A cornerstone of Lynch Ryan’s work for more than twenty years, a long-held mantra, has been that employees who work for good employers — employers who care for their workers and show it by the way they treat them — report all work injuries when they happen, get expeditious treatment and return to work faster. Moreover, their injuries cost significantly less than those of employees who work for less caring employers. A major driver for low workers’ compensation costs is the quality of the relationship between employer and employee.
We’ve seen this in our consulting work time and again, but it’s nice to have independent research confirm the mantra.
In the mid-1960s, the Department of Labor’s Employment and Training Administration (at that time called the Office of Manpower, Automation, and Training ) wanted to understand specific issues pertaining to the U.S. labor market, such as retirement, the return of housewives to the labor force, and the school-to-work transition. To do that it began conducting longitudinal studies, studies that look at a random group of like people to see how they develop over time. The Office began four such studies following groups of young men, older men, young women and, no, not “older” women, but rather “mature” women. The studies were originally targeted for five years, but, because they were yielding a mountain of data, they were extended until 1983, allowing other agencies to piggy-back along to glean even more information about how these first baby-boomers and World War II veterans were maturing in post-war America.
Because of the success of these studies, the Bureau of Labor Statistics decided to conduct an even more ambitious project, and in 1979 it launched the “National Longitudinal Survey of Youth 1979,” (NLSY79)
NLSY79 randomly selected and interviewed a cohort of 12,686 young Americans, 14 to 22 years old, all born between January 1,1957 and December 31, 1965, and it has been interviewing them regularly ever since, for nearly three decades now. As of 2004, there were 7661 people still in the survey group. These people have provided profound and relevant data about the aging of the last of the eighty million American baby-boomers.
What does this have to do with workers’ compensation? Actually, quite a lot.
Until I read Joe Paduda’s recent blog post, I was unaware that any researchers had ever mined the NLSY79 data for workers’ compensation insights. Thanks to Joe I have been enlightened. Thank you, Joseph.
In 2005, Darius Lakdawalla, Robert Reville and Seth Seabury of the Rand Institute for Civil Justice published “How Does Health Insurance Affect Workers’ Compensation Filing” (this is a Working Paper, meaning it has not been formally peer-reviewed). Using NLSY79 data, they confirmed Biddle and Roberts 2003 Michigan study (purchase required), which found that only about 55% of workers sustaining lost time injuries ever file claims for benefits, as well as an Oregon state-sponsored study of the 2002 Oregon Population Survey suggesting that 54% of workers reporting workplace injuries filed claims. They also found that unionized workers were more likely to file claims following work injuries.
Moreover, the Rand researchers found that workers without health insurance are about 15% less likely to file a claim than injured workers with health coverage.
A still more surprising finding may be that workers at companies that merely offer health insurance benefits are 50% more likely to file a claim after suffering a work injury than workers at companies that do not offer health insurance benefits.
However – and here is the major finding for me – lost time, as well as the cost of lost time for these workers who file more claims is about 20% less than for the workers who are not offered health insurance.
Finally, other types of fringe benefits – like paid vacation days – also seem to be associated with higher filing rates. For example, when both health insurance offers and paid vacations are present in the same employer, both variables are significant (at the 95% confidence level) and both have coefficients around .10 for claim filing.
What does this tell us? Well, for me it reinforces our mantra. These employees may report more injuries, but, as the NLSY79 data show, they return to work faster and their injuries cost significantly less than do the injuries of employees who work for employers who do not provide these benefits. Quod est demonstrandum.
The Rand study is compelling and instructive, but you do have to know a few things about statistical research to get the most out of it. Nonetheless, it should provide fuel for further workers’ compensation research using the NLSY79 treasure chest of demographic data. This stuff is too good to sit on a shelf gathering dust.
Posts Tagged ‘lost time’
Your Government at Work – Worker injury research you can actually use
Monday, November 19th, 2007Reducing medically unnecessary disability
Sunday, April 18th, 2004Any regular visitor to Workers Comp Insider would know that we are not ones to minimize the seriousness of workplace injuries, and we bemoan the frequency with which work injuries occur. Essentially, we believe that if American businesses can aspire to total quality management and zero defect philosophies for parts and processes, they can do at least as well for their greatest asset, their people. Prevention is a key mandate that all of us in the industry should and must embrace.
That being said, a good part of our focus as a company has been on teaching employers how to respond to and manage work injuries if and when they do occur, with the twin goals of fostering maximum recovery for the employee and minimum cost for the employer. These are goals that should not be mutually exclusive if approached thoughtfully and with care, through good management, communication, and planning.
I was reminded, recently, of a survey of occupational doctors on the topic of lost time that was conducted by Dr. Jennifer Christian. In this survey, occupational physicians were asked to assess how many of the work-related injuries they treat typically require more than a day or two away from work for medical reasons. Most physicians placed this number at less than 10 percent; more than half of the responding physicians placed the figure at less than 5 percent.
So with an occupational medicine consensus being that between five and ten percent of all work injuries require time away from work for medical reasons – or one injury in 10 or 20 – why is it that, on average, about one injury in four, or 24 percent, results in absence from work long enough to become a lost-time claim? (Most states have a three to seven day waiting period before compensabilty benefits begin.)
So the question is, why do so many work injuries result in medically unnecessary time away from work?
Measuring Success 2
Tuesday, January 6th, 2004As I’ve said previously, a company that wants to have low workers’ compensation costs has to have effective ways to measure the performance of its safety and injury management efforts. In December, I wrote about the Cost of Losses per Full Time Equivalent Employees (FTE). Today, it’s time to talk about the Severity Rate.
In nearly all cases, time away from work drives the cost of losses more than any other determinant. This is why modified duty plays such a vital role in controlling costs. Therefore, the severity rate, which measures lost time, becomes the single best non-economic indicator of the overall effectiveness of a company’s workers’ compensation program. So, what is it, and how do we calculate it?
The severity rate is the number of days away from work due to workplace injury or illness per 100 full time employees (FTEs) per year. It sounds daunting, but the Department of Labor has made it easy to get and use this data.
For more than thirty years the Occupational Safety and Health Administration (OSHA) has required most companies to maintain what is called the “OSHA Log.” On this report, every workplace injury and illness is recorded along with the resulting time away from full duty, as well as time spent on restricted duty.
Every year, each company required to keep the OSHA Log sends a copy of it to the DOL, which includes it within a national database maintained by its Bureau of Labor Statistics. The BLS collates data from each Standard Industrial Classification (SIC Code) and publishes an annual national average rate of time away from work, or “severity rate,” for each SIC Code.
To calculate your severity rate, divide the total number of days lost due to occupational injury or illness by the total number of hours worked by all employees. Following this, compare your severity rate with the average for your SIC, published annually by the BLS. Remember, the average for your SIC is nothing more than the middle of the bell curve; it is neither good nor bad. You should set for your company a goal of maintaining a severity rate that is 50% less than your industry’s average.
