How will the Affordable Care Act affect workers' compensation?

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Tom Hebson is the Vice President of Product Development & Government Relations for Safety National.

Since the Patient Protection and Affordable Care Act (ACA) became law in March 2010, healthcare reform began to significantly change the U.S. healthcare delivery system, though its impact on workers’ compensation has been minimal to date.

While the HEALTHCARE.GOV website was introduced on October 1, 2013, approximately 3 million “eligible” citizens have been able to enroll.  Unfortunately, an estimated 5.5 million people had their health insurance cancelled and are continuing to search for the new coverage options that offer large premium increases and larger deductibles.  The ACA requirements for businesses with 50-100 employees scheduled for this next year have recently been delayed by the President and the HHS to allow these employers more time to phase in healthcare. So what happens now?

Washington D.C. is working to try and fix this problem. Mid-size employers are getting a short reprieve to allow time for them to better assess healthcare options for their employees. While all of this is being worked out, what might be the impact on the workers’ compensation marketplace?  Will workers’ compensation benefits be the fall back medical benefit provider for workers that cannot find adequate or affordable healthcare coverage or are channeled into less effective healthcare providers?  

There are some insights about the upcoming changes that may impact workers’ compensation costs and availability over time. First, the U.S. Department of Health and Human Services estimates that the physician supply will increase by only seven percent by 2020. Over the same time period, the U.S. Census Bureau projects a 36 percent growth in the number of Americans over age 65, the very segment of the population with the greatest healthcare needs. On a per capita basis, starting in 2015, the estimated doctor shortage will be approximately 63,000.  By 2025, the shortage could be as high as 131,000, primarily due to the impact of additional users coming into the healthcare system. This collision of care needs and the shortage of both primary care and specialist physicians (as predicted by the AMA Colleges) could greatly impact the delivery of healthcare in the workers’ compensation marketplace.

Workers’ compensation is a long-tail business and the future impact of medical care access, availability and capabilities could greatly affect final costs of a claim.  Today’s current workers’ compensation lost time claims average 60% medical and 40% indemnity, and are greatly influenced by the cost and delivery of professional and unencumbered medical services. Despite many perceived cost savings services in the workers’ compensation system, the measurement of having quality and knowledgeable care for an injured worker is critical in controlling these costs.  With increased workloads due to doctor shortages and increased regulatory burdens, injured workers could find themselves waiting for needed immediate and ongoing care.  Workers’ compensation relies on getting injured workers to care facilities that are close in proximity and, when claims include lost time, getting the injured worker necessary follow-up care and rehabilitation on a timely basis.   

So what are the potential consequences this law might produce for the workers’ compensation marketplace?  What U.S. citizens will receive once they are able to sign up thru the HEALTHCARE.GOV website will largely determine the overall impact the law may have on workers’ compensation.  If the ACA results in higher cost plans, larger deductibles and limited doctor and healthcare providers, workers could stray out of this system and into the workers’ compensation realm.  

The ACA impact on workers’ compensation costs will likely take years to sort out and analyze.  Many of the variables will be analyzed as losses mature within the claims system.  The nature of the workers’ compensation business is long tail and this will delay accurate data analysis for years to come.   

Editorial note: An earlier version of this article was written by the author in November. The updated version reflects recent changes in the marketplace.
  • the truth on 2/12/2014 11:36:01 AM

    this is a lie written by insurance companies to manipulate people into thinking health care has to come at the cost of other things. it's not true. workmans compensation is not the same as a workers compensation for work done. theyre playing with the language to confuse us. don't fall for this trick. you're smarter than them.

  • Lost Wages Joe on 2/12/2014 12:22:03 PM

    I agree with "The Truth" that this post is misleading. The author conflates the unrelated issues of a pending shortage of physicians and an aging population, with the slow rollout and employer requirements of the ACA.

    Assuming that the author's concerns about a dwindling number of physicans are warranted, what is needed are programs to encourage and enable more people to enter the medical field. As for the ACA, what is needed is time to iron-out the bugs, and an end to partisan attemts to sabotage the program.

  • an informed agent on 2/12/2014 3:32:47 PM

    what planet do you guys live on? we see work comp abuse everyday here in the trenches, and the trend towards higher deductibles and out of pocket medical cost sharing in ACA will create even more abusive work comp claim activity. Aca is so overwhelmingly complex, we have not even seen anywhere near the unintended consequences of aca yet, and may not for years. It took 25 years for the last governmental social program to roll out in all fifty states- medicare and medicaid. stay tuned, its gonna get interesting.

  • Doug on 2/12/2014 3:33:37 PM

    The person writing "the truth" is an obvious cool aid drinker. How the hell is "workmans compensation is not the same as workers compensation for work done" related in any way to this article? Workers' compensation is an absolute liability imposed on the employer for those employees injured on the job. I can only imagine those workers injured on the job will rely heavily on their workers' compensation policy medical benefits when and because they can't afford their ACA program policies. Reported WC injuries, whether or not job related, will know doubt become more frequent.

  • Janice Flynn on 2/12/2014 7:47:21 PM

    I don't want the bugs ironed-out, I want Obamacare gone. Government/IRS should not be involved in our healthcare. Any yes, the abuse of WC claims will get worse because the Affordable Care Act is not affordable.

  • I differ on 2/13/2014 10:53:26 AM

    First off, this guy must be living under a rock for the past two months. Healthcare.gov is working. The aca will lower workers comp cost in the long run mainly due to the availability of healthcare to otherwise uninsured individuals. If a old Work claimant gets a new injury related to their work related claim, right now they are probably lumping it under their old claim. With ACA the claimant would have the proper care needed and not pad the WC claim. This should mitigate the long term claim development and minimize medical cost.

  • Not drinking the Kool Aid on 2/13/2014 12:22:20 PM

    Interesting the different views on this article. I would argue however that Healthcare.gov is working. I handle Property/Casualty insurance and yet my clients are calling me for help because they still can't get their applications through the website. The ramifications and unintended consequences of this program will be felt for many years to come.

  • Director of Claims on 2/14/2014 12:37:51 PM

    I am amazed that the kool aid drinkers still seem to have their heads in the sand. Without getting into all the issues that have already created this nightmare resulting from the ACA; there is no question at this point in time that people are not able to secure a health policy at an "affordable" rate and then it is just a bare bones policy with high co-pays/deductibles and limited physician choices. Do you really beleive that when the dust settles people will choose the treatment option with higher co-pays/deductibles, with longer waiting times to see approved doctors v. the WC system?! Think again... this is going to be a nightmare times three.

  • Lost Wages Joe on 2/14/2014 1:23:39 PM

    Hey Director; what do you think was going-on BEFORE the ACA? People with no insurance have long used WC for treatment of their non-industrial medical conditions. Even if the ACA is as bad as you expect to be (it won't be, in fact it already isn't, but for the sake of argument), at worst from the WC standpoint it will just be business as usual. Now, back to my yummy Kool aid.

  • Subro much? on 2/14/2014 4:15:08 PM

    "I differ" - so I guess ACA is going to cover old Work Comp injuries eh? and that a good thing? Why don't you asked Medicare how that's working out.

  • Kool-Aid callers are children on 2/14/2014 4:30:59 PM

    Interesting how the name calling always identifies who is grinding an agenda as opposed to addressing reality. My immediate thought was along the lines of Lost Wages Joe. With a job history in HR, I can see WC claims dropping as poorer workers obtain their own affordable personal health plans.

  • Brian on 2/14/2014 5:08:01 PM

    I really can't believe some of the people who have responded to this article. They have no idea what they are talking about. I am an insurance broker who focuses on individual and small groups in the health care arena. The ACA had dramatically changed the health care system in the country and NOT in a good way, far from it. Trying to get into the system and Doctor's getting out of the system coupled with the very high cost, makes this a debacle for the American people who really liked what they had before Obamacare.

  • Ed Steffan on 2/17/2014 9:35:11 PM

    I'm wondering if the W C insurance may displace cost thru buying ACA
    coverage as part of structured settlements. This possible unintended consequence is analogus
    to Ssdi not being intended to offset ttd payments

    If a WC claim is denied will a percentage of people who cant work due to the injury, having no income, qualify for subsidies ACA coverage

    Are these and other scenarios going to possible lower wc cost but increase ACA cost?

  • Ed Steffan on 2/17/2014 9:42:22 PM

    Will Dr's who left the WC industry come back for its reliability, consistency and the higher pay.

  • Carla on 2/18/2014 10:36:38 AM

    Agreed Brian. The ACA was a bad idea from the beginning and has become an unmitigated disaster for many. Of course, for those who haven't yet experienced it on a personal level, I am sure they think it is great from a philosophic point of view. And it has not helped those it was meant to. Watch for an insurance bailout down the road as we take on more unhealthy people and don't get the young healthy people on the plans.

  • Independent on 2/24/2014 2:07:53 PM

    For the sake of the greater good of American Society and Corporations. Since ACA is now the law of the land, let's work together to help make ACA work for the greater good and lower both Healthcare and Workers' Comp costs. Let's incentivize policies and practicess that make us all healthier from food, products, safe medications, roads, communities and work environments. Anyone not working toward this has alterior motives.

  • John Kocke on 4/8/2014 1:57:10 PM

    Re: The Truth - I've been on the Managed Care side of Worker's Compensation for 20 years and have seen hundreds of claimants without health insurance try to get treatment for non work related medical conditions under workers compensation. It is not unreasonable to assume that those without health insurance will try to get their personal medical conditions covered under comp.

  • Injured Worker on 7/7/2014 12:06:16 PM

    Enjoy the conversation here...I had tendon release surgery March 2013 for 3 fingers. My hand and arm/shoulder became inflamed swollen and painful. I returned to the workers comp doc only to be told that those body parts weren't covered and it would all be fine in about 6 months.
    I saw my primary care for treatment who referred me another Orthopedic Doc. I was diagnosed with bursitis tendonitis and torn rotator cuff. The comp insurance case manager made me stop going to that doctor because it wasn't authorized and permitted the treating doc to refuse to see me.
    I continued with pain swelling and no care until I fell and broke my hip May 2014. After 2 days of IV antibiotics the swelling left and the pain was gone at least for a few weeks.
    Workers compensation has done me more harm than good. Its wrong that a person can be denied adequate medical care in comp situations.

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