NU Online News Service, Dec. 3, 3:26 p.m.EST

Health care reform legislation is expected to have some impacton workers' compensation costs, but those impacts should be gradualand reflected in normal ratemaking processes, Swiss Re said in arecent report.

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' comp system and that someprovisions are not applicable to workers' comp.

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' comp,according to the report. These reforms include initiatives such asa mandate that insurers spend either 80 percent (small groupmarket) or 85 percent (large group market) of premiums on medicalservices, a heavy focus on wellness programs, and measures toencourage quality care through payment models and financialincentives.

On the positive side, Swiss Re said workers' comp insurers "canlearn some valuable lessons and best practices from health insurerswho implement successful wellness programs."

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

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' comp insurers by reducing the number ofattempts to bring non-work injuries into the workers' comp system,the report stated. But the report also noted that similar healthcare reform provisions in Massachusetts–while lowering the numberof uninsured–had no measurable impact on workers' computilization.

Reform goals to expand access to primary care services couldnegatively impact workers' comp, according to the report. As thenumber 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' comp if the number of insuredsincreases substantially before the infrastructure to service themis in place.

Efforts in the legislation to reform private health careinsurance should have "little to no impact" on workers' comp,according to the report. These include provisions such as endingexclusions on pre-existing conditions, prohibiting lifetime limits,and modified community ratings where health insurers will be ableto vary premiums only by age, tobacco use, geography and familysize.

Swiss Re said it will take months or even years to fullyunderstand the reform's impact on workers' comp. Ultimately,liability costs could fall or rise based on the success or failureof cost containment and supply enhancement initiatives, the reportstated.