And the latest biennial report by the Texas Division of Workers’ Compensation to the state Legislature about the state of occupational injury protection tells me that even with some of the most favorable rates in the country, employers still have plenty of issues with work comp.
About two-thirds of Texas employers carry coverage, meaning an estimated 80% of the state’s workers are under the work comp umbrella.
About 75% of the employers who don't subscribe have some alternative plan in place.
That doesn't necessarily mean that these plans are for the protection of workers either - could be that these are geared more towards risk management or mitigation strategy.
But regardless of the reason, 95% of private-sector employees in Texas have some form of work injury protection coverage.
The flip side is that the remaining 5% of private-sector employees who aren’t covered with any work injury protection total about 470,000 workers, 30,000 fewer than in the last report in 2012; but the percentage, 5%, is the same in both reports.
“Approximately 75% of the non-subscriber employee population is covered by some form of an alternative occupational benefit plan,” the report said. “As a result, an estimated 95% in the case of a work-related injury in Texas,” meaning either workers’ compensation coverage or coverage from a non-subscriber plan.
|Texas Tribune graphic illustrates the numbers from the 2012 TDI report.|
I'm not sure why the total population figure is different; perhaps there are fewer people employed currently in the state than there was in 2012.
Texas is a profitable state for the workers' compensation line with combined ratios in the past few years nearly always under 100. For carriers to make an underwriting profit on work comp is nearly unheard of. To do it consistently several years in a row is nearly impossible.
And this is with rates that are very reasonable compared to the rest of the nation, having dropped nearly 50% since 2003.
Still, the number of nonsubscribing employers grows - either employers feel they can get the same level of protection for themselves and their employees via alternative risk management systems, or they want more direct control over these systems, or they prefer to play the odds and just don't care.
“Despite lower workers’ compensation insurance rates in recent years, it appears that an increasing number of the largest employers in Texas have begun to opt out of the workers’ compensation system since 2010, while an increasing number of small and mid-sized employers have increased their workers’ compensation coverage rates,” the report said.
The percentage of nonsubscribing employers who have between 100 and 499 employees increased to 14% in 2014 from 12% in 2012. Nonsubscription also increased among Texas employers with 500 or more workers; 19% of such employers are now opting out, compared to 17% in 2012.
The nonsubscription rate among the largest employers had actually increased in 2012 as well, from 15% in 2010 to 17% in the last report.
The current 19% figure is still significantly lower than was reported in 2008, when 26% of employers with 500 or more workers were non-subscribers.
What's odd is that the report found slight decreases in nonsubscription for employers with five to nine employees – from 29% in 2012 to 27% in 2014 – and for employers with 50 to 99 employees (19% in 2012, 18% in 2014).
“Our reaction is that this remains a significant threat to the overall workers’ comp system,” Richard Levy, general counsel for the Texas AFL-CIO, told WorkCompCentral Monday. “It’s unconscionable that hundreds and hundreds of thousands of workers go to work every day with no protection against workplace injury, and until that is remedied, I can’t say that we have a healthy system.”
But Steve Bent, executive director of the Texas Association of Responsible Nonsubscribers, told WorkCompCentral that the latest nonsubscription rates were indicative of a system that’s working.
“As an association of nonsubscribers, we’re certainly not disappointed that the numbers are not higher,” Bent said. “It’s great that the workers’ comp system is working, and that employers don’t feel a need to opt out. However, workers’ comp rates have been somewhat cyclical historically, and if rates were to go up again in the future, we would hope that the ability to provide benefits outside of workers’ comp exists as a check valve or as a pressure valve for higher workers’ comp rates.”
Texas is an interesting study in employer psychology, at least regarding workers' compensation. Most of us, I'm sure, can't think of being without some work injury protection system in place. But there obviously is a sizable population that doesn't see it that way.
We see reports nearly daily of employers that either skirt mandatory work comp all together, or do their best to minimize premiums by underreporting payroll or misclassifying occupations.
Can you imagine if all states did not mandate some form of work injury protection?
We all have issues with workers' compensation and system performance. Sure, there are problems and nearly everyone has a story about denial, expense, coverage, fraud, etc. etc. etc.
And while we may debate the relevancy of workers' compensation in the modern employment era, at least we have rules in place with the intent of mitigating risk for both employers and employees.
Work comp is not perfect. It never will be. The Texas report gives us a glimpse into why not - because there is a sizable population that prefer risk to themselves and their workers rather than the expense of risk mitigation.
The biennial report can be viewed here.