Irrational Argument

The first day of the Workers Compensation Research Institute's annual conference was chock full of data, statistics and information about cost shifting, medical fee-based incentives, and independent medical review.

But to me, the most interesting of day one of the conference was the two separate sessions dedicated to debating "opt out," the latest pet phrase for alternative work injury protection systems.

The first debate was between Bill Minick of PartnerSource, and Trey Gillespie of the Property Casualty Insurers Association of America.

Minick is one of the major proponents and drivers of opt out. He and his firm are, consequently, lightning rods for opt out criticism, including loud denunciation in the general media such as the ProPublica story on the issue.

Gillespie is a Senior Workers Compensation Director for PCI, and has been strongly critical of the opt out movement.

Their debate was predictable. Gillespie interposed doubt about opt out's intent, and the threat it posed to the Grand Bargain, saying it would destroy people, companies and communities. Minick, of course rebuked those allegations, citing facts, statistics and anecdotes about how opt out can be a sensible, reasonable alternative to traditional work comp for both employers and their workers.

At the end, though, Gillespie pointed out a number of attributes that "a responsible alternative" to work comp would look like, stating for the first time I recall publicly that PCI is not opposed to alternatives if those objectives were met.

Frankly, I thought that was a huge capitulation on the part of Gillespie and PCI.

The bigger debate, though, came in Round Two where a panel comprised of James Mills from the Oklahoma Department of Insurance, attorney Alan Pierce, president of the Workers' Injury Law and Advocacy Group, Elizabeth Bailey,VP Workers' Compensation & Safety of restaurant chainWaffle House Inc., and Bruce Wood, VP & Associate General Counsel with the American Insurance Association. 

The arguments were heated, and in my opinion, curiously hypocritical.

And this is why - all of the arguments against opt out are largely based on just a couple of basic points: there are unreasonable potential restrictions that cause cost shifting and the injured worker gets shafted.

Frankly, those are the same arguments that the general media, and other critics, have been saying about traditional workers' compensation.

Think about it - work comp has been under fire the past few years on the argument that reform measures in various states have eroded benefits and protections for injured workers to such an extent that several states are facing constitutional challenges to their systems.

The opponents to opt out are making the same arguments against the movement that everyone else has been making against traditional work comp!

Limitations on temporary disability duration and the number of chiropractic or physical therapy visits, devaluation of permanent disabilities, restrictions on medical care, fee schedules, utilization guides, constrictions on causation liability, comorbidities, disputes, litigation, etc....

And in the end there is the injured worker, left without much remedy to overcome the financial consequences of a work place injury or illness while, in the meantime, vendors siphon money away for utilization review, bill review, pharmacy review and pretty much any other kind of review you can think of...

Bailey was, perhaps, the most rational and level voice of the entire debate. The Waffle House operates in 23 states where it is either self insured or has a high deductible program. The company employs 40,000 "associates" (see my post of yesterday, "The Culture") 2,000 of whom are in Texas.

In Texas, the Waffle House opted out in 2002 because costs were out of control and they saw no viable way to curtail their costs. Bailey said that the company's costs were driven by very high medical charges but that no one was ever getting better. 

They have stayed with opt out in the state because they saw huge improvement in communications with their "associates" because it was forced - they had to do it under ERISA law, and found that in fact it returned huge benefits and trust with employees. As a consequence the company experience a big reduction in indemnity because of the change in CULTURE.

In other words, opt out in Texas forced trust between the company and its workers.

Trust - oh yeah, a concept that seems to have escaped traditional workers' compensation.

By the way, Bailey also said that they are not opting out in Oklahoma, at least not yet. That environment is too unsettled at the time and the company is waiting to see how both systems turn out.

So, here's the message - it doesn't matter how you provide work injury protection. Employers that are good people will ensure that their workers are taken care of because they understand that human assets are the most important part of a business, and those that don't ... won't.

This basic truth transcends through the insured market. There are insurance companies that will do the right thing, and of course there are those that won't (e.g., how many carriers do you know that will voluntarily pay temporary disability beyond the statutory cap, or don't dispute statutory presumptions in order to curtail long tail liability on cancer claims?).

What I learned - it really doesn't matter if work injury protection is based on traditional work comp or opt out or some other program. It all comes down to whether the employer and/or carrier is going to do the right thing, and that comes down to how workers are valued, and the culture of the company, its insurer and the system within which it all operates.

 Trust operates in mysterious ways.