It’s still too early to tell whether federal health insurance reforms are having any significant impact on workers’ compensation costs. But it’s fair to say that so far, some of the worst-case scenarios raised as the Affordable Care Act (ACA) went into effect have not yet come to pass.

I’ve been getting calls lately from people who read my blog of Oct. 2, 2013, “‘Obamacare’ Might Impact Non-Health Insurer Bottom Lines,” wondering whether any of the possible fallout I cited, either positive or negative, had come to pass. I still believe the threats and opportunities I posited back then remain plausible, but they may take more time to manifest themselves.

Supply and demand concerns haven’t materialized

My biggest concern was seeing workers’ comp patients get stuck waiting in line for diagnostic tests, visits with specialists, and rehabilitative therapy, behind patients newly insured under the ACA. It was simple supply and demand at work, at least in theory. If tens of millions of uninsured people suddenly had health coverage, one could reasonably expect many of them to see a doctor, if only because they could now afford it. New ailments would probably be diagnosed, while neglected chronic conditions would receive overdue care.

A stampede into diagnostic and treatment facilities triggered by ACA could overload the medical care community and make it more difficult for those with work-related injuries or illnesses to be examined, rehabilitated, and returned to their jobs in a timely fashion. Such a development would be counterproductive for workers’ comp insurers, which go out of their way to assure a speedy diagnosis and aggressive treatments to limit the amount of missed working hours and to lower indemnity payments for claimants.

However, I’m not aware of any empirical studies being completed, nor have I heard of any complaints from workers’ comp carriers about a flood of newly insured patients disrupting their comp claims handling or timeliness of medical treatment.

That’s good news, although it’s likely not the final word on this subject.

For one, it’s taking time for the ACA to gain traction, given some technical glitches in implementation early on with the newly established health insurance exchanges that may have discouraged many from signing up, as well as the fact that there was no penalty last year for those who didn’t have coverage.

injured man

(Photo: Shutterstock)

However, the second year of ACA appears to be going a lot smoother, at least anecdotally, in terms of renewing coverage and signing up new policyholders. Meanwhile, those without coverage this year do face a penalty (levied via their federal income tax form) — an amount that will be going up substantially if people remain uninsured as the ACA takes full effect. That could prompt millions more to buy into the system, potentially triggering a delayed reaction in utilization that spills over and disrupts workers’ comp cases. 

It’s also too early to judge whether having millions more covered by health insurance will ease the temptation by formerly uninsured patients to try to have their medical problem classified as job-related so they could receive coverage under workers’ comp. That proposition seems to be logical in theory, but in reality those with standard health insurance still have to pay (often pricey) out-of-pocket expenses such as office visits, co-payments, and deductibles. Workers’ comp patients face none of these charges with their first-dollar coverage, which means that fraud might still remain an attractive option for some.

Concerns about cost-shifting

In addition, new concerns have been raised about the ACA perhaps creating incentives for cost-shifting from health insurance to workers’ comp, due to the former’s move from fee-for-service to capitated systems. More health plans may become accountable care organizations under ACA, financed by a set fee per member. This should theoretically discourage providers from ordering unnecessary tests or treatments.

Under such a scenario, however, if classifying a case as job-related moves a claim out of a capitated health plan and into a fee-for-service workers’ comp program, it might encourage some providers to favor a comp claim so they could boost their income potential. Once again, however, this is all speculative, so we’ll need more time to see how the situation develops.

It also remains to be seen if gradually lowering the uninsured population improves the overall health of the workforce and thereby limits the frequency and severity of work-related injuries and illnesses, an outcome conventional wisdom seems to favor.

Developments to watch

The only thing for certain is that such questions should keep insurance researchers like myself busy for quite some time as we watch these trends play out.

Of course, all of these questions may become moot if the ACA is effectively crippled later this spring by a U.S. Supreme Court decision nullifying federal subsidies for those buying coverage in states without their own health insurance exchange. And if the Republicans end up winning the White House in 2016 and hold onto control of both houses of Congress, ACA could conceivably be repealed altogether.

What happens then? If the many millions who have received (or been prompted to buy) health insurance under ACA end up losing their health coverage, what impact might that have on workers’ comp carriers? My guess is that the results wouldn’t be pretty for either side of the insurance business.

Sam Friedman (samfriedman@deloitte.com) is insurance research leader with Deloitte’s Center for Financial Services in New York. For many years, he was Editor in Chief of National Underwriter. Follow Sam on Twitter at @SamOnInsurance, as well as on LinkedIn. These opinions are his own.