Many of the same problems that plague the U.S. health care system are spilling over into Workers Compensation, including rising costs, an increased incidence of potential injuries brought on by an aging workforce and the obesity epidemic, and regulatory uncertainties. In a speech at the 62nd Workers Compensation Educational Conference, Robert Hartwig, president of the Insurance Information Institute (I.I.I.), outlined these and other challenges facing the Workers Compensation system over the next 10 to 20 years.
Hartwig first applauded businesses’ efforts that have radically reduced the frequency of workplace injuries in America. Successes on this front have:
- Helped companies remain productive, by lowering the number of future lost workdays that result from permanently disabling injuries or fatalities.
- Increased and preserved worker incomes — Seriously injured workers have lower lifetime earnings, a higher incidence of bankruptcy, and increased dependency on public assistance.
- Maintained and improved the quality of workers’ home life — Seriously injured workers experience a higher incidence of divorce, substance abuse and depression.
Hartwig then turned his remarks to problems facing the Workers Compensation system:
- The never-ending cycle of reform, fraud, and abuse, which will be an endless driver of costs in the future.
- The shift in balance between medical benefits and wage replacement — In 20 years, he predicted, 80%-85% of Workers Compensation benefits will be medical, and only about 15% will be for wage replacement. As a result, the Workers Compensation system will face the same problems as the health care system, but even more so, because the Workers Compensation system doesn’t have the same tools to control costs, such as deductibles and copayments.
- The aging workforce — Fatality rates for workers ages 65 and older are triple that of workers ages 35–44. The workplace of the future will require a complete redesign to accommodate the surge in the number of older workers.
- The obesity epidemic — In 2006, the most obese workers filed twice as many Workers Compensation claims and had 13 times more lost workdays than healthy-weight workers.
- Regulatory issues — Health care reform will be a major theme in the 2008 elections, as it was in 1992, when proposals surfaced that Workers Compensation be rolled into the general health care system. This could happen again.
Though this information is sobering, Hartwig urged businesses to use it to their competitive advantage and work to head off problems before they occur, and not wait until injury patterns emerge to take action.