At the turn of the last century, states and then the federal government created a system of compensation so that injured workers did not have to depend on recovering damages in civil lawsuits for the funds to pay their medical bills, rehabilitation, and time off work. Eventually, all of the states except Texas required all employers to either carry workers’ compensation insurance purchased from an insurance company or state fund or to register a program of self-insurance.
This week, the Oklahoma Senate has passed a bill that would allow the Texas system of alternative coverage. Under the bill, businesses would be required to meet certain requirements, such as having paid out at least $50,000 in losses over one of the previous three years or by reaching a certain risk threshold, before they would be allowed to opt out of state coverage. All of these plans would have to meet the employee benefit plan requirements of the federal Employee Retirement Income Security Act, or ERISA. One Oklahoma–based retailer testified that it was able to reduce its Texas costs for workers’ compensation by 50%, while the company saw employee satisfaction increase to 90%.
Only four states rely on entirely state-run programs for workers compensation: Ohio, North Dakota, Washington and Wyoming. Many other states maintain either state-run or independent non-profit funds, but also allow private insurance companies to insure employers and their employees, as well.
Ohio Gov. John Kasich and many other lawmakers campaigned on reforming the Ohio workers’ comp system, which is by far the biggest monopolistic fund in the nation. Until lately, that reform was thought to be the less controversial “low hanging fruit” such as codifying certain provider discounts and the like. The series of bills introduced as reform proposals turned out to be actually more meaningful and Ohio has added another fight to this year’s agenda.
The administrator and chief executive officer of the Ohio Bureau of Worker’s Compensation, a former state House and Senate member, testified this week that the time period during which Ohio pays claims is among the longest in the nation. In this state, a full eight years after the date of the injury, almost half (49%) of the cost in lost-time claims has not yet been paid. The national average is 17% of claims not fully paid by that time.
Motivated by research which shows that, after 30 days, an injured worker’s chance of ever returning to work declines dramatically, the legislation just introduced continues to allow the worker to see any medical provider for the initial visit. This works for 93% of injured workers, but the 7% of claimants who continue to seek medical attention after 45 days would now be directed to the Bureau’s approved Managed Care Organizations (MCO) network for further treatment.
There are other important provisions, which provide for much quicker payments for injuries and less waiting and bureaucratic inefficiencies for those who seek treatment, but the loss of choice in providers is guaranteed to produce fireworks over this reform. The trial lawyers and union representatives tell me that this will be another ballot challenge if it passes.