Cost Shifting in Workers’ Comp a Concern

Workers Compensation began over 100 years ago with a simple premise: If workers gave up their right to a jury trial then employers would insure injuries regardless of fault. This is what is known as the “Compensation Bargain.”

100 years later, this Bargain has been broken. Seasoned attorneys know that politicians permit employers to use questionable tactics to limit exposure. The “neutral” decision maker in Ohio is the Industrial Commission. Sadly, this political agency hires decision makers who permit employers to purchase negative opinions from medical examiners. By paying a grand or two to purchase an “IME” opinion, an employer can save tens of thousands or more in medical expenses.

Sadly, these political operators fail to recognize the ultimate cost of this betrayal. When they deny medically necessary treatment the injured worker is left with no choice but to pursue other sources for care. These include health insurance, Medicare or Medicaid. Ironically, the Affordable Care Act limits the ability of health insurers to refuse payment for worker’s comp caused pre-existing conditions. This “cost-shifting” means that we all pay (as increased group health premiums and taxes) for medical expenses that should have been paid through the employer’s workers’ comp coverage.

OSHA issued a report in 2015 entitled “Adding Inequality to Injury: The Costs of Failing to Protect Workers on the Job.” This report found that workers’ compensation payments cover only a small fraction (about 21%) of lost wages and medical costs of work injuries and illnesses; workers, their families and their private health insurance pay for nearly 63% of these costs, with taxpayers shouldering the remaining 16%.

The Center for Economic Policy Research made a similar finding. The number of workers receiving Social Security Disability Insurance (SSDI) in the United States has gone from 25 per thousand in 1990 to 59 per thousand in 2014, bringing the SSDI trust fund close to depletion. Their report, entitled “Rising Disability Payments: Are Cuts to Workers Compensation Part of the Story?” found that more than one fifth of the rise in the percentage of workers receiving SSDI awards can be explained by cuts to workers’ compensation programs.

Work related injuries should be paid for through employer sponsored workers’ compensation insurance. This enables an employer to factor premiums into the price of goods and services. Sadly, the routine denial of coverage shifts these costs to health insurance and taxpayers at a cost to us all.