Friday, June 10, 2016

The REAL Objection to Opt Out

I have never really understood why the Property Casualty Insurers Association of America has been so vehemently against opt out.

While it seems that opt out returned to the back burner for this year with constitutional defeats in Oklahoma (also beguiling traditional OK comp) and political stalemate in other states, PCI has reignited the debate with an inflammatory paper.

The basic arguments, which PCI supports with some data, is that opt out results in costs shifting to other systems, and that a lack of standards and transparency is detrimental to consumers (i.e. injured workers).

PCI also argues that opt out is all about saving employers money to the detriment of consumers by denying more claims earlier and paying less with capitations and restrictions not found in traditional comp.

I get that alternative work injury systems need to meet certain standards and need to be more transparent to consumers - to me that’s a no brainer.

But the objections that PCI in particular raises are exactly the same complaints made against traditional work comp: inadequate benefits, unnecessary delays, cost shifting, etc.

Each statistic cited by PCI against opt out can be asserted against traditional work comp - just use another study or data source.

For instance, just a couple of years ago, Paul Leigh of University of California at Davis, and lead author of the study, Workers' Compensation Benefits and Shifting Costs for Occupational Injury and Illness, told WorkCompCentral, "We're all paying higher Medicare and income taxes to help cover (the costs not paid by workers' compensation.)"

That study, published in the April 2012 edition of the Journal of Occupational and Environmental Medicine, found almost 80% of workers' compensation costs are being covered outside of workers' compensation claims systems. That amounts to roughly $198 billion of the estimated $250 billion in annual costs for work-related injuries and illnesses in 2007. Just $51.7 billion, or 21%, of those costs were covered by workers' compensation, the study said.

Of the $250 billion price tag for work-related injury costs, the Leigh study found $67.09 billion of that came from medical care costs, while $182.54 billion was related to lost productivity.

In terms of the medical costs, $29.86 billion was paid by workers' compensation, $14.22 billion was picked up by other health insurance, $10.38 billion was covered by the injured workers and their families and Medicare and Medicaid picked up $7.16 billion and $5.47 billion of the tab, respectively.

The study drew criticism from the work comp crowd defending its practices, challenging the data, and anecdotally attempts to counter argue, with limited success.

PCI does the same thing with its study. If one digs deep enough and studies the study I'm sure one would find fault with the data and the reporting on cost shifting - because the truth is that absolutely no one has a fix on that topic. It is basically impossible to study cost shifting since the point of first medical contact determines occupational characteristics and that determination follows the claim nearly without question most of the time.

My good friend, Trey Gillespie, PCI assistant vice president of workers’ compensation, told WorkCompCentral that, "it really goes back to the fundamental tenets of workers’ compensation: protecting injured workers and their families and protecting taxpayers. The general consensus is that the way programs should work is to protect injured workers and taxpayers and avoid cost-shifting.”

Of course! All work injury protection systems should do that.

But they don't.

That's what the ProPublica and Reveal series of critical articles about workers' compensation programs across the country tell us, both anecdotally and statistically: injured workers aren't protected, costs are shifted onto other programs, and taxpayers are paying an unfair portion of what work comp should be paying.

Indeed, in October, 10 federal lawmakers asked the U.S. Department of Labor for greater oversight of the state-run workers’ compensation system, citing “a pattern of detrimental changes to state workers’ compensation laws and the resulting cost shift to public programs” as proof the oversight was needed.

Then I started thinking about the one truism that governs human behavior nearly universally until someone is about 90 years old (and even then!): every single person protects their own interests first.

And I thought of PCI’s name: Property and Casualty Insurers Association of America; “property and casualty”. Aye! There's the rub!!

There’s no room for P&C in opt out! ERISA based opt out uses only health insurance and disability insurance.

Work comp is the mainstay of the P&C industry, the single biggest commercial line, and the gateway to a whole host of much more profitable lines.

If opt out spreads beyond Texas it is hugely threatening to the interests of the PCI members because they stand to lose considerable business, particularly if opt out migrates to the bigger P&C states.

PCI is protecting its own interests (or those of its members) by objecting to opt out.

And I don't blame them. Their impression of this threat is real.

Michael Duff, a professor of workers’ compensation law at the University of Wyoming, told WorkCompCentral, “These are interested observers. They’re going to have an agenda. They represent insurers who are in the workers’ comp business.”


“Every commercial actor that participates in traditional workers’ compensation has an interest in seeing traditional workers’ compensation continue," Duff went on. “But,” he added, “that traditional workers’ compensation imposes costs on employers. There is now a group of employers who would like to pay less, and Bill Minick has developed a commercial product that is in competition with this other conceptual approach to handling things.”

Here's THE fact: traditional workers' compensation and ANY alternative work injury protection plan require vendors pitching wares and services to make the systems work.

Insurance companies are as much a vendor in either scenario as physicians, bill review companies, utilization review companies, attorneys, vocational counselors, etc.

Each and every single one makes a buck off work comp, and each and every one has an interest in maintaining the status quo.

All vendors have a business interest to promote and protect, otherwise they would not be in business. For property/casualty insurers, money comes in via premium, and they hope only a little goes out in claims so that shareholders get some return.

The spigot on outgoing dollars is tightly controlled by regulation (and many argue not tightly enough), and if it weren't then the interests of the insurance company would be even more weighted against those of the customer (i.e. premium paying employer) and consumer (i.e. injured worker).

That's the bottom line. Arguing that one system is better than the other without admitting one's own special interest is simply hypocrisy.

Workers' compensation is going through some pretty traumatic soul searching right now. Employers leading the debate are asking, "why stay in a system that facilitates vendors' interests ahead of employers or workers?"

THAT's the question that BOTH the P&C industry and the opt out movement need to answer. Further debate about the merits of one over the other is simply sophistry.


  1. So it's a turf war between the big insurance boys, while the little folks are the one's who get affected and harmed by it. NO! OPT out, or any form of it will be good for the injured workers. It's a pathway to poverty just like the DOL has stated. When OPT OUT is being promoted by ALEC's little brother, ARAWC (The Association for Responsible Alternatives to Workers’ Compensation). Who's "Backed by Wal-Mart, Lowes, and other big corporations, who have all declared a war on the grand bargain. It's not a good thing for those injured on, or by their jobs.

    ALEC & "ARAWC are pursuing a national agenda, currently pushing for opt-out laws in South Carolina and Tennessee. Meanwhile, New York, Illinois, and Wisconsin are facing aggressive campaigns from corporate interests to introduce laws that further diminish benefits and curtail injured workers' right to due process. These anti-worker reforms could pave the way for opt-out laws and the "privatization" of the claims process in many more states unless workers manage to shift the balance of power." As was reported in the Workers' Comp Hub Newsletter, Winter 2016.

    What is needed is for neither of the big boys to win this turf war, but for the FEDs to step in with some minimum mandatory Federal standards across the board. So as to get the grand bargain back to the way it was, before all these ALEC boiler plated State law reforms took place over the last 20 years.

    Minimum Federal Standards, Or Singer payer, with the State Med Tort laws rolled back to where they were before ALEC boiler plated State laws, were stacked against med mal practice law suits, over the last 20 years as well. Our little civil stingers have been taken away, they said because health care cost were out of control. Yet 20 years later, health care cost are still out of control, yet we the people still do not have our little civil signers back, with which to fight against the profiteering corporate giants. See more on about these med tort law issues. Here.

    Hot Coffee documentary explores issues of tort reform

    The injured workers and patients need our grand bargain back in full, and our little civil stingers back to fight against these corporate giants who conspire to profiteer over the miss fortune of others.

    Allowing either one of the big bullies to win their turf war, does not help the little people on the bottom. We need Federal intervention into bought out State laws NOW! Like your good friend Bob W, likes to say, No matter how much lip stick you put on the pig, it's still a pig.

    The bottom line, OPT-OUT Equals ALEC & ARAWC's attempt at "PRIVATIZATION" of State workers comp systems, and that has not worked for our schools, our hospitals, nor our jails. THIS PRIVATIZATION war by corporate America on the working poor, is making things worse, not better, and needs to end. NO OPT OUT, in any form, will be of use to the injured workers of today.

    Learn more about ALEC and it's intentions here.


    And for your education, I have putt together a nice posting, that explains who and how this war on injured workers is being carried out in America today. You can see it here.

    Meet The Folks, Who Have Declared A Class War On Injured Workers And The Laborers Grand Bargain.

    If we are to hear both sides of the story? One can not tell the whole story of workers comp, nor state med tort laws, without explaining about who ALEC is, and how they have helped to carry out this war on the injured workers, and patients rights. Just saying, as one of the many adversely affected injured workers. Wrongfully denied care and training's, while being cost shifted off to the ACA. Any thing but, having the grand bargain honored to start with.

  2. Those folks who really want to see things get better for injured workers and employers? Would be working towards getting Federal Intervention into our Broken State Workers Comp systems, all others are just aiding in the smoke and mirrors game, the big insures and corporate America like to play.

    Implement minimum federal standards for worker’s comp.

  3. Thanks David, it's nice to know the REAL Objection to OPT OUT.

    So the Big insurers are fighting it out over who gets to profit off the injured workers today. WOW

    OPT OUT is BAD for the injured workers, so I have to agree with one of the bad guys, but it still feels like having to chose from the lessor of the two evils. Seems like were having to do that a lot these days.

    "opt-out systems dramatically reduce costs for opt-out employers and promote massive cost shifting for work-related injuries from corporate employers to their workers and families, private payers, and taxpayers."

    I guess the injured workers can take solace in the fact that the big boys are actually fighting over us now. It does go to show, that down deep, the big boys, really do value you us injured workers after all. WOW

  4. WorkComp Linda
    Shared publicly -

    The REAL OBJECTIONS by Injured Workers and their Advocates and Caregivers about Workers Compensation can be summed up in just a couple words: FRAUD AND MALFEASANCE.

    Wouldn't it be great if the Workers' Compensation "National Discussion" would begin to address the real issues of this national/global crises of hyper-corruption?

    Field representatives from offices of my local political representatives seemed truly shocked to receive a copy of the October 2015 Congressional Letter to DOL, as well as a new call for fraud investigations by another local politician directed to the DIR.

    LET'S GET ABOUT THE REAL PROBLEMS.... IF YOU HAVEN'T READ THE PETITION signed by nearly 6,000 Injured Workers across America, you gotta wonder why those comments are meaningless to the 'leadership' of the national discussions, don't you?

    You also might wonder why one of the 2 or 3 Injured Worker blogs, with a reach to date of more than 35,000 views --- is dismissed as "DRIVEL" ....

    My representatives didn't seem to consider it drivel, either.

    Have a nice day, and yes indeed, #DodgeTheRads. 'The Work-Comp-Kill' pales in comparison to the radiation poisioning we're all experiencing.

    Military personnel with loved ones in the WorkComp system suggest Injured Workers proceed as if they are "POWs" and do all they can to ESCAPE THE SYSTEM...

    "DodgeThe21stCenturySonderkommando" ...and ask about YOUR RADIATION THIS WEEK, and how it impacts YOUR HEALTH