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Health Care Reform and Workers’ Compensation

by Donald M. Harrison

Will health care reform affect workers’ comp? Even though the term “workers’ compensation” isn’t mentioned in the bill, I anticipate both direct and indirect effects on workers’ comp. Most of the consequences are unknown at this time and may not be known for several years, but two direct results are already clear:

  1. revisions to the federal black lung program will make it easier for coal miners and their survivors to obtain black lung benefits; and
  2. new taxes on pharmaceutical and medical device manufacturers will likely be pushed onto policyholders, potentially resulting in higher workers’ comp premiums.

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Reform analysis
The indirect effects of health care reform on workers’ comp aren’t as easy to determine, but they will likely be far-reaching. One potential result is that the frequency and importance of “medical use” review will increase. The reason is simple: Health insurers and workers’ comp insurers increasingly battle over responsibility for medical expenses.

A key question that remains is whether health care reform will increase or decrease the number of workers’ comp claims. One provision of the new bill allows health insurers to charge smokers 50 percent more for health insurance coverage. Another provision provides that employees enrolled in a company wellness program or meeting certain health standards may obtain a 30 percent reduction in health insurance premiums. In theory, as a result of these provisions, employee health will improve, which will result in fewer workers’ comp claims.

Some theorize that because more employees will have health insurance to fall back on, they will be less likely to file questionable or hard-to-prove workers’ comp claims. If health insurance will cover it, why go through the rigmarole of proving an on-the-job injury?

However, others believe the new bill will result in increased workers’ comp claims. One theory that supports that idea notes that more workers will have health insurance. Thus, they will take greater advantage of medical services, including surgeries. More medical treatment and surgeries means more time away from work for medical reasons. More time away from work for medical reasons may mean an increase in workers’ comp claims as employees attempt to receive indemnity benefits while off work.

Those are some of the theories surrounding the issue. In my view, it’s too early to determine the indirect effects of health care reform on workers’ comp. Administrative regulations will follow, which will go a long way toward shaping the law’s effect.

Keep up with the latest legal changes affecting employer benefits and trends in employee benefits with the Benefits Complete Compliance and with changes in federal employment laws in the Federal Employment Law Insider.

Federalization on the horizon?
One thing I don’t anticipate is the federalization of workers’ comp. Some in the industry see health care reform as a step toward federalized workers’ comp. Adding support to that theory is a bill introduced in the House on January 22, 2009. House Resolution (HR) 635 would create a National Commission on State Workers’ Compensation Laws to examine state workers’ comp programs. Many see the bill as a precursor to federalized workers’ comp.

Despite the introduction of HR 635, I see very little interest on Capitol Hill — and none at the state level — in federalizing workers’ comp. The bill is currently stalled in committee and doesn’t seem to be going anywhere. Moreover, since 1913, when New York became the first state to enact a workers’ comp act that passed judicial scrutiny, workers’ comp laws have been controlled at the state level, with a few exceptions — e.g., railroad workers, who are covered by the Federal Employers Liability Act. We will continue to monitor the issue.

Donald M. Harrison defends employers against workers’ comp claims and works with employers to improve safety in the workplace. He is senior counsel at Lehr Middlebrooks Vreeland and a contributor to Alabama Employment Law Letter.  If you have questions regarding workers’ comp or a safety issue, you can contact him directly at (205) 323-9276.