Medical costs were up a mere 3% in 2014, and actually dropped by a point in 2015 (in NCCI states).
I’ve been in comp a long time, and nothing like this has ever happened. What’s going on?
One likely contributor – 20 million more Americans have health insurance, and work comp doesn’t have to pay for medical care for non-injury-related conditions. (Surprisingly, not many of us know that coverage has increased so much…)
If someone gets hurt at work, has comorbidities, and needs surgery, those comorbidities have to be addressed as part of the treatment plan. If the patient has health insurance, that’s what pays for the non-injury conditions. If not, work comp’s on the hook.
Clearly, the more workers with insurance, the less added expense for work comp payers. So, here are my back-of-the-virtual-envelope calculations of the impact of ACA on work comp (a more-qualified researcher needs to do a much more thorough job):
In 2009 – 2010, 81.8 percent of the employed population aged 18-64 had health insurance. By March of this year, 90.3 percent had coverage, a 10.4 percent/8.5 point increase.
Around 150 million people were employed this March; running the numbers, that means about 13 million more workers had health insurance early this year than did six years ago.
At 3.2 injuries or illnesses per 100 FTEs, that’s 416,000 patients. About 84,000 of those patients have more severe injuries, the type that may require surgery, physical therapy, and/or more expensive and extensive medication.
We do not know how much of the moderation in medical inflation can be accounted for by expanded health insurance coverage, but we do know there are around 84,000 folks with pretty significant injuries or illnesses that don’t need work comp to pay for non-occupational conditions.
Another factor – employed people with health insurance are healthier than employed people who don’t have insurance. Sure, there are confounding factors here – how long do they have to be insured to become “as healthy” as folks who’ve had insurance for years, and how much healthier do they get for each year they’ve had coverage. I get all that. And some really smart researcher at NCCI or WCRI or NASI will figure that out (c’mon, people, the race is on!)
What does this mean for you?
We don’t KNOW ACA how much reducing work comp medical costs, but it is very likely a major contributor.
Joe, you are using numbers and math again. Most bloggers just make stuff up and wildly speculate. You are not playing fair.
Joe,
Does the decline in medical costs seem to indicate that the concerns about provider cost-shifting may not be materializing?
Les – thanks for the question.
The “cost-shifting” issue is quite complex and much more nuanced than I previously thought. Case-shifting may be occurring, however my sense is – to the extent this occurs – it is driven primarily by appropriate categorization of injuries and illnesses and NOT by reimbursement.
Celebrating the low to no increases in work comp medical and attributing it to ACA is typical to a left pundit, but I\’d look first to the continued decline in injury rate and claims volume first. I\’d also consider that to the extent that dollars drive behavior, and they do, you can bet two things:
1) With higher deductibles and other out-of-pocket costs impacting everyone on the group side, \”free\” work comp care will be very attractive to a large portion of the working population who have seen no rise in income levels while their real costs have gone up, and
2) If work comp pays more than commercial, and is not unduly burdensome in documentation and collecting, expect medical providers to figure out how to align the incentives with their patients\’ desire to eliminate out of pocket costs.
Randy – I’m surprised by the lack of substance in your comment.
While I support my “attribution” with data, sources, and a methodology, you dismiss it outright due to some vague notion of my political leanings.
As to your logic, there isn’t any. The injury rate has been declining for decades, as have claims volume. Therefore there is no linkage, causal or coincidental, between the two.
Second, your 1) point makes no sense. If it did, the previously high deductible/copay levels would have influenced claiming behavior. Moreover, the FACT that 13 million more workers have health insurance coverage now must have some effect, especially as a significant portion are covered by Medicaid, which has no deductibles and small copays.
Third, I debunked your 2) in earlier posts dealing with this issue – there is a basic misunderstanding about physician behaviour, reimbursement mechanisms, and the correlation of the two.
Just thinking out loud here…..
So this is a case shifting argument and the suggestion is that some of these 84K people with “significant injuries” are utilizing their new health coverage vs. work comp to cover the cost of those injuries?
But if we assume these “significant injuries” require some time out of work I would think these people would likely pursue work comp for indemnity benefits, no? If using work comp for indemnity the medical comes to comp too. For this reason I’m not sure I buy the argument.
But…. If the suggestion were that people with LESS severe injuries, that don’t involve lost time, would opt to use their new health coverage rather than work comp because its easier, I might consider that. Although given the fact that these people are all likely faced with very large deductibles on the health insurance side I don’t see why anyone would chose that path over $0 deductible comp. In my experience with employer moving to a large ded health plan the opposite occurs.
Maybe now that more folks have health coverage there’s less incentive for them to claim that a non-occ injury or illness is occupational which might explain drops in frequency and total medical cost? So maybe the argument is more people with health insurance = less work comp fraud?
Not sure to what extent the “people that have health insurance are more healthy” piece fits into all of this. I’m sure there’s probably truth to that with lots of studies backing that up. Although I know a lot of people with large ded health plans that forego treatment as most of the cost of the care is out of pocket. Has there ever been a study that’s tried to link the size of the deducible (and co-pays) to the overall health of the subscribers?
Thanks.
MIke – thanks as always for the comment and observation. Appreciate the thoughtful queries.
My sense is this isn’t about case shifting – rather it is what payer covers treatment of non-occ conditions that complicate recovery from the occ injury. For example, someone who is hypertensive and needs surgery. If the patient does NOT have health insurance, the payment for hypertension treatment is going to be covered by worker’s comp. If they DO have health insurance, it is covered by the health insurance program.
Interestingly, the only research I can find that looks at the correlation between health insurance status and claiming behavior indicates that people WITH health insurance are MORE likely to file a claim. One theory is that those people work for employers that are more employee-friendly, and therefore less likely to take action against a worker that files a work comp claim.
Haven’t been able to find any credible research about the “Monday morning” injury issue – if you know of any please share.
re deductibles and subscriber health, there was a RAND study a number of years ago that looked at this, using a Medicaid population as a test group. Net was – if I recall correctly – that patients with higher individual deductibles/copays did not get both necessary and unnecessary care – so it was a edged sword. It did impact health status – got to dig that study out and re-read it.