Workers Comp: Medical Benefits Slice of the Pie is now the biggest

by Clive Riddle, September 10, 2010

The National Academy of Social Insurance (NASI) has just released a 112 page report: Workers Compensation Benefits, Coverage and Costs 2008 which provides  comprehensive data on workers' compensation cash and medical payments for the nation and for each state, the District of Columbia, and federal programs.

This year, for this first time ever, the report finds that medical benefit claims exceed cash compensation payouts. Here is a summary data table provided by the NASI:

Figure 1: Workers' Compensation Spending, 2008
Type of Spending	Billions of Dollars	Percent  Change
Total benefits paid	$57.6	4.4
Medical payments	29.1	8.8
Cash benefits	28.6	0.3
Employer costs	78.9	-6.7
Amount per $100 of Covered Wages	Per $100 of Payroll	Dollar Change
Benefits paid	$0.97	$0.03
Medical payments	0.50	0.03
Cash payments to workers	0.48	-0.01
Employer costs	1.33	-0.11
Source: National Academy of Social Insurance, 2010.

Continual health care inflation, utilization and other medical cost escalators are blamed. John F. Burton, Jr., chair of the report panel tells us: The growth in medical spending may reflect both higher prices for medical care and greater use of services. The increase is the continuation of a long-term trend since 1980, but this is the first year that payments for medical care were more than half of all workers' compensation benefits."

However, one additional factor is probably in play. Given 2008 data would be the first year to reflect the great recession, intuitively one might assume the cash compensation slice of the pie was diminished by a shrunken work force.  So while health care costs are an easy target and typically a deserved scapegoat, the economy would seem an equal explanation for why the pie is being sliced up differently.