The founders of the American workers' comp system envisioned a way to compensate for work disabilities. The system was to be self-sufficient and independent of other safety nets and business regulation. And maybe that self-contained system is how we prefer to still think of workers' comp, but that is not how things are.
The system in fact is quite porous. A lot of nonoccupational disability and health problems come into the system and a lot of work injuries leave it to roost elsewhere. Why do we have a separate system, if it cannot mind its borders?
Consider how personal health conditions invade workers' comp. Many injured workers have nonoccupational conditions that complicate recovery. Coventry Managed Care estimates that 7 percent of injured workers have at least one of five leading comorbidities. These complications are underreported. The Official Disability
Guidelines estimate that the expected median disability duration for a lumbar sprain is 10 days, but combined with lingering depression or anxiety the duration is 153 days.
Work conditions also now invade federal insurance programs set up well after workers' comp was created.
About a third of beneficiaries of the federal Social Security disability insurance system are disabled from a work-related condition, and they are entitled to Medicare. Injured workers who are more than 64 years old are entitled to Medicare. One team of researchers estimated in 2004 that work injuries imposed $30 billion a year in costs on SSDI and Medicare.
Claims payers have been aware of this unintended federal largesse and in the past used the federal program as a free reinsurer. Washington is now charging claims payers to set aside roughly $1 billion dollars a year to pay for future medical care that Medicare expects to absorb.
Then consider what happens when injured workers don't file workers' comp claims, going around the system for their care. A slew of studies suggests that perhaps 40 percent of work accidents that require medical attention never make their way into a claim.
Workers may not think it worth the bother to file, if their health insurer might unwittingly pick up the doctor's tab. But there may be many serious occupational diseases that do not become claims. That may be because state law prohibits or discourages these claims. Or the worker may not be aware of the condition until years after exposure.
For World Trade Center cleanup workers, the medical and disability bill has expanded into a monstrosity. There is a victim's fund and federal grants, the burden being supported by the federal taxpayers' dime. More than $200 million in federal funds have been spent in compensating plaintiffs' attorneys in connection with WTC cleanup claims.
Those who try to trim workers' comp coverage are sometimes making the system less credible and foisting its burdens onto other forms of insurance. In Missouri, cumulative injuries were tossed out of the system by a 2005 law stating there must be objective symptoms of an injury caused by a specific event during a work shift. Employers incurred overnight a new tort liability for injuries that a competent doctor would call work-related. And health plans now pay for these injuries.
What if these flows in and out of the system balance out? Rough justice this may be, yet it certainly is not a model of independence.
PETER ROUSMANIERE is an expert on the workers' compensation industry.
March 1, 2011
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