Editor’s Note: This guest column is written by Les Boden, Professor, Boston University School of Public Health and Chair, Study Panel on Workers’ Compensation Data. It is in response to a blog post that appeared in this area last week.
This year marks the 22nd annual Report on workers’ compensation benefits, costs, and coverage published by the National Academy of Social Insurance (NASI). NASI staff worked with a diverse panel of 23 workers’ compensation experts to provide a reliable source of data on trends and levels of workers’ compensation benefits, costs, and coverage. Panel members engaged in many hours of spirited debate about the best way to present this information. Because of the consistent efforts of NASI staff and panel members, this year’s Report shows changes in costs and benefits going back to 1980, providing a picture of both temporal and cyclical changes over almost 40 years.
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Panel members have thought long and hard about how to present this data to make it reflect meaningful patterns in worker benefits and employer costs. One of the most important decisions for the Report was how to measure costs and benefits. The panel decided that benefits and costs per $100 of wages were the best feasible measures – ones that were most likely to convey useful information and not mislead. The cost measure tells employers something that they want to know: what proportion of payroll goes to workers’ compensation insurance or to direct payments for workers’ compensation benefits. The benefit measure tells us how much, relative to their wages, workers’ compensation pays to cover workers’ lost earnings and medical care.
The Report presents both national and state-specific data. Individual states may want to know how changes in their costs and benefits compare with national trends, and they can see those changes in the NASI Report.
These measures are useful if imperfect. The measure of benefits per $100 of wages has advantages over total benefits paid, because the latter can be affected by changes in employment and wages. If nothing else changes but employment rises by 10 percent, total benefits will also rise by 10 percent. This tells us nothing useful. However, if average wages rise but weekly benefit caps remain fixed, benefits per $100 of wages will decline. This will reflect a decline in the proportion of lost wages replaced by cash benefits, which is important to know. (All but two U.S. jurisdictions have temporary disability caps that rise with the state average weekly wage, so this example may be of limited importance.)
The Report acknowledges that neither benefits nor costs per $100 tells us all that we would want to know. In a recent blog post titled “Is NASI Study Showing Reduced Injured Worker Benefits Seriously Flawed,” Bob Wilson rightly points out, “a reduction in employer costs does not by itself equate to an automatic reduction in worker benefits. There are many factors that could result in those reduced costs seen by businesses around the nation.”
This is of course true, and the Report acknowledges it, stating that “it is impossible to know whether a state with lower costs is safer due to industrial mix, safer due to better safety practices within industries, more efficient in providing benefits, or poses greater barriers for injured workers to access workers’ compensation benefits.” The available research and data are, unfortunately, inadequate to quantify this. We might also want to know the extent to which cash benefits cover injury-related lost earnings. This also cannot be answered within the scope of the NASI Report.
The Panel welcomes suggestions about how to improve the Report, and we thank Mr. Wilson for his November 18 blog post. In particular, the news release was written so it was possible to think that that there was a steep decline in total benefits and costs, not as benefits or costs per $100 of wages. We will be more precise in future news releases.
We hope that this clarifies the issues he raised. We would be happy to hear from anybody with suggestions about how to improve the Report going forward.