Study Finds Workers Comp Costs Increasing While Benefits are Falling
A new study by the National Academy of Social Insurance states that workers compensation is becoming more expensive for businesses while insurance companies are providing fewer benefits to injured workers and their families. The study analyzed data from 2009 to 2013, and found a decline in workers comp benefits compared to payroll in 39 states in the US. The study also noted two reasons for the decline:
“The decline is due to a drop in workplace injuries as well as changes in many state laws that made it more difficult for workers’ to qualify for benefits,” said John F. Burton, Professor Emeritus of Rutgers and Cornell University. “These state laws include more stringent compensation rules, the reduction of coverage for certain medical diagnoses and new legal requirements that make it more difficult for workers to succeed in their claims for benefits.”
Costs increased in a total of 27 states. Meanwhile, workers compensation covered 98 cents for every $100 wage dollars earned by workers, while businesses covered $1.37 for every $100.
Nationally, the amount of benefits paid has been on the increase, as more issues such as some cancers, mental illnesses, and chronic pain issues have been traced to working conditions. The increase in coverage can also indicate an increase in employment. However, health care costs grew to 50% of total workers comp coverage in 2013 – in 1980, health care costs were only 27% of workers comp costs.
Out of all 50 states, South Carolina ranked 39th for the amount of medical benefits paid.
Until recently, workers comp benefits as well as business costs had both been on a downward trend for the last two decades. Now, business costs are beginning to rise again, but worker benefits appear to not go up in response to the inflated costs. The trend could be in part due to rapidly rising healthcare costs, which would correlate to why so much of a workers compensation payment covers medical costs, rather than other costs of living. Also contributing to the costs could be the consistent trend toward privatization of workers comp costs, rather than relying on state-run programs.
Good news came out of the report, noting that the overall number of worker deaths due to job-related accidents had gone down 27% over the last two decades, and declined a small amount between 2012 and 2013.