Swiss Re

The report, "The Impact of U.S. Health Care Reform on Workers'Compensation and Other Casualty Lines," noted that the reforms arenot specifically directed at the workers' compensation system andthat some provisions are not applicable to workers'compensation.

But, the report added, the legislation "may have an indirecteffect on workers' compensation medical costs and on the coststructures underlying the medical portion of tort liabilitysettlements and judgments."

The reforms aimed at bending the health care cost curve downwardcould have both positive and negative effects on workers'compensation, according to the report. These reforms includeinitiatives such as a mandate that insurers spend either 80 percent(small group market) or 85 percent (large group market) of premiumson medical services, a heavy focus on wellness programs, andmeasures to encourage quality care through payment models andfinancial incentives.

On the positive side, Swiss Re said workers' compensationinsurers "can learn some valuable lessons and best practices fromhealth insurers who implement successful wellness programs."

Additionally, insurers can benefit if they can adaptresults-based compensation to the workers' compensation system,Swiss Re said.

But Swiss Re cautioned that "to the extent that cost containmentends up meaning the government starves the provider community,insurers could face cost shifting into the workers' compensationsystem."

Efforts in the reforms to reduce the uninsured population couldbenefit the workers' compensation insurers by reducing the numberof attempts to bring non-work injuries into the workers'compensation system, the report stated. But the report also notedthat similar health care reform provisions in Massachusetts --while lowering the number of uninsured -- had no measurable impacton workers' compensation utilization.

Reform goals to expand access to primary care services couldnegatively impact workers' compensation, according to the report.As the number of uninsured is decreased, Swiss Re said it will be"essential that providers expand to meet the new demand."

Swiss Re explained that cost pressures associated with thisexpansion could impact workers' compensation if the number ofinsureds increases substantially before the infrastructure toservice them is in place.

Efforts in the legislation to reform private health careinsurance should have "little to no impact" on workers'compensation, according to the report. These include provisionssuch as ending exclusions on pre-existing conditions, prohibitinglifetime limits, and modified community ratings where healthinsurers will be able to vary premiums only by age, tobacco use,geography and family size.

Swiss Re said it will take months or even years to fullyunderstand the reform's impact on workers' compensation.Ultimately, liability costs could fall or rise based on the successor failure of cost containment and supply enhancement initiatives,the report stated.

Phil Gusman is an Associate Editor withNational Underwriter, part of Summit Business Media'sP&C Group, which includes Florida Underwriter. Thisarticle originally appeared on the NU Online News Service.