There are several potential implications of the latest national policy changes for workers’ comp.

First, if wages and hiring increase due to the tax cuts – as promised by the President – premiums will rise.

So far, that isn’t happening. The vast majority of the windfall is being spent on stock buybacks.  While this is inflating stock prices it isn’t going to have any material effect on wages or hiring, so no joy for work comp.

With the added focus on deporting undocumented workers, industries that demand low-skilled workers for high-stress jobs such as meatpacking are often struggling to find enough workers. Jobs are usually filled with first-generation immigrants – as those jobs always have been.

And many low-skill jobs are going to disappear – including burger-flipping. 

And healthcare administrative jobs.

So, we could well see injuries increase if untrained workers are hired to replace people with long experience in those risky jobs.

Now add the tariffs on steel and aluminum, which will really hurt manufacturers that use those materials, and add transportation to the industries affected by tariffs and NAFTA redos and we may see a reduction in commerce – which will affect employment and wages.

credit – CNN

One industry that’s been hit again is agriculture.  Cash crop farmers, especially soybean producers, are justifiably alarmed by China’s retaliatory tariffs on soybeans and other ag products.  Here in upstate NY, our next door neighbor has hundreds of acres in soybeans; farmers in the midwest are also heavily reliant on soybeans.

So, it is possible hiring will increase, altho the latest numbers aren’t encouraging. Wages could go up, altho again, the most recent data doesn’t show a significant bump.

It may well be more likely that employment and wages take a hit due to trade wars and tariff fights. If that happens, work comp premiums will be affected, but we may see a bump in claims from workers concerned about layoffs.

What does this mean for you?

Watch the reports on trade wars carefully.

Brian Downs runs claims and medical management for the Work Comp Trust of Connecticut. He’s the best claims exec you’ve never heard of.

The Trust serves the healthcare industry in Connecticut with both insurance and administrative services. It may be the best-run payer in the nation; with very strong financial results, results which would be the envy of any payer, big or small, a complete and total focus on claims handling excellence, and provider relationships that are core to the Trust’s success.

Those financial results are driven by management’s single-minded focus on it’s customers and patients. Everything revolves around what’s best for policyholders and patients; preventing injuries and illnesses, and delivering the best possible medical care to patients drives the company.

I’ve never heard Brian or CEO Diane Ritucci talk about discounts or savings; those metrics just doesn’t exist. This in a state with among the highest provider fee schedules in the nation.

I met Brian over a decade ago when I was asked to audit the Trust’s medical management program. The more I learned, the more impressed I was. For a small insurer with few resources working in one small state, the Trust was remarkably effective.

The audit found a claims culture focused entirely on outcomes. A medical management approach rooted in partnering with the right providers, with a proprietary network of constantly-evaluated physicians. Results that would be the envy of any payer, large or small.

• Combined ratio hovering around 90% for years
• A large and growing fund balance
• Consistent record of premium returns amounting to about 10% of premiums this year

Before anyone starts saying how easy it is for a small payer working in one state, let’s talk resources.

This payer’s IT budget is a tiny fraction of the big boys’. The staff is equally small, with many folks wearing multiple hats. It competes in a market that’s home to many other payers, ranging from the Hartford and the Travelers to Sedgwick and other trusts. It serves a market – healthcare – with high frequency and occasionally high severity.

Yet despite these challenges, the Trust is nimble, focused, and innovative. Brian meets regularly with individual physicians, groups of docs, employers and other stakeholders. He’s out and about listening and learning, while letting those providers know what the Trust expects of them. The Trust invests heavily in customer outreach, product innovation, network refinement, and staff education.

Brian is the epitome of an effective leader and manager. He has no ego, is constantly looking for ways to get better, to deliver more, to innovate. I’ve never heard Brian sound satisfied or content, he’s always asking, questioning, pushing to improve. Quiet and unassuming, engaged and calm, you’d be hard-pressed to pick him out of a crowd.

I’m lucky indeed to count him as a friend and colleague, and the Trust’s customers have benefited greatly from his competence and professionalism.

Brian Downs is one of work comp’s best.

Workers comp in a dozen years MAY look a lot different that it does today.

That’s the take from Rick Victor PhD, former CEO of WCRI, who discussed a number of potential factors that might actually increase work comp claim counts a LOT at the WCRI 2018 conference.

One was case-shifting, an oft-cited but generally poorly-researched factor that most of us think happens all the time. I’m not so sure.

According to Dr Victor, factors that might increase case-shifting include:

• weakening of the ACA = 20 million more uninsured
• higher proportion of the population is on high deductible plans – and they can’t afford the deductible.
• providers looking for higher reimbursement

Another is the shortage of labor, driven by an aging workforce and current tight labor market. Factor in the possibility that the workers left to be hired are not as strong, motivated, employable, and diligent as the ones already working, and therefore are more likely to file work comp claims, and Dr Victor posited injuries may increase.

Interesting thought experiment, especially given the current Administration’s remarkable ability to not understand that our economy:

• benefits from immigrants,
• desperately needs them today, and
• even more desperately needs them in coming years.

The central premise, that labor shortages and a robust economy will dramatically increase claims, perhaps as much as 50%, just doesn’t make sense.

The rise in robotics, replacement of human intelligence with Artificial Intelligence, autonomous vehicles and trade policy all are very powerful arguments that claims will actually decrease – at a rapid rate.

What does this mean for you?

Unless technology stops evolving, claims will continue to drop.