Tuesday, April 1, 2014

It's Only One Dollar

The most difficult part about workers' compensation is that there is only one pot of money and so many competing interests trying to get to that pot.

In California that pot of money is about $9.2 billion - that's how much net written premium was reported by the Workers' Compensation Insurance Rating Bureau for 2012.

Nationally it's about $48 billion according to the National Council on Compensation Insurance.

These numbers of course don't include investment income, or the money that self-insured (or non-subscribers in Texas and Oklahoma) set aside for their work place injury obligations.

Nevertheless, the fact is that there's only so much money to go around so it becomes a tug of war with each competing interest arguing that if they don't get their fair share the injured worker and/or the employer suffers.

Workers' compensation has two big component obligations: medical treatment and indemnity.

In most states work comp is, essentially, a medical insurance plan with a bit of disability thrown in - meaning that in most states the medical component (including cost containment expenses) take more of the claim dollar than the disability or indemnity component.

That makes sense to me - the chief task of any work comp system is to ensure that someone injured at work gets prompt medical attention. The disability protection part is secondary and can wait a week or two.

But, of course, anytime there is an attempt to control costs, it comes at the expense of one interest or another.

In Wisconsin the pot of money is about a tenth of California's - there's not a whole lot available for distribution. 

The medical community in that state was not willing to sacrifice their piece of the pie to fund the indemnity slice - at least not in the manner that had been proposed through the usually benign legislative process that deals with work comp.

Assembly Bill 711, a bill introduced last year to that would introduce a work comp medical fee schedule, was effectively killed by medical industry special interests according to an article by a policy expert at the Wisconsin Center for Investigative Journalism.

The bill would allow providers to charge no more than 10% above the average paid by state group health plans and would pass the savings on to injured workers by increasing weekly payments, increasing permanent partial disability to $337 a week, up from $322. Long-dormant rates for some severely disabled workers would also increase. Employers would also have potential cost savings.

The bill came about because proponents argued that medical costs in the state's system were growing too rapidly, exceeding the level of inflation experienced by the general health community.

Bill Leuders, money and politics project director at the Wisconsin Center for Investigative Journalism, said in an article that the medical industry mobilized against the bill, starting a clash of special interest powerhouses.

Fifty lobbying groups had positions on the bill, evenly split for and against. Proponents were business groups, insurers and labor unions. Opponents were groups representing doctors, hospitals and other health care providers.

In the face of such strong lobbying interests the bill was killed because usually changes to the work comp laws are done through consensus in what is known as an "agreed-on" bill process.

The medical community said that they were left behind at the bargaining table so that is why they mobilized.

AB 711 proponents on the other hand said that medical interests just didn't come up with anything workable.

Reformers will try again next year.

They'll get nowhere, though, unless all interests understand that there's only a single dollar, and unlike the Federal Reserve Bank, there is no alchemy or wizardry available to make that dollar seem like more.

No comments:

Post a Comment