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MIIA is a Membership Service of the Massachusetts

ACA affects workers’ compensation in 3 areas

Published in News on June 15, 2015 by Joe Callahan, MIIA Marketing Manager


Opinions still differ regarding the Affordable Care Act and how it will affect health care costs and delivery in the long term, but most agree that the landscape is evolving rapidly.

With some technical glitches at the beginning of the law’s rollout, and the penalty for being uninsured going into effect just this year, the full effect of the ACA on our system remains to be seen.

Massachusetts, a leader in health care reform, has had legislation in place since 2006, so the percentage of insured residents was already high when the federal law passed. Since the ACA implemented new federal subsidies and a big publicity push, the number of Massachusetts residents with health coverage has risen even higher – to more than 99 percent, or near universal coverage.

Massachusetts residents and employers have also become more familiar with – and developed strategies to deal with – issues and challenges such as employer mandates, coverage thresholds, minimum quality standards and affordability.

When it comes to workers’ compensation insurance, the ACA’s long-term impact isn’t so much a question of who is covered, but more of how three factors – the influx of newly insured workers, the delivery of occupational health services, and the quality of health of the general workforce – will affect the system.

 Availability of care

With the addition of newly insured workers into the health care system, the potential exists for more crowded waiting rooms and bottlenecks in accessing primary care. Down the road, supply and demand issues could lead to higher costs.

Increased wait times, and potential provider rate increases for tests and services, could affect workers’ compensation profitability, according to an article by Sam Friedman, an insurance researcher with Deloitte Center for Financial Services, in a 2014 issues report from the National Council on Compensation Insurance.

“While job-related medical claims account for a relatively small slice of overall health care costs,” he writes, “they make up more than half of the payments made by workers’ comp insurers.

In the same report, Kathy Antonello, chief actuary with the National Council on Compensation Insurance, notes that, similarly, the demand for orthopedic services could increase as newly covered residents seek treatment for ongoing joint and back pain.

“For the injured worker, a delay in receiving prompt medical attention may result in a slower recovery, thereby increasing both indemnity and medical costs,” she writes.

A recent Workers Compensation Research Institute study predicts some cost shifting from group health plans to workers’ comp plans as more people are covered, with workers’ comp plans generally paying more – particularly in cases where the source of the injury is less clear (such as shoulder, neck and back issues).

Reduced access to occupational health care is another issue that could arise as the ACA settles more firmly into place, says Niko Pappas, MIIA’s workers’ comp claims manager. MIIA (and other workers’ comp insurers) often try to refer injured workers to a specialized occupational health facility, as they are typically most familiar with the duties performed by municipal employees.

“If occupational health facilities are swallowed up by big hospitals and workers can’t get occupational health care during the first few days after an accident,” Pappas says, “this means they could be sitting in emergency waiting rooms and have longer recovery times – which affects costs.”

 Healthier workforce?

A more positive potential impact of the ACA is that people who previously weren’t covered by health insurance start going to the doctor and getting healthier. Underlying chronic conditions such as obesity, diabetes and hypertension are often linked to work-related injury claims, notes Friedman.

Pappas points out that when workers with chronic conditions such as diabetes have health insurance, they are more likely to see a doctor for regular physicals and monitor their own health more closely. As a result, workers who are treated properly for these conditions may heal faster.

In addition, employees who proactively seek treatment for existing back and joint issues reduce the likelihood that these issues will worsen over time and result in longer, more serious claims.

After passing health care reform, Massachusetts did see a decrease in workers’ comp claims. According to a RAND Corp. study, claims dropped by 16.7 percent from 2005 to 2009, and hospital costs dropped 5 to 10 percent. Although there were other factors at play (including the 2007 economic downturn), the study’s authors say the decline was “plausibly attributable to the reform rather than other factors.”

 Hidden costs

The rising cost of health care in general could also affect the future of workers’ comp costs. In Massachusetts, health care costs are expected to increase by 7 percent this year, in part due to the higher costs of hospital visits, medical procedures and specialty drugs.

Less than 10 years ago, lost wages made up the bulk of workers’ comp claim costs, Pappas points out. Today, the cost of medical treatment outweighs lost wages.

Other considerations that affect costs include paying overtime for other employees to cover an injured worker’s duties, hiring temporary staff, and shifting management-level employees to fill in, thus affecting their own productivity. When other employees are overworked while covering for an injured worker, it potentially sets the stage for more injuries.

“Sometimes these hidden costs outweigh other costs related to a claim,” Pappas says.

 What to do

While we further track how the ACA rolls out and determine how these competing factors balance out, municipal employers can take immediate action by working with their insurers to implement return-to-work programs, which can rehabilitate and return injured employees to productive work when medically reasonable to do so. Such programs reduce the amount of time employees are out of work, while also reducing workers’ comp costs.

Municipal employers are also advised to start identifying an occupational health network for referrals.

[The Health Care Reform section of has regular updates on the ACA.]


Joe Callahan is MIIA’s Marketing Manager.

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