The future of health reform – lessons from workers comp

The current political and cultural divide over health reform is not new – in fact, a century ago a very similar debate took place, and the result may be instructive.
At the turn of the century courts were stuffed full of tort cases brought against employers by workers injured in industrial accidents. Workers had no other recourse besides the court system, and for the years leading up to 1911, the courts offered little hope. That began to change in 1911, when New York passed legislation requiring employers to pay for industrial accidents. The day after the bill passed, a Earl Ives, a railroad worker, sprained his ankle while signaling to an engineer. His employer took the case to court, saying it was Ives’ responsibility to be more careful.
Ultimately, the court found in favor of the railroad. This from Peter Rousmaniere’s recent piece in Risk and Insurance:
“…what drove Werner’s (judge in the Ives case) reasoning were cultural values. He magnified the responsibility of the self-reliant worker within his or her immediate sphere of influence. He chose, in effect, a narrative that made sense a generation before Ives’ accident.
New York voters overrode Ives with a constitutional amendment in 1913. Other states responded by crafting legislative proposals meant to be challenge-proof.
The rapid and broad acceptance of the new system was mainly due to a new angle of vision on the individual at work. The cause of work accidents now was neither the worker nor the employer but industrial employment itself. The new mantra of a work accident “arising out of and in the course of employment” skirted the question of causality.”
Workers comp took hold across the country, and within a decade most states had passed some form of comprehensive workers comp legislation.
There are a couple reasons why employers’ efforts to battle workers comp legislation stopped. First, on a national scale, the cultural issues noted by Peter overtook the laissez faire theology of early industrial America.
Second, employers were starting to lose more and more court cases, an occurrence that struck fear into management and owners. Work comp was seen as a ‘less worse’ alternative to the increasing number of increasing verdicts.
Third, the growing influence of organized labor was being felt in corporate boardrooms around the country, and management wanted to eliminate industrial accidents as an issue.
So what does this have to do with health reform?
Health care is reaching a crisis point. Within six years, family premiums will exceed $30,000, plus out of pocket costs In an increasingly global economy, American employers are going to abandon ideology when confronted by the stark reality that they cannot and will not ever be able to compete if they aren’t relieved of the burden of health care costs.
Similarly, taxpayers (as we’re seeing every day) cannot and will not pay for ever-increasing health care benefit costs for Medicare, Medicaid, and public employees. But those programs, especially Medicare, control a LOT of votes. Thus politicians will be forced to come up with cost-reducing solutions that are dramatically different from the feeble attempts from Washington to date (and I include both parties in that).
Ryan’s solution is no solution at all – in actuality it is nothing more than a ‘throwing up of the hands and abandoning any pretense of cost control.’. And, it’s from one of the guys who voted for the single largest increase in entitlement programs since Medicare – Part D.
The Accountable Care Act isn’t a solution either, but it contains the seeds of real change, specifically with the IPAC.
What does this mean for you?
When things no longer can continue, they won’t. We saw that with workers comp exactly a century ago, and we will see that with health care within five years.