Storm Clouds on 2008 Horizon for Workers’ Compensation

While declining Workers’ Compensation rates have benefited employers in recent years, there are challenges that cloud the future. The outlook for 2008 is one of caution and concern.

Consider the following issues:

1. Rising costs and utilization of medical treatments. Alarming increases in utilization of medical services compounds the ever-present negative impact of escalating medical costs. An NCCI study concludes the key driver is not price, but growth in the number of medical treatments. What’s more, there is a move to more complex and expensive treatments. The seismic shifts in medical innovation and the corresponding increase in treatment options, coupled with consumer demand for the latest and greatest treatments, will continue to propel the spiral of increased utilization in 2008. Unchecked, the combination of these factors means soaring medical costs.

2. A sundry of health care standards. California’s sweeping legislative reform has been successful in reducing employers’ Workers’ Compensation from an average of $6.47 per $100 for coverage in 2003, to $2.93 in the first quarter of 2007. A cornerstone of California’s success is the mandated use of the American College of Occupational and Environmental Medicine scientific evidence-based treatment guidelines, enabling employers to measure the actual versus expected duration of absence based on the injury to determine whether or not the treatment matches the prescribed protocols. While the efforts in California have been closely watched, only a handful of states have adopted similar extensive reforms. Workers’ Compensation is a multiplicity of systems governed by the states, and there is no mantra to adopt a national model. In a climate of declining rates that fosters lethargy, and with unique political obstacles in each state, it is unlikely that state policies will ever converge. The adoption of evidence-based guidelines will be agonizingly slow. In 2008, many job-related health decisions will continue to be made by health care professionals without appropriate training and expertise in occupational injuries.