Will the Affordable Care Act raise or lower workers’ compensation rates?

While doing research for the Affordable Care Act (ACA) I stumbled upon an article about workers’ compensation.  As a Risk Manager my first love is naturally workers’ compensation so I eagerly dived into the Rand Corporation’s study entitled, The Impact of Health Care Reform on Workers’ Compensation Medical Care.  In my experience, conventional wisdom among my peers in Risk Management is that employees with health insurance have lower workers’ compensation claim losses.  I share this preconception which is often reinforced when I see employees that do not have health insurance file workers’ compensation claims that probably did not happen on the job.  One of the many examples that come to mind is a hernia with a highly suspect set of facts.  The worker with the hernia also had a wife and newborn but did not yet have health insurance.  It was certainly within the realm of possibilities that a workers’ compensation claim was a way this employee could get treatment and keep his new job.

The study outlines that the Massachusetts health care reform shares many similarities with the ACA. The author reviewed the implementation of the health care reform law and the number of reported workplace injuries to provide an insight to how the ACA might affect workers’ compensation rates.  The study found a reduction in hospital care by 5-10% in workers’ compensation billing after the Massachusetts‘s health care reform took effect.  While acknowledging limitations due to the available data, the author takes through steps to control for variables such as the Great Recession.   The article was well written and the conclusions based on the available data are quite reasonable. Overall the article was a great read and fascinating study. I agreed with the conclusion that that an increase in health insurance among those employed will reduce workers’ compensation rates.

I remained cognizant of my bias while reading The Rand Corporation’s study and tried to poke some holes in it. The first finding was a notable reduction in workers’ compensation emergency room visits.  I was certain the study would find a drop in emergency room visits however the skeptical streak inherent in risk managers caused me to raise a couple of concerns with the author’s analysis.  Most of the data on the reduction in workers’ compensation billings came from hospital emergency room admissions.   I have noticed that some employers in Oregon have been urging injured employees to go to anywhere but the emergency room due to the cost of emergency room care.  When I review claim costs it seems like an emergency room visit adds on a zero onto the medical bill when compared to urgent care or a doctor’s office.  It is against the law in Oregon to limit an injured worker’s choice of medical providers but employers push the boundaries.  For example, in the Eugene/Springfield area there is a service where an emergency medical technician will come out to the jobsite and see if first aid can be administered.  If first aid is insufficient they will take the injured employee to any doctor within a certain number of miles. I suspect that emergency room prices have risen universally throughout the nation, including Massachusetts, and that many employers try to control this cost by directing care. The second question that arose was the author’s reliance on hospital data as there are many providers that treat workers’ compensation injuries outside of a hospital.  Ideally I would have liked to see other sources of data to corroborate the author’s finding.  Of course some data, like from a workers’ compensation carrier, may not have been accessible. Another option for data is from the Occupational Safety and Health Administration (OSHA). OSHA randomly picks employers to provide OSHA 300 information.  The idea is that all employers in the United States report data using a national standard on the 300 Form so OSHA can track injuries via a Days Away, Restricted or Transferred (DART) rate. Comparing DART rates which controls for the number of hours worked would be a fascinating secondary source of data to confirm or contrast the study’s conclusions.

There is certainly room to question if workers’ compensation rates will begin a downward trend once the ACA goes into effect.  We can only speculate on the effectiveness of the combination of penalties and incentives from the ACA in getting uninsured Americans to buy insurance or if the primary effect of this new law will be an expansion of Medicaid.   The level of adoption may have a pronounced effect on future workers’ compensation rates.

Although it can be argued there were limitations with the study, I have not changed my original preconception.  When I go back and think of my initial example of the injured worker with a hernia, I reach the same conclusion.  It is easy to imagine a worker with health insurance who was not injured on the job having an avenue to obtain treatment and deciding not to file a workers’ compensation claim.

Arin J. Carmack