Colorado Disruption

Voters in Colorado are being asked to adopt a single payer medical system.

Proposition 20 would enact Amendment 69 to the state Constitution, creating ColoradoCare to pay for medical services provided to all residents of the state regardless of why they need treatment.

The amendment language expressly requires the program to pay for treatment provided to people hurt on the job. And it directs the legislature to repeal parts of the Workers’ Compensation Act obligating employers to cover medical costs for occupational injuries and illnesses.

To pay for all of the medical care, a 3.33% payroll tax would be assessed on all workers and a 6.67% payroll tax on employers in the state. It would also levy a 10% health care premium tax on non-payroll income. Supporters say these taxes will raise $25 billion that will be needed to pay for medical costs for all of the state’s residents.

Opponents say the math is wrong, that costs won't be reduced, and that important safety and other considerations will be thwarted.

Pinnacol Assurance, Colorado's state-chartered carrier, also says its bad for employers and their workers.

“And any workers’ comp savings will be eroded quickly by lower worker productivity and increased indemnity costs,” Edie Sonn, Pinnacol's vice president of communications, wrote on the carrier’s blog. “That’s because ColoradoCare won’t have mechanisms in place to do all the things Pinnacol does: work with employers to keep workers safe and minimize the potential for injury, and work with doctors to help injured workers get back to work in a timely and safe way.”

Which brings me to the point of discussion about just what workers' compensation is supposed to do.

Safety, return to work, injury prevention - these are offshoots of the workers' compensation insurance formula because it saves the insurance company money, and arguable thus saves the employer money.

Whether the employer, or the worker, is particularly interested in saving the insurance company money is an irrelevant argument though, because, while the carrier may have some influence over behavior, ultimately it is the employer and the worker to behave as desired.

Brian Carpenter, R. Ph., Clinical Director and pharmacist with Optum, made a very poignant observation to attendees at the Self-Insured Workers' Compensation Executive Forum in Scottsdale, AZ yesterday.

The silos that now exist, said Carpenter, interfere with the sharing of important medical and health information. Consequently general health doesn't know what the workers' compensation providers are doing, and visa-versa.

This is, in part, because of the legal and regulatory environment dictating privacy, and it is also in part due to the fact that there are simply too many different data platforms making data share radically difficult.

The unfortunate outcome of this information failure is inappropriate or ineffective treatment that may considerably extend disability or time off work, or worse, result in treatment contraindications.

Jennifer L. Evans, a shareholder with the Polsinelli law firm in Denver, co-authored an analysis of the single-payer proposal for the Colorado Health Foundation.

Evans told WorkCompCentral that Prop 20 would represent a huge culture shift in workers' compensation, but the end result is simply unknown.

“It really is a sea change for workers’ comp,” she said. “On the health care side there’s not much change, mostly just payments. In comp, it appears this would change the infrastructure for where care is furnished and might impact the type of care available.”

In my mind, while completely disruptive to the status quo, ColoradoCare is a debate and idea that is long over due. The arguments against the idea of a single payer system strike me as simply entrenched interests seeking to protect their turf and business models.

But, as we have seen over the past few years in critique after critique, those interests and business models may no longer be relevant, may no longer be economical, and in fact may ultimately be more harmful to employer and employee than what is proposed.

Just what does Pinnacol (or any other workers' compensation carrier) do that is so special for employer safety programs that state or federal agencies don't do now, or that some other more specialized provider could do?

Why is it that return to work is such an insurance company specialty? The migration from medical treatment to disability determination (ergo return to work status) is nothing special - general health and disability insurance providers have been doing this for decades; the only distinction in work comp is that all of this is combined into a very complex equation that the insurance company controls for the purpose of containing costs.

And as noted by Carpenter, the separate silos ultimately are dangerous to employees, and consequently likely more expensive for employers.

The insurance carrier's workers' compensation role is very simple: provide medical care, and pay indemnity, nothing more.

This is a reality that we in the work comp industry simply forget.

All of the other ancillary programs foisted upon worker and employer may help them, or may not - these are completely out of the control of the carrier and depend upon the attitudes, cultures, and willingness of the service recipients to have any impact.

Nobody really knows how all of this will play out.

What we do know is that we are in a dramatic age of disruption. The tech industry has been disrupting existing business models and entire industries for a couple of decades now.

Why anyone would think that the insurance industry, and in particular workers' compensation, is not just as subject to disruption is pure sophistry.