California: Comp costs for self-insured employers jumped significantly last year
The California Workers' Compensation Institute recently issued its analysis of new data from the California Office of Self Insurance Plans, which offered the first look at private, self-insured claims experience for calendar year 2008. The data tracked, among other things, the number of medical-only and indemnity claims, as well as total payments and total incurred losses on those claims through the end of last year.
Compared to initial summaries from earlier years, the CWCI said the 2008 report showed that California's private self-insured work force increased by 4.3 percent to 2.39 million workers in 2008. That total, however, was 3.3 percent less than in 2003, the last year prior to enactment of comprehensive workers' comp reform legislation. Overall, researchers found that private self-insured employers reported 91,715 claims last year -- only 36 more than in the 2007 initial report, but the first increase of any kind in 17 years.
At the end of 2008, aggregate payments on the private self-insured claims totaled $191.4 million ($73.7 million indemnity and $117.7 million medical) -- up 12.1 percent from $170.8 million recorded in the initial report for 2007 claims. Researchers said that works out to an average payment of $2,087 for the 2008 claims at the end of the calendar year. This is a 12 percent increase from the comparable figure for 2007 and 20.6 percent more than the post-reform low of $1,730 in 2005. The study noted that a closer look revealed that private self-insureds averaged $804 in indemnity payments on their 2008 claims -- 5.7 percent more than in 2007 and 10 percent more than the recent low of $731 in 2006. Average medical payments on the 2008 claims rose to $1,283 -- 16.4 percent more than in 2007 and 29.2 percent more than the 2005 post-reform low of $993.
Year-end data on incurred losses (paid amounts plus reserves for future payments) also showed the growth in private self-insured claim costs. At the end of last year, aggregate incurred losses on 2008 claims totaled $583 million -- 6 percent more than the post-reform low of $550 million noted in the initial report for 2007 cases. Researchers said there was little change in the number of private self-insured claims from 2007, so the increase was mostly due to higher incurred costs per claim. These costs jumped to $6,360 in 2008 -- the highest level since reforms were enacted, and 13.8 percent more than the post-reform low of $5,588. According to the study, medical costs were again the biggest cost driver. Average incurred medical jumped to $4,149 in 2008 -- the highest level since 2003 and 20 percent more than the post-reform low of $3,450 in 2005.
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October 1, 2009
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