Dispensing With the Politics: ACA’s Implications for Workers’ Comp

By Jeanette Ward, Senior Vice President of Claims

By Jeanette Ward, Senior Vice President of Claims

No matter what your politics, the Patient Protection and Affordable Care Act (ACA) appears to be here to stay. As workers’ compensation blogger Joe Paduda said in a recent post…“If you spend your work time focused on what you don’t like about health reform, you’re not spending your time thinking about reform’s implications for workers’ comp – how you can mitigate any problems, leverage any advantages, and monitor and measure ways reform affects your business.”

As the head of claims at Texas Mutual, I am heeding his advice by trying to understand the potential impact to workers’ compensation in Texas, as well as to our policyholders and their injured workers.

Workers’ compensation medical costs are estimated to be a little less than 2 percent of total medical spend in the United States. While the ACA did not address workers’ compensation specifically, it is widely believed that there will be unintended impacts.

The overwhelming conclusion right now is that no one really knows what the impact will be, but there will be an impact. There does, however, appear to be several theories regarding the potential effects. Texas Mutual will monitor them and take action if necessary:

  1. Provider shortages/access to care. As more consumers enter the healthcare market, there could be less capacity in the medical community to match the increased demand. The potential downside to workers’ compensation is that if it takes longer for an injured worker to receive medical care, overall claim duration and costs could increase. Additionally, the theory of supply and demand (low doctor supply, high demand) could accelerate medical inflation overall, which would have an impact on workers’ compensation claim costs. Texas is one of the top states projected to have doctor shortages in the coming years.
  2. Medical cost and/or claim shifting. While no one can prove that uninsured workers tend to call an injury work related to have a portion of their health care paid for (i.e. the low back injury from a softball game on Sunday becomes the lifting injury on Monday at work), it is widely suspected in the industry that this does occur. If there is no time lost from work for these injuries, the now-insured worker may be incented to file under healthcare instead of workers’ compensation. However, the high deductibles as part of the ACA could have the opposite effect. Other factors could influence cost or claim shifting between healthcare and workers’ compensation, including reimbursement rates for providers and the complexity of the workers’ compensation system. A recent RAND study shows that in Massachusetts, which implemented an ACA-like reform in 2006, costs shifted from workers’ compensation to healthcare. However, that state’s workers’ compensation reimbursement rates are the lowest in the country. Texas workers’ compensation rates are higher than Medicare, which could favor medical cost shifting to workers’ compensation for some claims. It seems that for every theory I read that would shift costs one way, there is another theory that predicts shifting costs the other way.
  3. Healthier workers. The ACA does not bring all bad news for workers’ compensation. In theory, a healthier workforce could lead to a reduction in claim frequency and acceleration in return-to-work. This could ultimately result in lower workers’ compensation costs overall. While not all theories are proven true, it is worth monitoring for changing claim frequency and severity trends.

Workers’ compensation is not a particularly dynamic industry. Workplace safety, return-to-work and claim management have been best practices for more than 100 years, and they will still be best practices 100 years from now.

Every once in a while, though, something happens to shake up the system. The ACA is undoubtedly one of those issues. Everyone who has a stake in workers’ compensation should understand how the Act could change the landscape we have grown accustomed to.

About the author

As senior vice president of claims, Jeanette Ward is responsible for claim operations, claim quality and compliance, and network and medical operations. Jeanette joined Texas Mutual in 1993 and has since climbed the company’s ranks, serving as operations analyst to the chief operating officer; senior manager of corporate planning, budget and accounting; vice president of claim and information services; and vice president of claim support services. During her diverse career, Jeanette has overseen process and system management efforts, including Texas Mutual’s recent claims system replacement project.

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