Wednesday, November 12, 2014

Just The Way It Is

Anyone that doubts that workers' compensation is a "political compromise that obfuscates medical science to achieve a financial outcome" simply needs to read this morning's WorkCompCentral story about Illinois governor-elect Bruce Rauner, and the anticipated strategy the Republican plans to use workers' compensation as a bargaining chip to achieve other promised campaign goals.

Democrats hold about 60% of the vote in the Illinois legislature so whatever Rauner comes up with, to be successful, will need Democratic support.

And while Rauner never clearly outlined exactly what kind of reforms he had in mind during his election campaign, Michael Lucci, director of jobs and growth at the Illinois Policy Institute, noted for WorkCompCentral that Rauner said he would raise the minimum wage in the context of reform for workers’ comp and other tort liabilities.

“You can see that he is sort of framing a compromise there,” Lucci said.

Illinois went through a big reform of its system in 2011, but the state has been criticized for lagging in its execution resulting in a number seven ranking of the most expensive work comp states according to the last Oregon biennial study, although Illinois was ranked fourth in the nation when the last study was published in 2012 indicating some progress in shrinking costs, primarily by reducing medical treatment payments.

The pro-business lobby in the state is crowing that it's next border state, Indiana, has one of the lowest rankings in the Oregon study.

This of course, in my opinion, is a red herring argument - any business that says that it is moving to another state only because of workers' compensation evidences to me a management that doesn't know how to control its other costs since work comp is really a very small part of a business' overall expense budget; there's a lot more problems under the hood than just work comp.

Here's the political challenges facing any more tinkering with the Illinois system at this stage:
Otto Von Bismarck

1) Republicans and pro-business leaders want to change the causation standard to make it more difficult for workers to make a claim for benefits. Labor opposes this idea, and says that more insurance industry regulation is needed.

2) Illinois has gone through major changes to its comp system 3 times in the last 10 years - Rauner faces legislative fatigue on the issue.

3) Rauner is tying a promised minimum wage increase to $10 an hour to workers' compensation and tort reform, attempting to forge a compromise between Labor and Business in a face off where both sides must essentially come to the bargaining table in order to make any changes - Lucci says the members of the Illinois Workers' Compensation Commission must all sign off on any changes that are made to the policy, making some reforms harder to push through than others.

What's interesting about the minimum wage issue is that on Election Day, 67% of voters supported an advisory initiative to raise the state’s minimum wage to $10 an hour, reflecting Illinois' strong Blue roots.

Regardless, workers' compensation has always been a political compromise clearly dating back to the very first iteration introduced by Otto Von Bismarck in his 1884 Workers' Accident Insurance system.

I've said before that workers' compensation works as it is designed, but not as it is intended. That is because it is, always has been, and always will be, a political tool tied to unrelated social objectives of elected officials (or perhaps more often the objectives of those financing those politicians).

And that's just the way it is.


  1. Very good report as always. I think folks are starting to see what is really going on in comp now, but there are still lot's of folks who are in high office that are uneducated about workers comp yet, so it's every one's duty to continue to educate all at to the real facts regarding our comp systems, that does help many, but is also allowing many to be harmed, while a few profit off this misery, being needlessly created legislatively.
    Peace to all at the table one day, even LABOR and Patients.

  2. Dave: I had not yet encountered your concluding 'nutshell' summary, which is brilliant: in precious few words you decode the defective gene behind most of the "workers compensation problems," virtually everywhere!

    H. George Kagan