NASI Says Nationwide Comp Payments Were Up 2 % In 2007

NU Online News Service, Aug. 26, 12:54 p.m. EDT

U.S. workers' compensation payments for medical care and cash benefits for workers injured on the job increased 2 percent to $55.4 billion in 2007, according to a nonprofit study group.

The in Washington also said in its report that its data shows that as comp payments decrease, workers file more Social Security disability claims.

NASI said the spending figure for 2006 was $54.3 billion and the modest growth in national spending in 2007 (the most recent year with complete data) reflects large declines in California cash benefit payments that followed reforms enacted in 2003 and 2004.

Jeff Eddinger, ratemaking practice leader and senior actuary at the National Council on Compensation Insurance, said the NASI numbers are consistent with what his organization finds. NCCI supplies some data to the group.

According to NCCI, 2007 average cost for indemnity or wage replacement was up 3.4 percent nationwide, and medical increased 5.8 percent while claim frequency fell by 2.6 percent. Mr. Eddinger said for 2008 preliminary figures show the amount of increase is similar to 2007.

A spokeswoman for NASI said they did not have data to project beyond 2007.

NASI said in 2007 there was a 10 percent decline in California's cash payments to injured workers, which followed declines in 2006 and 2005, as well.

"The reduced spending for cash benefits reflects the continuing effects of cost containment reforms that were put in place in 2003 and 2004," said NASI member Christine Baker, who directs the California Commission on Health and Safety and Workers' Compensation, a nonpartisan labor-management group that advises state policymakers.

Nationally, workers' compensation payments of $55.4 billion in 2007 include $27.2 billion for medical care, an increase of 3.3 percent over the prior year, and $28.3 billion in wage replacement benefits for injured workers, an increase of 0.8 percent.

In 2007, NASI said employers paid a total in premiums and deductibles of $85 billion nationwide.

The organization noted a sharp drop in California employers' costs of 14.3 percent led to a small drop for the nation of 2.7 percent.

Outside California, employer costs for workers' comp were almost unchanged--up 0.1 percent, NASI said.

The report compares trends in workers' compensation cash benefits and Social Security disability insurance benefits, each as a share of payrolls covered by each program.

According to the study, trends in the two programs have moved in opposite directions since 1980. When workers' comp cash payments rose in the 1980s, Social Security disability benefits declined as a share of payroll. After 1990, workers' comp cash payments declined and Social Security disability insurance payments rose as a share of payroll.

John F. Burton Jr., chair of the panel that oversees the study, in a statement announcing the report said, "The different trends suggest that retrenchment in one program may cause injured workers to turn to the other program for benefits to replace their lost wages."

NASI mentioned that Nov. 19 it is sponsoring a research seminar to further examine how developments in workers' comp affect Social Security disability insurance.

The 88-page report, Workers' Compensation: Benefits, Coverage and Costs, 2007, is the twelfth in the NASI series that provides the only comprehensive national data on workers' compensation cash and medical payments for each state, the District of Columbia and federal programs.

NASI said the lack of uniform reporting of states' workers' comp experience makes it necessary to piece together its data from various sources to develop estimates of benefits paid, costs to employers, and the number of workers covered by workers' compensation.

It noted that unlike other U.S. social insurance programs, state workers' comp programs have no federal involvement in financing or administration.