At the 2017 NCCI Annual Issues Symposium a panel debated issues impacting the workers’ compensation system and how well our industry is serving injured workers. The panel was:
- Susan Donegan – Chief Regulatory Officer, NCCI (moderator)
- Robert Hartwig – Associate Professor of Finance, University of South Carolina
- Peter Kochenburger – Associate Clinical Professor of Law, University of Connecticut
Question: Is the workers’ compensation system still relevant? Does it still meet it’s goals.
No question that workers’ compensation has evolved and adapted over time but the grand bargain that was the foundation of it is still intact.
Workers’ compensation has adapted and still has a bright future. However, it also needs to make sure it is always thinking about both sides of the grand bargain. Too often, reforms focus on lowering benefits for injured workers and that cannot continue if the grand bargain will stay intact.
Question: How will healthcare reform impact workers’ compensation?
Back in the 1990s there was talk that HillaryCare would eliminate the medical component of workers’ compensation. Then there was talk of Obamacare changing this. That has not happened.
We have no idea what healthcare reform is going to look like under this administration. This keeps changing.
Politically, Universal Healthcare is not going to happen during this administration nor is it likely to happen any time soon in other administrations. There is more of a political push to give rights back to the states.
People being dissatisfied with ACA does NOT mean people do not want healthcare. This will increase the burden on states to address this issue. How will states address the residual market for healthcare?
Question: Is workers’ compensation broken?
Workers’ compensation is not perfect, but it is far superior than other social welfare programs. It is better than SSDI in it’s operation. Workers’ compensation is the most efficient social benefit delivery model as it focuses on returning people to work. SSDI does not do this. Workers’ compensation focuses on recovery, where Medicare/Medicaid simply pay for treatment.
Workers’ compensation is the only no-fault system that actually works. No fault auto has all types of problems.
Last year the Department of Labor pointed out many faults in state workers’ compensation programs. This has not changed. Last week a court in Alabama struck down their workers’ compensation statutes as unconstitutional because of inadequacy of benefits. There is no question state workers’ compensation programs have significant shortfalls.
The fact that only 6 states have decreased permanent disability rates in the last 10 years shows that comments about the “race to the bottom” are overblown.
Not having adequate benefits only results in cost shifting, it does not eliminate the costs.
The fact that frequency keeps declining is another example showing how workers’ compensation is not broken. There is a focus on loss prevention and employee safety.
Question: How would you improve workers’ compensation?
Benefits need to be indexed to keep up with cost of living increases. Maximum benefit rates should not depend on legislative action for adjustment.
Workers’ compensation has not caught up to the modern era where a significant portion of the workforce is self-employed and that percentage is growing. Most states exclude sole proprietors from having workers’ compensation coverage so we have a growing percentage of the workforce without coverage.
The injured workers’ really do not have a legislative voice any more with the decline in unions. We need to find a way to engage the voice of the injured worker to maintain balance in the system. Plaintiff attorneys are NOT the voice of the injured worker.
In states with lower unemployment benefits tend to have people find jobs faster after a layoff. People with higher co-payments and deductibles tend to utilize medical care less. We need to make sure that workers’ compensation incentives are properly aligned to encourage both the employer and injured worker to focus on recovery.
Question: With changes in healthcare leading to higher deductibles will we see more cost shifting to workers’ compensation?
Answer: No question there will be incentives to cost shift. However this could vary based on how states implement healthcare in their state.
Question: The aging workforce in the insurance industry is a concern because of loss of knowledge and talent. What insurance industry jobs are your students interested in?
Students are looking for careers with decent pay and a good potential growth trajectory.
Some students are intrigued by the global nature of insurance and risk management and the international opportunities associated with that.
Employers in the insurance industry need to refine their pitch to students so that they understand the wide variety of opportunities available to a variety of majors.
There is LOTS of competition for the good students including those majoring in risk management. Risk management students are taking jobs in banking, finance, etc. Not just in insurance.