Workers’ Comp: Like a Nasty Divorce
I have followed the ProPublica/NPR article series on “The Demolition of Workers’ Comp,” and the subsequent reactions with interest. From the implication that the system is being decimated at the expense of American workers, to various points of disagreement from industry parties, I have found a lot to consider.
ProPublica ignited a debate that is still alive, and one that I felt it prudent to give considerable thought to before weighing in.
One major realization I’ve come to is that workers’ comp cases can be a lot like a nasty divorce.
In the aftermath, there are two households to support and both sides believe the other is “screwing” them. One spouse is certain they are “right” and the other is clearly “wrong.” But the truth, as it so often does, lies in shades of gray.
I think this is where we find ourselves in the ProPublica debate.
In workers’ comp, employers often have to cover massive costs, typically for a person who is no longer working or producing. The injured worker does not have the same earning power or quality of life.
Nothing the insurer can do will take away the fact that someone has lost a limb or is a quadriplegic. The story is a sad one, no matter what the outcome.
If we can help 10 injured workers have a better life, but cost thousands of U.S. jobs, have we done a good or bad thing for society?
To be frank, when I began reading the ProPublica report, my initial reaction was that it likely amounted to sensationalism masquerading as journalism. There are some well-founded points, though we do everyone a disservice — injured workers, employers, and insurers alike — if we do not look past the anecdotes to the tough questions.
As in a nasty divorce, it is tempting to point fingers and place blame. But if we want to truly understand the realities of workers’ comp today, we must resist the urge to oversimplify.
If you’ve been following all of the punches and counter-punches, then you know significant attention has been given to ProPublica’s use or misuse of statistics. So instead I will touch on some of the other issues raised but in a much broader context.
The Costs of Competition
Workers’ comp does not function in a vacuum, it operates in a national and global free market system. The cost of labor is a major factor in this system and determines where companies hire and expand.
In a global economy, every state and country compete to see if the job can be done better, faster, cheaper. Additionally, labor markets are increasingly competing with robotics and automation.
That means every action has a reaction, and that includes consequences for every increase in workers’ compensation costs and benefits.
If we can help 10 injured workers have a better life, but cost thousands of U.S. jobs, have we done a good or bad thing for society? We have to consider the larger price we may pay for the decisions we make today.
Consider, too, that if employers and insurers cease to turn a profit, they cease to exist.
The ProPublica article contends that worker’s comp reforms are being driven by employers seeking to increase profits. Any dubious math aside, it is important to understand that in insurance, some measure of profitability has more to do with market forces than with work comp laws. Massive amounts of capital are needed to underwrite insurance, and the majority of that capital rests with reinsurers.
Reinsurers invest wherever the risk is lowest and the returns are highest. Higher risk/lower return investments (such as workers’ compensation in U.S. states) will see less capital, subsequently driving prices up, while low risk/high return markets will see a flood of capital that drives prices down.
Overall, insurance profitability must match the market’s profitability or we will have no insurance. What then?
Don’t Oversimplify … or Overcomplicate … Comp
We face tough decisions with no perfect answers in workers’ comp. For example, when a carrier underwrites workers’ compensation, their liability is unknown. Cases from the 1950’s are still open.
There is no way to predict medical improvements. A prosthesis might have been all that was available when a carrier wrote a policy fifty years ago. Now they are expected to cover a robotic limb that can cost hundreds of thousands of dollars. Is that fair? It’s not a simple issue.
Overall, insurance profitability must match the market’s profitability or we will have no insurance. What then?
We as an industry can also complicate matters by tripping over dollars to save pennies. This is devastating to workers and, over time, the payers’ bottom line.
The best payers I have seen jump to take care of injured employees. When you do everything possible to help workers get to pre-injury status or maximum improvement, it’s pretty easy to identify the frauds.
Really, there are two choices in claims management. Distrust everyone until they prove they are legitimate, or assume they are legitimate until they prove otherwise — the latter produces better results.
Despite ProPublica’s implications to the contrary, the vast majority of people I know in workers’ comp are well-intentioned, want the best for injured workers, and want a system that supports them. But we face challenges, and how we address these difficult issues will have far-reaching, even global, ripple effects for employees, employment rates, employers and carriers alike.
We have to approach the tough questions — and answers — we face with the understanding that things are never simply black or white, and reaching solutions often lies in the shades of gray.
Kind of like a good marriage.
Workers’ Comp – Feeding the Heroin Dragon
CNN recently ran an article on a grandmother addicted to heroin. In what almost seems cliché these days, her heroin use started as a prescription drug addiction. This could have just as easily been the result of treatment for a workers’ comp injury.
Our nation spends billions fighting the “war on drugs,” militarizing the police, incarcerating people, and devastating lives, while the highly-regulated medical and pharmacy industry are free to dispense essentially the same substances. Consider that most inmates are jailed for non-violent crimes, and most of those are drug-related. The cost to society in money and disruption is astounding.
Prescription drugs account for more overdose deaths than all street drugs combined. Moreover, our healthcare system has basically become a primary feeder to the illegal drug market.
This is a health issue and a moral issue – not a criminal issue – and we need to fix our health system.
When you start doing some back-of-the-napkin math, you realize that the workers’ compensation system’s potential contribution to the heroin problem in America is staggering.
As workers’ compensation professionals, it’s critical we understand our impact on society. Every time we help prevent an addiction, we impact not just one person’s life, not just an insurance carrier or an employer and their employees, but the children and families of these potential addicts. We also impact the public’s price tag in emergency room visits, government treatment programs, drug-related accidents, etc.
Consider this. A WCRI study found that about 55–85 percent of injured workers were prescribed opioids. Of the roughly 3.6 million new injuries that occur each year, this equates to 1,980,000 to 3,060,000 potential addicts the workers’ comp industry is creating annually.
Now factor in that 75 percent of heroin users indicate that their “first opiate of abuse” was through prescription drugs, according to a recent JAMA study. Taking it one step past the patients themselves, you uncover that the family medicine cabinet has become a breeding ground for the heroin addictions of our youth.
When you start doing some back-of-the-napkin math, you realize that the workers’ compensation system’s potential contribution to the heroin problem in America is staggering. Bottom line, we need to take ownership – our industry is creating addicts who are creating a massive recurring demand for heroin and other illegal substances.
While I applaud the Drug Enforcement Administration’s recent reclassification of hydrocodone as a Schedule II medication with heightened restrictions, one has to wonder – will this simply drive users to illicit drugs, like heroin, faster? Some addiction experts think so.
Anyone in our industry that’s been involved with addiction weaning programs knows how hard it is to get patients off “the dragon.” The reality is that providers continue to prescribe opioids way too often and for way too long, rather than as a short-term or last resort option. This is a battle that needs to be waged from the front lines.
The key is to make sure we have the systems and processes in place to prevent addiction in the first place. We in the workers’ compensation industry are uniquely positioned to fight this battle and change people’s lives for the better.
Read more of Jason Beans’ Risk Insider articles
Hospitals Are Not Getting Safer
Nearly 15 years ago, the Institute of Medicine report “To Err is Human” drew attention to the disturbing number of preventable deaths in hospitals.
According to recent testimony by a panel of patient safety leaders to the Senate Subcommittee on Primary Health and Aging, there has been little progress in addressing this issue in the 15 years since, despite all of the increased regulations. In fact, preventable medical errors in hospitals are now the third leading cause of death in the US, only after heart disease and cancer.
“The problem of patients dying or being harmed because of preventable medical errors in U.S. hospitals remains [a] grave consequence that is not getting enough attention,” according to the Senate subcommittee chairman.
There are five main types of preventable medical errors. The question is, who in our industry is watching out for these errors, and where does responsibility for oversight end and begin?
- Errors of omission: Provider fails to perform an obvious, necessary action, like prescribing a certain medication.
- Errors of commission: A mistaken action harms a patient, like surgery on the wrong body part.
- Errors of communication: Miscommunication or failed communication between providers, or between a provider(s) and patient, such as a failure to warn a patient about the risks of certain activities.
- Errors of context: Provider does not account for the unique constraints in a patient’s life, like not having reasonable access to follow-up care.
- Diagnostic errors: Harm to the patient resulting from delayed, wrong, ineffective, or no treatment.
A recent study by Patient Safety America estimated that the 98,000 preventable error deaths cited in the Institute of Medicine’s original 2000 report may have been severely understated, and the real number could be closer to 440,000 deaths annually.
That is roughly equivalent to 148 September 11th attacks every year.
In fact, preventable medical errors in hospitals are now the third leading cause of death in the US, only after heart disease and cancer.
This is only preventable deaths. It doesn’t include infections and sickness that did not result in death.
Even without human error, the potential for hospital-acquired infections is immense. There are thousands of patients coughing and touching furnishings and other items, which are then touched by relatives and staff. It is almost impossible to prevent the spread of disease and infection in this environment.
And this doesn’t even factor in issues of inappropriate treatment, over-treatment, over-medication, or unnecessary surgeries, which can result in a poor prognosis for individuals who may already be in fragile health.
I am not a big fan of politicizing an issue, but this transcends politics. Hospitals attract the sickest of the sick people. That is what they are there for, but we as an industry need to focus on reducing the potential for preventable deaths in hospitals.
We need to focus on directing people to healthier options — whether non-surgical alternatives, the best providers, or non-hospital based surgeries and treatment.
We may never know when our actions prevent a health complication, or even death, but any time we can lower a patient’s risk, everyone is better off.