While employer workers' compensation costs in 2008 decreased compared to 2007, medical payments and cash benefits to injured workers saw the largest percentage increase since 2001, according to a report by the National Academy of Social Insurance (NASI).

NASI said total workers' compensation benefits paid increased 4.4 percent to $57.6 billion in 2008--the most recent year for which data was available. NASI said an 8.8 percent increase in payments for medical care drove medical spending to $29.1 billion in 2008, while wage replacement benefits paid directly to injured workers rose by 0.3 percent to $28.6 billion.

"For the first time, medical benefits accounted for over half (50.4 percent) of all benefits paid," NASI said.

John F. Burton Jr., chair of the panel that oversaw the NASI report, said, "The growth in medical spending may reflect both higher prices for medical care and greater use of services. The increase is the continuation of a long-term trend since 1980, but this is the first year that payments for medical care were more than half of all workers' compensation benefits."

Despite the increase in benefits paid and in medical spending, employers paid less for workers' compensation, the NASI report said. Employer costs--defined as benefits paid and administrative costs for self-insured employers, and premiums and deductibles paid for those who buy insurance--fell 6.7 percent in 2008 to $78.9 billion.