Friday, October 7, 2016

Executive Summary Labor Department Workers Comp Report 2016

This is a follow up to the previous post.  Here is the full text of the reports Executive Statement.  It belongs here because it underscores the need for substantive change that will not come about from the same corporate interests that have created this problem to begin with.  ColoradoCare, Amendment 69 provides a solid framework upon which to build a patient responsive Colorado workers comp and health care system.  Vote Yes on Amendment 69.

U.S. Labor Department Workers Comp Report 2016



State-based workers’ compensation programs provide critical support to workers who are injured or made sick by their jobs. These programs are a key component of the country’s social benefit structure and of occupational safety policy, and the only major component of the social safety net with no federal oversight or minimum national standards. This Report provides an introduction to these programs, but it also sounds an alarm: working people are at great risk of falling into poverty as a result of workplace injuries and the failure of state workers’ compensation systems to provide them with adequate benefits.

Despite the sizable cost of workers’ compensation, only a small portion of the overall costs of occupational injury and illness is borne by employers. Costs are instead shifted away from employers, often to workers, their families and communities. 

Other social benefit systems – including Social Security retirement benefits, Social Security Disability Insurance (SSDI), Medicare, and, most recently, health care provided under the Affordable Care Act – have expanded our social safety net, while the workers’ compensation safety net has been shrinking. There is growing evidence that costs of workplace-related disability are being transferred to other benefit programs, placing additional strains on these programs at a time when they are already under considerable stress.

As the costs of work injury and illness are shifted, high hazard employers have fewer incentives to eliminate workplace hazards and actually prevent injuries and illnesses from occurring. Under these conditions, injured workers, their families and other benefit programs effectively subsidize high hazard employers.

In 1970, Congress created the National Commission on State Workmen’s Compensation Laws to undertake “a comprehensive study and evaluation of State workmen’s compensation laws in order to determine if such laws provide an adequate, prompt, and equitable system of compensation.”

The National Commission agreed on five basic objectives for workers’ compensation programs:
broad coverage of employees and work-related injuries and diseases; 
substantial protection against interruption of income; 
provision of sufficient medical care and rehabilitation services; 
encouragement of safety; and 
an effective system for delivery of the benefits and services. 

Using these objectives as a starting point, the National Commission members unanimously concluded that “the protection furnished by workmen’s compensation to American workers presently is, in general, inadequate and inequitable,” and endorsed 84 recommendations, including 19 recommendations that they regarded as “essential.” The National Commission suggested that states should be given until July 1, 1975, to comply with its essential elements and urged that, if compliance was not achieved, Congress should then act to secure compliance.

Progress in particular areas after the National Commission’s Report was notable. Perhaps acting under fear of federal intervention, states’ compliance with the 19 essential recommendations increased and the adequacy of some benefits unquestionably improved. By the mid-1980s, however, it became clear that federal intervention was improbable, and the motivation to conform to the National Commission’s recommendations dwindled. As the National Commission’s legacy faded and medical and lost wage costs began to rise, there was a shift toward controlling costs by cutting benefits.

Restrictions on access to benefits generally and medical care specifically increased; inflation adjusted statutory benefit levels began to decline. Recent years have seen significant changes to the workers’ compensation laws, procedures, and policies in numerous states, which have limited benefits, reduced the likelihood of successful application for workers’ compensation, and/or discouraged injured workers from applying for benefits. 

These include changes that have resulted in the denial of claims that were previously compensated, a decrease in the adequacy of cash benefits to those awarded compensation, imposition of restrictions regarding the medical care provided to injured workers, and the institution of new procedural and evidentiary rules that create barriers for injured workers who file claims. 

In addition, the elimination by several state legislatures of Second Injury Funds – that is, state-administered funds that provide compensation for injuries not otherwise covered – creates additional holes in the fabric of insurance and coverage.

Some state legislatures continue to attempt to reduce workers’ compensation costs, and proposals for statutory amendments that restrict workers’ benefits or access have become increasingly bold. Notably, there have been legislative efforts to restrict benefits and increase employer control over benefits and claim processing, most dramatically exemplified by the opt-out legislation enacted, and recently struck down by the state supreme court, in Oklahoma and considered in Tennessee and South Carolina, among other states.

We are moving further from many of the National Commission’s 19 essential recommendations – and these recommendations do not address some of the new issues that have arisen. For example, new ways of reducing access to benefits have emerged, primarily focused on higher burdens of proof for injured workers. 

Using the historical consensus of replacement of two-thirds of gross pre-injury earnings recommended by the National Commission, indemnity benefits are inadequate in many – perhaps most – jurisdictions. Workers who file for compensation are blocked from receiving benefits because of the combination of higher evidentiary bars, exclusion of conditions that do not meet standards like “major contributing cause,” and requirements for drug testing. Some states have enacted arbitrary limits on the number of weeks that benefits can be paid; some have enacted caps on medical payments as well.

All of these issues result in the transfer of the economic cost of occupationally-caused or aggravated injuries and illnesses to families, communities and other benefit programs, further burdening the federal Medicare and Social Security Disability Insurance programs. As benefits erode, workers with significant permanent disabilities that make it difficult for them to function in the labor market turn to SSDI. 

While studies vary in their conclusions regarding the specific effects of recent changes in workers’ compensation, all agree that a substantial number of SSDI claims involve at least one work-related chronic condition, often simultaneously with other conditions; some show an increasing reliance on SSDI as workers’ compensation programs tighten eligibility standards.

The current situation warrants a significant change in approach in order to address the inadequacies of the systems. We need to identify best practices in order to provide better benefits to injured workers, increase the likelihood that workers with occupational injuries or illnesses can access the wage replacement benefits they need until they can go back to work, and reduce costs to employers.

In addition, the most effective means to reduce workers’ compensation costs is to prevent work injuries and illnesses from occurring. Workers’ compensation is not simply another disability program; participation in the program is the direct result of the work environment. It is important to strengthen the link between workers’ compensation and efforts to prevent work-related injuries and illnesses.


Policy areas that deserve exploration include:

• Whether to increase the federal role in oversight of workers’ compensation programs, including the appointment of a new National Commission and the establishment of standards that would trigger increased federal oversight if workers’ compensation programs fail to meet those standards.

• How to strengthen the linkage of workers’ compensation with injury and illness prevention, including by facilitating data sharing among state compensation systems, insurance carriers, state and federal Occupational Safety and Health Administration (OSHA), and state health departments.

• Whether to develop programs that adhere to evidence-based standards that would assist employers, injured workers, and insurers in addressing the long-term management of workers’ disabilities to improve injured workers’ likelihood of continuing their productive working lives.

• Whether to update the coordination of SSDI and Medicare benefits with workers’ compensation, in order to ensure, to the extent possible, that costs associated with work-caused injuries and illnesses are not transferred to social insurance programs.

In addition, there are many ways in which additional research would provide valuable data and insight into ways to improve the functioning of workers’ compensation systems and the experience of injured workers. An expanded research agenda focusing on the impact of aspects of the workers’ compensation system on workers and the families, and on evidence-based approaches to improving the functions of the compensation systems, would be beneficial.

“…[T]he vast majority of American workers, and their families, are dependent on workmen’s compensation for their basic economic security in the event such workers suffer disabling injury or death in the course of their employment; and … the full protection of American workers from job-related injury or death requires an adequate, prompt, and equitable system of workmen’s compensation as well as an effective program of occupational health and safety regulation.”

For the rest of the Labor Department’s Report link to

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