If the requirement that every individual have health insurance is overturned by the Supreme Court, workers’ comp costs will increase over the near term and get worse from there.
If the mandate sticks, costs will likely moderate somewhat, then increase at a lower rate. Here’s why.
First, it may not be why you think; work comp costs won’t come down because people with health insurance are less likely to file WC claims (the theory being those without insurance are more likely to try and get comp to cover a non-occupational injury). In fact, 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]
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…
This is particularly true for smaller employers in states such as Texas and Florida which have large proportions of working-age people with no health insurance; work comp insurers focused on small businsses may well find their outlook looking rosy under reform.
In addition, several studies (here and here) indicates those with health insurance tend to be healthier than those without. Healthier people heal faster, more good news for work comp.
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 Accountable Care Act 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).
There’s a complicating factor – or rather multiple factors that make the real picture a bit too muddy to clearly project the impact of reform on cost shifting. For example, Medicaid will expand significantly (in fact it already has). While that’s good because providers are now getting paid something for some portion of the care they use to do for free, it may well be that they deliver a lot more care to a lot more people – all at below-breakeven rates.
With that said, it remains to be seen if the mandate stays, goes, or, if it goes, takes the entire Accountable Care Act with it.
What does this mean for you?
Regardless, it is clear that the more people there are with health insurance coverage, the better it is for workers comp payers. And if the mandate goes away, the percentage of workers with health insurance will undoubtedly be less than if it doesn’t.
Feb
13
