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BY PETER ROUSMANIERE, an expert on the workers' compensation industry

Click here for our 50-state comparison of the performance of state workers' compensation systems. Most state workers' comp systems are not far off from one another in the end result, as measured by the personal and financial burden on workers and employers caused by work injuries. If the median state's burden is given a summary grade of B, then most states when graded according to a curve will score either B, or slightly higher or lower.

But a sizable minority of states have grades which depart markedly from the median. In addition, every state has the potential of lightening or worsening its burden. One state, Massachusetts, is granted a summary grade of A+. Montana is the only state with a score of C-.

A low rate of lost-time injury, short duration of disability, and low workers' comp premiums are signs of a good workers' comp system. To these is added a fourth desirable attribute: the generosity with which a worker is compensated while on disability. Generous benefits don't preclude low insurance costs, as demonstrated by Massachusetts.

Risk & Insurance® assigned a grade for each of these four attributes, and calculated a summary grade. Because insurance costs and benefit provisions are very important, they are given extra weight in calculating summary grades.

Some attributes of note are missing from this grading calculation. For example, there is no satisfactory way to compare states by medical costs. Massachusetts' superior grade is due, in some measure, to its relatively low fee schedule.

Another important but missing variable is the relative success of injured workers to return to gainful employment after their claims have been resolved.

The lost-time injury and median duration of lost-time injury results were derived by Occupational Safety and Health Administration data, and compiled by the Bureau of Labor Statistics. The data was analyzed by Work Loss Data Institute.

Benefits, mainly wage replacement rates, were analyzed by Actuarial and Technical Solutions, a Ronkonkoma, N.Y.-based actuarial firm. Insurance costs grades are averages derived from studies by the state of Oregon and Actuarial and Technical Solutions.

November 1, 2009

Copyright 2009© LRP Publications