A Workers View of Workers Compensation NASI Symposium October - - PowerPoint PPT Presentation

A Workers’ View of Workers’ Compensation

NASI Symposium October 12-13, 2006 Washington, D.C.

Edward M. Welch School of Labor and Industrial Relations Michigan State University welche@msu.edu www.lir.msu.edu/wcc

Costs Per $100 of Wages

0.00 0.50 1.00 1.50 2.00 2.50 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Costs Are Down

Source: National Academy of Social Insurance

Average Costs Per $100 of Wages was 19% Lower in 2004 than in 1993

2.16 1.76 0.00 0.50 1.00 1.50 2.00 2.50 1993 2004

Costs Are Down

WC as Percent of Wages

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986

Source: Bureau of Labor Statistics

In 2006, WC as a Percentage of Wages was 19% Lower than it was in 1994

3.01% 2.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 1994 2006

Benefits Per $100 of Wages

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Benefits Are Down

Source: National Academy of Social Insurance

Benefits Per $100 of Wages in 2004 were 33% Lower in 2004 than in 1992

1.68 1.13 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 1992 2004

Return On Net Worth

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Insurance Profits

Source: National Association of Insurance Commissioners

Insurance Profits

• 2004 was significantly lower than the highs
• f the mid-1990s
• 2004 was dramatically up from the low of

2001

• Where are we in 2006?

“Costs are down, but they’re still too high”

Employers Can Control Their Own Workers’ Compensation Experience

• Safety
• Disability Management
• Corporate Culture
• Good Claims Management

In Workers’ Compensation in the Last 10 to 15 Years:

• Employers have done very well
• Workers have taken a terrible beating

An Injured Workers’ Bill of Rights

Workers Should Apply for their Rightful Benefits with Dignity

• “I’m not like all of those other people.”
• Injured workers have a right to their

benefits

What is the Proper Value to Place

• n Workplace Injuries and

Deaths?

• For 9/11, the average death award was

$2.1 million

• For 9/11, the average injury claim was

$384,000

• These figures are about 10 times the

average award given to workers who are injured on the job

Benefit Adequacy

• Most seriously injured workers suffer a

large lifelong wage loss that is not replaced by workers’ compensation benefits

• Workers’ compensation should replace

80% of the after-tax wage loss for work- related injuries

Defusing Myths

• The widespread belief that workers live well
• ff of workers’ compensation is not based on

fact

• States should conduct the research

necessary to determine what happens to workers who suffer an on-the-job injury

• There is a NASI commission report that

discusses how to do this

Cost of Living Allowances

• The purchasing power of workers’

compensation benefits erodes as time goes by

• Workers’ compensation benefits should

be indexed for increases in the wages

Pre-existing Conditions

• The laws in many states make it harder

for a worker to get benefits if he or she works in spite of the presence of some pre-existing weakness

• No worker should be penalized because

he or she works in spite of a pre- existing condition

Older Workers

• The laws in some states make it harder

for older workers to qualify for benefits and/or reduce the amount of benefits paid to older workers

• Workers’ compensation laws should not

discriminate against older workers

Fraud

• Employer fraud adds substantially to the

cost of workers’ compensation

• There should be aggressive procedures

for identifying and prosecuting fraud by employers, insurers, and agents. These should include civil and criminal penalties.

Starving Out Workers

• Many states allow employers to

withhold benefits from workers while disputes are resolved

• Workers’ compensation systems should

not allow employers and insurers to starve out workers while they await an adjudication of their rights

Pay What You Owe

• Many states allow employers to

withhold from workers benefits that are not disputed

• Employers should be required to pay

immediately amounts that are clearly

• wing

Penalty for Denying Claims

• In many states, there is no incentive for

employers to pay promptly, and no disincentive for employers to withhold benefits

• There should be a penalty for

employers who unfairly deny the payment of benefits, and/or an incentive for employers who pay promptly

Prompt Hearings

• In many states, there is a long delay

before hearings can be held

• Within 30 days of filing a claim, there

should be at least a preliminary hearing, which will determine whether benefits will be paid pending the outcome of the litigation

Attorney Fees

• Most states limit the amount of money a

worker can spend on his or her attorney, but put no limit on the amount an employer can spend

• All parties to workers’ compensation

proceedings should have the same access to effective legal representation

Withholding Healthcare

• In many states, employers can withhold

healthcare from workers

• Employers should not be allowed to

withhold needed healthcare while a workers’ compensation dispute is being litigated

It is Time to Restore Fairness to the Workers’ Compensation System