not at all a sure thing that health insurance, even with guaranteed coverage for preventative care, will turn the tide on America’s dismal health record. I don’t see how a doctor offering counseling for 5-8 min will defeat the ingrained lifestyle and/or genetic dispositions to some destructive behaviors. Even more proactive programs for chemical abuse have poor long term results for most people.
There is hope for controlling some conditions that respond well to drug treatment like hypertension. But again individual choices to maintain treatment and other lifestyle changes cloud the long term prognosis for better health.
Wellness programs — as distinct from health insurance– do show some positive paybacks to employers. But the ACA does not create more wellness programs.
There is no question that some aspects of the PPACA, like the increased benefits for preventative care, will positively affect workers’ compensation claims; however, some employers will choose to drop their group health insurance because of the increase in premiums that it will cause particularly in 2014, unless changes are made to the existing law. Small employers are not required to buy insurance and with individual mandates in question we may see some negative unintended consequences.