Posts Tagged ‘healthcare reform’

Healthcare Reform and Workers Compensation

Monday, June 14th, 2010

In the the following guest post, Gary Anderberg, Phd, the Practice Leader For Outcomes and Analytics at Broadspire offers his thoughts on the potential impact of healthcare reform on workers comp in the coming years.
At the moment, health care reform appears to have a number of positive and negative potential impacts on workers compensation over the next few years. The net results cannot be estimated this early in the game. We can, however, identify a few elements and their possible consequences:

  • Insuring the now uninsured: Positive — employees who have health insurance tend to file fewer workers compensation claims. They have less incentive to cost shift. Another result will be that chronic medical conditions will be, over time, better controlled and less likely to increase the severity of work related claims.
  • Availability of care: Negative — with a large number of people having new health coverage, doctors and facilities may be swamped in some areas. The problem will lead to (a) delays in appointments for workers compensation-related medical treatments and (b) less willingness by providers to participate in occupational medical networks and offer discounts off fee schedules.
  • Removing the pre-existing exclusion: Unknown — in 2014 the pre-existing exclusion will disappear in group health. This cuts several ways at once. There will be less incentive for employees to claim long standing “wear and tear” conditions as work related – a positive change. There may also be much greater demand on employers for workplace and job accommodations leading to new exposures and safety issues.
  • Medicare reform: Negative — the passage of HR 3590 was predicated on massive adjustments in Medicare reimbursement levels, which are marginal for medical providers now. This will pressure providers, especially hospitals and some specialists, to cost shift where possible and workers compensation is a soft target in most states. We could see significant increases in medical costs per claim as the Medicare changes begin to bite in a couple of years. (The recession-driven cutbacks in state Medicaid reimbursements will only amplify this effect in the near term.)
  • Libby care: Unknown — the “Libby care” clause of HR 3590 (sec 1881A) is not intended to lead to the federalization of industrial diseases absent some very specific catastrophic circumstances comparable to those of the WR Grace disaster in Libby, MT. But we all know that ERISA was intended to address a very narrow set of union pension abuses when it was passed, but the Department of Labor, abetted by the Florida Administrators decision of the Supreme Court in 1977, expanded it greatly. The Libby care provision will bear watching.

Workers compensation was not at the table when Congress hammered out its health care reform solutions. Other than a few glancing mentions, such as the Libby care clause noted above, occupational medicine was overlooked and, by default, left to the states. This is probably a good thing, on balance. Yet, as health care reform changes begin to penetrate the enormous US health care enterprise, they will impact workers compensation in many overt and subtle ways over the next several years. Carriers, third party administrators, and managed care vendors will need to be alert to capture possible advantages and avoid potential nasty surprises.

Health Reform Roundup

Wednesday, March 24th, 2010

We’ve compiled a variety of resources on the health care reform developments this week:
First stop, see Joe Paduda’s excellent analysis of Health Reform’s implications for workers’ comp, part 1, part 2 and part 3. Joe’s expertise in the inner workings of the medical side of workers comp make this a must-read.
In the National Underwriter, Arthur D. Postal gets insurer reactions to bill passage: Insurers Decry Health Bill for Lack of Cost Restrictions
Insurance Journal looks at the various suits filed by 12 state Attorneys General which challenge the constitutionality of reform: How States Are Responding to Healthcare Reform Law and Republican Attorneys General Pursue Sovereignty Claim Against Health Bill
Law Professor Mark D. Hall, J.D. offers his thoughts on the constitutionality of mandating health insurance at The Health Care Blog.
At the Washington Post, Ezra Klein explains how the exchanges work. Also see How big is the bill, really?
Jaan Sidorov at Disease Care Management Blog Has a multi-part post focusing on What the Health Reform Bill Says About Prevention, part 2
Tinker Ready does a local roundup over at Boston Health News: Health reform: How’s it playing in Mass?
At Healthcare Economist, Jason Shafrin samples the international reaction.
At Gooznews, Merrill Goozner talks about the the reinvention of social progress and notes the Physician Payments Sunshine Act, which requires more transparency about payments that drug and device companies make to doctors.
For employers, Anne Freedman of Human Resource Executive suggests that uncertainty reigns. While most changes for employers won’t be in effect until 2014 to 2018, she outlines some changes that go into effect this year.
Consumer Corner
The New York Times Prescription blog answers reader questions on the Health Care overhaul
At Kaiser Health News, Phil Galewitz offers a Consumers Guide to Health Reform. Kate Steadman and Julie Appleby talk about the immediate effects of the Health Reform Bill.
The Washington Post offers a cost calculator to help consumers learn the impact on their situation: What does the health care bill mean to me?
Specifics about the legislation – from House Speaker Nancy Pelosi’s page
U.S.A. Today looks at how health care overhaul affects taxpayers.

Fresh Health Wonk Review; also – the power of pink, the bunkhouse rule, and more

Thursday, February 18th, 2010

Clear the decks – it’s Health Wonk Review day and Brady Augustine has posted Health Wonk Review: “The Relationship Rescue” edition over at medicaidfirstaid. It’s a Dr. Phil-themed issue replete with art, videos, and commentary on some of the best of the health policy blogosphere. Check it out.
The Power of Pink – Sometimes those of us who work in workers comp are so focused on the process, the insurance issues, and following the dollars that we lose sight of the fact that we are actually in the people business. Our friends at the Work Comp Complex Care blog have a refreshing post that demonstrates the difference one person can make: A little pink goes a long way.
The Bunkhouse Rule – Can an injury that occurs at home be compensable? Yes, if your home is your employer’s property, according to the South Carolina Supreme Court. Read more details on the ruling in Roberto Ceniceros’ article in Business Insurance, Migrant worker’s injury in company housing ruled compensable.
Misclassification – The L.A. Times features an article by Dave Gram on a topic that is near and dear to our heart (search for “FedEx”): how companies are slashing payrolls by calling workers independent contractors. The Internal Revenue Service and 37 states are cracking down on this practice, which resulted in an estimated underpayment of $2.72 billion in lost Social Security taxes, unemployment insurance taxes, and income taxes just in the year 2006, according to the Government Accountability Office. Many experts think that the economic downturn has exacerbated the problem of employee misclassification.
Good PT and bad PT – At Managed Care Matters, Joe Paduda asks How many dollars are wasted on physical therapy?. He suggests that while he’s a believer in the benefits of physical therapy, but advocates for clinical guidelines to separate the wheat from the chaff.
More on the Toyota mess – At Claims Magazine, Mary Anne Median writes that . Her article focuses on issues associated with claim-handling, subrogation, and litigation. It’s a fascinating read – here’s just a sampling:
“To break it down; damages, subrogation, and settlements will all be affected, not only for current, but also past and future accidents involving Toyotas.
This also leaves us with questions surrounding the diminished value of the vehicles. In determining that a vehicle is a total loss, what is the value? Can we apply this diminishing value factor when we are establishing what the insured’s or claimant’s vehicle is worth? How does this affect the resale and salvage value?”

Cavalcade of Risk #94 and general workers comp news notes

Thursday, December 17th, 2009

Cavalcade of Risk #94 is posted at My Wealth Builder. Among the many good posts, our friend Hank Stern offers some good news for the holiday season.
Our fellow blogger Joe Paduda was recently speaking at the Casualty Actuarial Society’s annual meeting on the topic of health reform and its impact on workers comp, and his remarks were covered by Insurance Journal. Paduda noted that, whether or not it gets enacted, health care reform is already having a major impact on workers’ comp. On the same topic, Roberto Ceniceros has a post about how healthcare reform is stalling some return-to-work advancements.
Jon Gelman on Genetics and Workers’ Compensation Claims. Also see our past posts on the topic: Brave new World and Genetic Testing And Workers Comp
Risk & Insurance has posted some interesting case law: In Michigan, a worker establishes asthma as compensable disability and in Colorado, a claim for a bad faith denial of benefits is considered to be separate and distinct from the underlying workers’ compensation entitlement claim and therefore is not precluded. However, an insurer can preclude certain issues in a subsequent proceeding.
We recently touted Mark Wall’s WC forum on LinkedIn as an excellent resource – but one feature that we neglected to mention is an active job board, where members can post a job or find a job. That’s a natural use for LinkedIn, particularly in today’s tough times – register for the Forum.
Winter safety tips from BLR Daily Advisor: Cold Weather Hazards: Are Your Workers at Risk? and Brrr-ing Down the Risk of Cold-Related Injuries
Finally, this item made us wonder if the North Pole’s workers’ comp coverage includes stress?

Health Wonk Review: the sausage-making-is-a-messy-business pre-holiday edition

Thursday, December 10th, 2009

We’re honored to be hosting the holiday edition of Health Wonk Review. As we approach the holiday season waiting for a verdict on health care reform, we can take a lesson from Santa Claus, whose ordeal on this publicity shoot reminds us that good things don’t always come easily:

Our wonderful wonkers don’t let the holiday season slow them down. This edition offers a wide array of excellent posts on health care reform, health care quality, and health care 2.0 developments.
Sausage Making
Joe Paduda of Managed Care Matters kicks things off with a simple but powerful observation: If private health care insurance worked, we wouldn’t need reform.
Over at the Health Affairs Blog, Tim Jost, the Robert L. Willett Family Professorship of Law at the Washington and Lee University School of Law, composed a series of four detailed posts analyzing the Senate health reform bill. He avoids the politics, but examines all the bill’s nooks and crannies, including an overview of reforms and new programs, as well as issues ranging from mandates and constitutionality to abortion and Medicare.
Richard Elmore of HealthcareTechnologyNews summarizes a recent health care reform analysis by MIT Professor Jonathan Gruber which counters health insurance industry claims that premiums will increase and other fear, uncertainty & doubt (FUD) talking points put forth about health care reform.
Roy Poses of Health Care Renewal sees parallels between the current health care dysfunction and the global financial meltdown, but most of these parallels have gone unnoticed. Left unaddressed, he sees the potential for a burst bubble with lives and personal fortunes on the line. Don’t say you weren’t warned.
To put health care in some global perspective, here at Workers Comp Insider, Tom Lynch takes a world tour of the state of care in various countries in his post, the geography of health: US vs. them.
At Colorado Health Insurance Insider, Louise posts about the Chamber of Commerce’s campaign to discredit proposed health care reform, but in examining their arguments further, found the Chamber offered little in the way of positive ideas or creative solutions to lower costs and expand health coverage to all Americans.
At the Robert Wood Johnson Foundation’s Health Reform Galaxy Blog, Steven Findlay tells us why he thinks health reform would be a holiday gift for every consumer and Minna Jung looks at the messy doings in Congress now, reminding us that even though that first step is a doozy, it’s still only the first step.
At a new blog called Healthy Debate Georgia, which focuses on on health care reform at both the state and national level, Mike King explains why Georgia may just say no and Timothy Sweeney posts about why national Medicaid expansion may be a bargain for Georgia.
Over at InsureBlog, Hank Stern says that Joe W was right, noting that the latest version of Obama’s health care plan will include coverage for illegals after all and he discusses why this is important.
In another Joe-related post on the other side of the political aisle, Madeleine Kane has composed a No-Man Joe limerick at her Mad Kane’s blog.
Quality & Safety
Jaan Sidorov of Disease Management Care Blog detours from legislative sausage-making to summarizing an interesting Canadian study called “EFFECT,” which demonstrated that public reporting of hospitals’ quality metrics can save lives. In light of this, he wonders if Medicare’s much ballyhooed “Hospital Compare” web site is – in retrospect – evidence-based.
At New Health Dialogue, Tom Emswiler presents a case history of a group of Premier Hospitals that made significant progress in saving lives and saving money after participating in a year-long Quality, Efficiency, Safety, and Transparency (QUEST) initiative. He asks if seven percent can save lives and money, why can’t the other 93% follow suit?
To commemorate the 10-year anniversary of the Institute Of Medicine’s seminal report on patient safety, To Err Is Human, see Terri Schmitt’s post, Nurses: The Crucial Link for Patient Safety from the Interdisciplinary Nursing Quality Research Initiative (INQRI) Blog. See the entire series of posts on the To Err is Human anniversary
Technology & Innovation
At The Health Care Blog, Brian Klepper and David Kibbe team up to offer an excellent review of the surprises and changes in the Electronic Health Record technology market during 2009.
HIV testing at your next dental visit? David Williams features a podcast and transcript of an interview with Dr. Catrise Austin of VIP Smiles at Health Business Blog.
David Kibbe talks about the critical importance of establishing and adopting a a core set of relevant and portable personal health records at The Health Care Blog.
At EHR Bloggers, Glenn Laffel pens an open letter to David Blumenthal asking if he is going fast enough. He lauds the work of the National Coordinator for Health Information Technology, while gently chiding him that he needs to pick up the pace on EHR deployment to providers.
Peggy Salvatore of Healthcare Talent Transformation posts about another letter to Blumenthal, this one penned by Medical Group Management Association President William F. Jessee, urging Blumenthal to get real, real fast.
Meanwhile, at Health IT Buzz, David Blumenthal weighs in to offer a progress report on technology initiatives.

Health Wonk Review and other news briefs

Thursday, September 3rd, 2009

Jared Rhoads has posted a fresh Health Wonk Review at The Lucidicus Project. There are many interesting posts running the gamut: healthcare reform, home birth, hospice, hypertension and a variety of other topics that the health bloggers found noteworthy in the last two weeks.
Other news notes
Bad Manager of the Month Club – Scott Polston, an employee of Foster Farms Dairy in California, suddenly began getting a series bizarre phone calls and dozens of strangers coming to his home with unusual requests. The callers and visitors were responding to bogus ads that had been placed on craigslist, ads that were subsequently traced back to his supervisor, Michael Odell Simpson. At the time of this report, Simpson was no longer employed by the Dairy and was facing criminal complaints. Polston filed a worker’s compensation claim over stress.
Experts Detail Perils To Comp Insurers – “Unconventional threats to the workers’ compensation system, ranging from Medicare system red tape to recession problems to employers liability difficulties,” – these are all perils for employers and threats to the doctrine of exclusive remedy discussed by panelists at the recent at the Workers Compensation Educational Conference presented by the Florida Workers’ Compensation Institute in partnership with The National Underwriter Company.
Survey: Consumers Would Support TWD Ban – In light of our recent posts on texting while driving this week, we were interested to learn that a recent Harris Interactive survey revealed that 80% of Americans favor a ban on texting while driving, while two thirds favor a ban on cell phone calls, and more than half say they would support a ban on cell phone use altogether.
Labor DayAs the Industrial Revolution took hold of the nation, the average American in the late 1800s worked 12-hour days, seven days a week in order to make a basic living. Children were also working, as they provided cheap labor to employers and laws against child labor were not strongly enforced. With the long hours and terrible working conditions, American unions became more prominent and voiced their demands for a better way of life. On Tuesday September 5, 1882, 10,000 workers marched from city hall to Union Square in New York City, holding the first-ever Labor Day parade. – More at Labor Day History.
Workplace safety – We started the week with a texting-while-driving shock video that has been making the rounds on the Web. Today, we found a more uplifting video highlighting the importance of workplace safety from the Washington Department State Department of Labor & Industries:

Health Wonk Review’s Recess Edition and news from the blogosphere

Thursday, August 6th, 2009

Congress may be on vacation but the dedicated health policy bloggers are certainly on the case so you should face no shortage of wonkery. Jaan Sidorov has posted the August Recess Edition of Health Wonk Review at Disease Management Care Blog – well worth your perusal.
And as long as we’re on the topic of health care, kudos to the folks at Kaiser Family Foundation who have put together an interactive tool that allows for side-by-side comparisons of two or more healthcare reform proposals across a number of key characteristics and plan components. It will be regularly updated to reflect changes in the proposals and to incorporate major new proposals as they are announced.
Other news from the blogosphere and beyond
OSHA – President Obama has nominated David Michaels as Assistant Secretary for the Occupational Safety and Health Administration, Department of Labor. David Michaels, PhD, MPH, is an epidemiologist and is currently Research Professor at the Department of Environmental and Occupational Health at the George Washington University School of Public Health and Health Services. In addition to his biography in the release, read more about him in his biography at George Washington University. The folks at OSHA Underground have more and this nominee is also welcome news to The Pump Handle gang as evidenced by the comments in the announcement post.
In more OSHA news, Heidi at The Facility Blog posts about OSHA’s new national emphasis program (NEP) on recordkeeping. The NEP was prompted after congressional hearings last year which raised the issue of under-reporting. The program will institute a policy that prompts recordkeeping inspections at employers’ establishments with low incidence rates in historically high rate industries and will also incorporate inspections of a sample of construction firms. See Heidi’s post for more details on the program.
Pharma – Freshly back from his vacation in the Tanzanian bush, Joe Paduda offers his take on the workers comp implications of the Administration’s drug deal.
Lean claims handling – Roberto Ceniceros has made lots of good posts over at Comp Time this week. Read about how the manufacturing trend to streamlined processing is surfacing in insurance as “lean” claims handling.
Firefighters – August 17 to 21 is National Firefighter Health Week. Despite the dangers that they face on the job every day, the real threat to their health is heart disease – nearly half of all firefighter deaths are caused by heart attacks. The National Volunteer Fire Council sponsors a site with resources and programs designed to encourage first responders to learn their risk factors, commit to making healthy lifestyle changes, and keep the momentum going all year.
NY construction training scam – a new law in New York City requires 10 hours of training for all workers hired at high-rise buildings begun after July 1. The New York Daily news reports that fake 30-hour construction training cards are surfacing. Apparently, three companies in New York and one in Nevada have been busted for issuing these bogus cards and a few dozen other companies are under investigation.
Lighter sideConsumer Insurance Blog posts an amusing video of clever ads from Bangkok Insurance which do a good job illustrating the concept of probability.

New Health Wonk Review; other news notes

Thursday, July 9th, 2009

If you find the task of following breaking news developments on the health care reform front a trifle daunting, we have a solution: let the health policy blogosphere’s best braniacs dish up and dissect the news for you in bite size portions in the bi-weekly compendium of the best of heath care policy posts. Check out the fresh edition of Health Wonk Review: Crunch Time For Health Reform hosted by Ken Terry at BNET Healthcare Blog.
And in other news:
MHSAThe Pump Handle tells us that Joe Main has been nominated for Assistant Secretary of Labor for Mine Safety and Health and posts some info on his background.
Taking the industry economic pulse – With another quarter in the year under our belt, several industry watchers have taken the pulse of the industry’s health. In Business Insurance, Roberto Ceniceros reports that a tough climate is shaping up for workers comp. Among the many problems he notes, he reports that sources have told him that “…rising bankruptcies have insurers concerned that defunct businesses may not pay all their premiums and leave their insurer stuck with claims that should have been paid by the company.” Risk and Insurance features an article on a report from Fitch Ratings which discusses the challenges that the workers compensation market is facing in 2009. According to the report, underwriting performance is expected to worsen in 2009 as rate reductions persist. And we’ve recently noted grim news in the industry at large: first quarter of 2009 was the worst on record for property casualty insurers since quarterly results were first compiled in 1986.
Training – Eric at The Safety Blog reports that OSHA is targeting fraudulent trainers in construction and general industries and is working to strengthen their trainer authorization program. They will be conducting more surprise visits to independent training centers to check for compliance with program requirements. Trainers are authorized to teach and to do outreach training only after completion of a one-week course in an OSHA Training Institute Education Center. Learn more about training certifcation: OSHA Outreach Training Program.
H1N1Lloyd’s warns that pandemics continue to pose a threat to companies – Many feel the flu publicity and warnings earlier in the year were overstated because up until now, the manifestations of the flu have been very mild. According to WHO, there have been 429 fatalities out of 95,412 cases. Yet Lloyd’s points out that it has been having a devastating economic impact on some businesses and notes that, “Up to now flu cases have been relatively mild; however, Lloyd’s warned that “health officials worry that swine flu could mutate during the southern hemisphere winter and return in a more virulent form in the northern hemisphere this winter.” Keep up to date on any developments at Flu.gov.
Waste treatment fatalities – More on last week’s three fatalities at Regal Recycling: Old Story in Waste Removal: A Worker Collapses, Then Rescuers Do: “Dr. Hendrickson and two co-researchers found that in 42 incidences of workers’ dying of hydrogen sulfide toxicity between 1993 and 1997, more than one-fifth involved multiple deaths, including co-workers killed while trying to rescue a colleague. In all, 52 workers died over that period. The deaths have mounted despite strict standards governing work in confined spaces set by the federal Occupational Safety and Health Administration.”
And in another waste treatment plant, a worker recently died of burns suffered in an explosion that occurred while he was cleaning a tanker at CES Environmental Services in Houston. The death was the third at a regional CES operation since December, unleashing criticism from area residents, activists and city officials, who are looking to shut down the plant.
Useful Twitter feeds
@govsites – A searchable directory of any nation’s Government sites on Twitter
@NIOSH – The National Institute for Occupational Safety and Health
@usdol – Jobs, employment, workforce, safety, labor, government 2.0 issues & regulations news and information from the US Department of Labor
@Disabilitygov – Official U.S. Government Web site for People with Disabilities
@CCOHS – Canadian Centre for Occupational Health and Safety (CCOHS)
@FluGov – One-stop access to U.S. Government H1N1, avian and pandemic flu information
@VHAVeterans – Veterans Health Administration in the U.S. Dept. of Veterans Affairs
@usfire – Official Twitter account of the U.S. Fire Administration – Working for a Fire-Safe America

Atul Gawande’s The Cost Conundrum – Why haven’t you read it yet?

Monday, July 6th, 2009

Over the last twenty years, medical costs have gradually, but steadily, replaced indemnity wage replacement as the engine driving the workers’ compensation train. This is the same period during which our nation’s health care costs have grown from average among OECD countries (Organization for Economic Cooperation and Economic Development) to double the average (PDF). In other words, workers’ compensation medical cost increases reflect similar increases within the general public. The only surprising thing here is that during the last decade or so, the steady increase in workers’ compensation medical costs has happened at twice the rate of those eye-popping group health increases.
The National Council on Compensation Insurance (NCCI) has convincingly demonstrated that the rise in workers’ compensation medical costs is due primarily to over-utilization of physical medicine services, especially those for chronic, soft tissue claims. (See here (PDF) and here (PDF ). And now, Atul Gawande, writing in the June 1, 2009 issue of The New Yorker, has demonstrated even more convincingly that over-utilization of medical services, including testing, surgery and hospitalization, is the metastasizing cancer in America’s health care system.
Dr. Gawande’s lengthy article, The Cost Conundrum, for which he should win the Pulitzer Prize, is the most trenchant argument yet for why costs in America are so appallingly high, but outcomes merely mediocre. He reduces the problem to its simplest terms. In essence, our American health care house that Jack built has turned the once noble profession of medicine into nothing more than assembly line piecemeal work, and our physicians both in primary care and the specialties, have been economically incentivized to over-prescribe in all areas. And, as Gawande’s article clearly shows, the areas of the country that produce the highest costs with all that over-prescribing also produce the poorest health care results.
Dr. Gawande examines health care in McAllen, Texas, a town within Hidalgo County, the County with the lowest household income in the country, but, after Miami, the second most expensive health care costs. He wanted to know why. He also wanted to know why health care costs in El Paso County, eight hundred miles to the north with similar demographics to Hidalgo’s, were 50% lower.
He wanted to know why the Mayo Clinic, in Rochester, Minnesota, with the best medical technology on the planet, produced some of the highest quality medical care in the nation, but with costs that rank in the lowest fifteen percent of the nation. And why the Mayo was able to replicate that achievement when it opened its hospital medical center in Florida, one of the country’s highest cost states for health care?
His answer? Because in the pockets of excellence he found around the country doctors work together in teams, peer-reviewing each other’s work. In these low-cost, high-quality areas, physician income is neutralized. At the Mayo, for example, the doctors are all on salary. Whether they order ten procedures or none, they get paid the same. This is central to understanding how to fix the problem. As Gawande writes:

“Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coordination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.
This last point is vital. Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care.”

The Cost Conundrum, by Atul Gawande, should be required reading for anyone interested in understanding and participating in American health care reform. And that should be all of us.

Will Health Care Reform Crush Workers Comp?

Tuesday, June 9th, 2009

If health care reform is the proverbial 800 pound gorilla, then the medical portion of workers comp is a 15 pound Maine Coon cat: it might big for a cat, but compared to a giant gorilla, it is barely noticeable. Nonetheless, this cat is blessed with a very strong notion of what it needs. As the nation moves closer to universal health care, the implications for workers comp are both profound and troubling. Comp medical services comprise a mere 2% of total medical expenditures, so policy makers in Washington will be inclined to ignore its special needs. That could create profound problems for the employers, insurers, and state administrators who deal with comp issues.
There are a number of key reasons why reform of health care may undermine the ability of states to deliver a quality workers comp system. (We previously blogged these issues here, here and here.) In order to provide some focus for the pending debates, here is a brief summary of how comp fits into the overall medical universe:
The focus is similar but not identical
The general health care system focuses on the prevention of what can be prevented and the treatment of that which can be treated, up to limits of coveraged defined in specific health plans. The overall goal is to preserve the life and health of individuals and families. This system provides treatment from conception up to the moment of death.
The comp system has a much narrower focus: comp provides treatment only to workers who are in the course and scope of employment. Comp treats work-related injury and illness, with the specific goal of returning injured/ill workers to productive employment.
Eligibility is Radically Different
The general health system provides defined services to individuals and families. Virtually any illness or injury is covered, including many forms of mental illness.
Comp covers only what occurs during work and is proven to be work-related, with an almost phobic disregard for mental impairments.
The cost structures are very different
In general healthcare, the premiums for coverage are paid by individuals and their employers. Depending upon the plan, individuals and their family members assume at least some of the cost of treatment, through premiums, co-pays and deductibles. The trend has been to shift more and more of the costs onto the consumer (which, in turn, becomes an incentive to reduce utilization).
In comp, employees never pay comp premiums and are never charged co-pays or deductibles. Injured workers are covered from the first dollar. Thus, only the employer, self-insured or who purchases mandatory coverage, and the insurer have the incentive to control costs. No such incentive exists for injured workers.
There are Perverse Incentives in the Comp System
Under comp, injured workers are paid not to work (indemnity). They may not like their jobs. They may malinger, seeking treatment more often than medically necessary (no co-pays to discourage them), thus prolonging disability in order to avoid work. The incentives for returning injured/ill employees to work lie primarily with the employer (who pays the premiums or is self insured) and the carrier (who pays the bills, which may exceed the premiums collected).
For employees with minimal job skills and perhaps no job to return to, the incentive for remaining on comp as long as possible is powerful.
Comp is a State-Based Program
The new mandates for health insurance coverage will come from the federal government. Comp, by contrast, is strictly a state by state program. The new federal mandates (eg., employee choice of doctor) may well conflict with long-established systems.
Policy makers are trying to create a new paradigm for medical coverage in the twenty first century: truly, a daunting task. Ultimately, the new direction for health care will be driven by cost and coverage. Whether the providers are public, private or both, health care cost controls and rationing will lurk in the shadows: will there be a cap on total expenditures for any given individual and any given conditions? Will there be limits on end-of-life services? How much of the costs will be shifted to consumers? What incentives will be created to reduce utilization?
In stark contrast, comp is and will remain an early 20th century system, based upon an industrial world that no longer exists. It already provides virtually universal coverage for people who work. The costs belong exclusively to employers and carriers; there is no cost-shifting onto injured workers and there are no incentives for these workers to limit expenditures. The over-arching goals are returning injured workers to productive employment and providing lifetime benefits for the totally disabled.
So it all comes down to this: When and if the 800 pound gorilla that is universal health care actually sits down, will it be beside – or on top of – the comp coon cat? Will the federal mandates take into account the unique and idiosyncratic needs of the comp model, or will the new mandates inadvertently crush the system, state by state by state?
There are often unintended consequences when well-intentioned humans try to solve gargantuan problems. Let’s hope that the comp system does not fall victim to this fundamental law of human endeavor.