Monday, September 14, 2009

Health Care Reform

I have a question: What happens to workplace safety and health if health care reform actually goes through? Has anyone thought about it?

Please don't jump in and leave comments about how health care reform is good or bad for the country, I'll just delete those posts. My question is not whether or not we should have health care reform, my question is what happens to safety and health if it comes to pass?

Let's assume it does pass. Let's also assume it meets the goal of reducing health care costs. Wouldn't this suggest that workplace injuries and illnesses might go up? Think about it, we all know that there exists a segment of employers who are only motivated by workers compensation costs. If those costs drop 20%, isn't it reasonable to also assume that at least some of those employers will also reduce their safety and health efforts?

Will this happen? Can it be stopped? We need to get some people a lot smarter than I am to start thinking about this.


  1. It's kind of hard to take a guess without knowing exactly what kind of health care reform will pass.

    I'm not sure how a reduction in health care or worker comp costs will also lead to a reduction in S&H efforts. I don't think most employers draw a correlation between the two - health care and safety compliance are really two seperate things, aren't they? I mean, if your health care costs go down 20%, great. Celebrate. But why then is there a need to reduce S&H efforts? Conversely, couldn't the employer also use the 20% savings to bolster safety compliance?

  2. Does any of the reform mention workers' comp? I can't believe anyone is ready to tackle the billing issue, when the general health insurance companies themselves don't care enough to fight cost shifting.

  3. Abel, explain your thinking on how a reduction of health care costs would or could result in an increase in workplace injuries and illinesses. Maybe you should go back read you post and think about what you wrote. It does not compute, health care costs have nothing to do with inuries and illinesses or worker's compensation costs. Are you trying to capitalize on the "hot" topic of the day?

  4. Workers comp costs have everything to do with health care costs, and it does compute, if you follow it all the way back (by the way, have I ever been a "hot" topic kind of blogger? Well, maybe if it's a hot S&H topic.).

    Workers comp (WC) rates are primarily based on three things (I realize it's more complicated than this, but these are the basics): the number of claims companies make (C), the average medical costs to the insurer of those claims (M) [this average cost is based on the industry not the individual company], and the average of the wages lost (L) [again, based on the industry not the individual company]. Visually this is:

    WC = C x (M + L)

    Generally, L is less than M, so if M goes down, say through health care reform, then C can go up and still keep WC constant. Since C equals claims, which equals reported injuries, a company can allow the number of injuries to rise, while keeping WC rates the same.

    Not every company is going to do this, in fact I would hope that most won't, but most of us who have been around awhile have run into safety directors who will admit that the only reason they have a job is to reduce WC costs, and if the costs were low enough, they would probably lose their jobs.

    Will this happen? Will it be a large impact? I don't know, that's why I posed the question.

  5. RT, I think the good companies will continue their S&H efforts and may even roll their WC savings into their S&H programs, but remember, OSHA isn't here because of the good companies...

  6. That's a great question. I would not expect much impact on OSHA compliance, workers' comp, etc. The threat (and reality) of workers suiing their employers will continue helping companies to stay committed to compliance, lowering rates, etc. I think that (lawsuits) is still the bigger hammer.

  7. Great timing on a post. CalOSHA reporter listed a link today on this subject

    There is a direct link to health off the job and on. Sports injuries on weekends are often claimed as work related on Monday just to get the coverage. Stop Smoking plans, affect work, the general heath of your family can take time and pressure off of work related stress and time away from the job.

  8. "injuries on weekends are often claimed as work related on Monday just to get the coverage."

    That sounds the opposite of my experience with comp. Hope that isn't really in the article you cited, unless it is one of the myths.

  9. Abel, Back up... The medical cost involved with worker's compensation has nothing to do with general health care costs. Reform will have no impact unless it is going to take over worker's compensation. I think you are comparing apples and oranges. To answer your question what happens to safety and health efforts id health care reform passes? NOTHING!!! Sorry I didn't answer your question the first time.

  10. I think WC should be considered in any health care discussions. How many WC claims have been paid as health claims because the employee used the wife's/husbands insurance because they were independent contractors without WC ins. The first concern of any employee is how to get the health cost paid for without usining there own cash. The other side is when a person gets hurt mowing the grass or fixing the car and gets hurt and uses the WC of their employer because they don't have health insurance. Do employers already push claims to health insurance to keep their rates low and fight any claim as not being work related. It all adds to the cost of Health care.

  11. Backing up to my last comment...

    - Lawsuits are not much of a deterrent because WC largely shields employers from those lawsuits. If an employer is especially indifferent, an employee might be able to sue, but that's the exception not the rule (it's likely that the states have different requirements for what constitutes indifferent).

    - Thanks for the link, it was a timely article.

    - I have seen cases of employees being hurt at home and trying to use WC, so I know it happens, but I disagree that it is 'often,' I think it's uncommon.

    The flip side of that is that I have also seen cases where the employer doesn't want their WC costs to go up, so they make the employee use the insurance the company pays for/subsidizes or that the employee's spouse have through their employer (as the last commenter notes). Again, I think it's uncommon, but it's out there.

    - And medical costs associated with WC ARE connected to general health care. Malpractice insurance is malpractice insurance, and it's not cheap. Regardless of who is paying the physician, that doctor is going to pass on part of their MP costs to each payer, whether they are WC, private insurance, or a person paying cash.

    Coverage for all also means that it becomes less likely that people hurt on their own time will try to claim the injury as work related.

    Those saving will be passed on to the employer.

    - My point exactly.

  12. BLS stats 2004 list Monday as the day of week with most injuries in Private sector,( 231,260) Manufacturing, Goods Producing, Mining,
    Friday as the least with (196,780).
    Most injuries occurred 2 hours after arriving at work.
    I know that OSHA does not follow up on many of these injuries because it may be 2-3 years before it drops off the books.

    If you have a laborer with little to no health care and he is hurt playing soccer on a Sunday, where else would he get that knee surgery?
    I see a drop in fake work related injuries.


    Look Inside the Workers’ Compensation System

    Is the Workers’ Compensation system really there to protect us if we are injured on the job? On this Workers’ Comp Matters program, host Attorney Alan S. Pierce welcomes Dr. Patrice Woeppel to take an inside look at the ins and outs of the workers’ compensation system and discuss her new book, Depraved Indifference: the Workers’ Compensation System.

  14. 1 million small businesses, will cost $49 billion a year and 5.2 million low-wage workers unemploy­ment or reducing hours. The fewer job opportunities put 10.2 million workers at risk of slower wage growth and cuts in other benefits and some of the cost of the mandates will be passed on to American consumers.

    H.R. 3200 will require the following:
    pay into each worker's account the amount equal to 2 to 8 percent into a Health Insurance Exchange Trust Fund. Coverage must be at least 70% as good as as current packages, and employers who do not offer the required minimum coverage and premium contributions, and have annual payrolls of more than $400,000 per year must pay 8 percent of each worker's wages into a Health Trust Fund. Employers with annual payrolls between $250,000 and $400,000 per year would be required to pay 2 percent to 6 per­cent on a sliding scale.

    Employers will receive a credit equal to 50 percent of the employer's health care expenses. This credit phases out as the number of employ­ees increases from 10 to 25 and the average annual compensation of employees increases from $20,000 to $40,000. The small business credit would not be available for workers with wages above $80,000.This may cause employers not to hire many new workers!

    Premium that employers pay in order to meet the qualifying coverage under the House mandate will be an additional $14.8 billion per year

    Congressional Budget Office believes under H.R. 3200, some firms may stop offering health insurance, and 3 million workers lose employment-based coverage.From the employer's perspective, it's more costly to "pay" than to "play" under the mandate, particularly for low-wage workers.

    Hiring decisions will be based on the total compen­sation of employment, including wages and bene­fits

    worker's compensation not high enough to absorb the cost of the man­date without bumping into the minimum wage. The play-or-pay mandate will have the effect of an increase in the minimum wage and likely reduce the employment and job opportunities skilled workers.
    Highlights are from the Heritage Foundation article by Mark wilson's 'Economics of Pay as you play in Health Care Reform

  15. "pay into each worker's account the amount equal to 2 to 8 percent into a Health Insurance Exchange Trust Fund."
    -This is for the employers who currently do not offer healthcare. How will this affect the workplace health and safety of these companies?

    "Hiring decisions will be based on the total compen­sation of employment, including wages and bene­fits"
    -Correct me if I am wrong, but isn't this how hiring decisions are made now? What will be different here?

  16. There is some talk about employees who injure themselves on weekends reporting injuries on Mondays. What about employees who are afraid for their jobs if they claim a work-related injury? Health Care Reform would (if it includes a mandate) possibly shift a large number of employee injuries OUT of the WC system. Injured employees would simply claim that work-related injuries happened at home, keeping them out of trouble with their bosses. Small businesses often fear a rise in WC premiums caused by a single injury. This pressure can be fairly common among small employers, and is borne out in my experience interviewing employees. They will say that they cut themselves and needed stitches, but their foreman took them to the urgent care clinic and just paid cash, so as not to have to file a claim.

    This is purely anecdotal, but it also happened to me personally, as an 18-yr old working in construction. Many moons ago.

  17. This has nothing to do with the post, but Abel, where are you? You have not posted in a month! We miss you....

  18. I think less health care costs for employers will create opportunity costs to invest in other things like safety & health efforts to improve the safety and production of operations. This is only the case for companies that value the safety and health of their employees. It will be a wash for companies that are more preoccupied with prodcution over safety and health.

  19. One aspect that has significant potential is the proper allocation of illnesses to work. Yes, there is the occasional weekend injury claimed under workers comp, but this is rare (except for the fraud attorneys who spend their time on this), and the occasional work injury claimed under health insurance, which is also rare.

    I fully agree with the concern that reducing health care costs will reduce worker comp premiums, and therefore reduce the amount of money that will be available within a compnay as far as the business cases based on cost savings from workers comp.

    The bigger issue is for illnesses which are very difficult to support in the workers comp system. The possibility is that the larger collective insurance community, now faced with having to accept all pre-existing conditions, may be able identify more illnesses as work related, and therefore properly push more medical costs into the workers compensation system. They may be able to collect sufficient data to identify occupations, industries, and individual companies with an excess occurance of illnesses to make the case that these are really work related.

    If this happens, I would hope that we could get access to the aggregate data to be able to target prevention efforts at all levels: both governmental and professional.