The medical share of total workers' compensation insurance losses has jumped by 13 percentage points since 1987, according to new research by the National Council on Compensation Insurance.

NCCI said in a brief that such losses have gone up "dramatically" to a projected 59 percent for medical against 41 percent for wage replacement indemnity costs in 2007, based on actuarial estimates of ultimate accident-year losses.

Among other findings in the report, which NCCI labeled as key:

o The rising importance of medical losses is pervasive, whether looking at estimated ultimate losses, reported data, or incremental payments by accident year and report period.

o The medical share has been increasing over time for most report periods.

o For a given accident year, the medical share starts out high, falls until the fourth or fifth report, and rises slowly again.

o Slightly more than half of the increased medical share was the result of differences in medical and wage inflation rates, while the balance was attributed to differences in the growth in medical and indemnity utilization.

o Although there are differences in the medical share by state, the change in the relative mix of states has had very little impact on the estimated countrywide share of medical and indemnity benefits.

Regarding inflation, NCCI noted that growth in the medical Consumer Price Index has exceeded growth in wages from 1986 to 2006, with medical CPI growing 175 percent versus 103 percent for wages.

The Council said that the rising share of medical losses since 2001 reflects not only the growth of medical severity but also a moderation in the growth of lost income payments for an injury.

It also noted its prior research found that in the case of medical utilization, a key driver in recent years has been increases in the number of billed treatments per claim.

NCCI defines the medical share of total benefits as medical losses divided by the sum of medical and indemnity losses.

Special Reports /

Comp Loss Medical Share Up 13% Points Since '87, NCCI Finds

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