Workers’ Comp Has Some Health(care) Issues of Its Own
July 19, 2014| By Diane Brown |
On the surface the Workers’ Compensation segment looks like it is in good health. The preliminary CY combined ratio declined 7 basis points to 101% in 2013, compared with 2012. Yet, the rating agency A.M. Best maintains its negative outlook on commercial lines - and Workers’ Compensation represents the largest commercial line.
Certainly, there are signs that the “medical side” of the business may have some fundamental issues, especially around the way physicians dispense and repackage drugs. It’s an important issue because medical expenses now exceed 60% of overall WC costs.
Fortunately, many states are waking up to the potential problems being created by the excessive use of opioids, for example, and are bringing in legislation to impose controls or guidelines. But we shouldn’t be complacent – and state legislatures shouldn’t allow these bills to languish or to be deferred to the next session. A question for the WC industry is what role it can play to educate policymakers, judges and physicians.
The Affordable Care Act is, of course, one piece of legislation that is attracting attention. Questions about its impact on WC abound. Speaking at the recent WCRI conference, MIT Professor Jonathan Gruber said the industry should consider two totally opposite impacts of ACA on WC.
- The ACA could decrease WC costs because more workers will have access to health insurance and consequently less incentive to report a WC claim for an injury that occurred elsewhere.
- The ACA could increase WC costs because healthcare providers receive higher reimbursements from WC, creating an incentive to shift care to WC.
For its part a new report from RAND Institute for Civil Justice forecasts $900 million in cost savings for WC in 2016 as a result of the Affordable Care Act. Gen Re will continue to monitor the changes in healthcare that impact WC business. And what we learn, we will share with you.
In the meantime one of our current Insurance Issues is called “Critical Issues in Workers’ Compensation” and contains articles that our WC clients shouldn’t miss – one on how case management plays a vital role in WC, another on how advances in prosthetic technology can boost outcomes for injured workers, and then a short piece on the use of exoskeletons in rehabilitation programs. There’s also a quick Nano update and a review of states that passed bills for preventing prescription drug overdose. These are all important subjects for WC professionals. Hope you enjoy reading them.