Demand for Bundling of Workers’ Comp and Health Insurance Increases

An article last Wednesday in Healthcare Finance News, by Anthony Brino, a Contributing Editor to Healthcare Finance News and the Editor of Healthcare Payer News, said that demand is increasing for the bundling of workers’ compensation and health insurance.

According to Brino, as more employers are seeking to integrate workers’ comp into their benefit packages, a range of market trends and regulations may be responsible for slowing what could be a natural fit.

However, according to Derek Jones, an actuary with Milliman, more Americans getting insurance should actually mean a healthier workforce, and therefore fewer workers’ comp claims. Jones said that what is more significant is the potential shift of costs between the workers’ comp and health insurance markets.

The article states that the new expanded availability of health insurance could shift payments for injuries and illness otherwise covered by work comp to health plans. Yet, as Jones is quoted in the article, “To the extent any of these claims are larger, there may be a significant cost shift from workers’ compensation to healthcare”.

Brino then says that treatments typically covered by health plans may end up being covered by workers’ comp. This development has not gone unnoticed by members of the workers’ comp industry in the run-up to the passage and subsequent enactment of the Affordable Care Act (ACA). Many of them have predicted cost shifting will occur from health care to workers’ comp.

While finishing my MHA degree in 2011, I took an elective course on the PPACA, and the term paper I wrote for this course concerned the impact of the ACA on workers’ compensation. I found at the time that there were three types of impacts in the literature of the time. The first was Direct, the second was Indirect, and the third was Speculative.

While I did not specifically address the issue of cost shifting, I would have to classify this as a speculative impact, as we shall see, and as Brino’s article mentions.

And according to Steve Kokulak, a senior vice president of workers’ compensation and no-fault insurance at MagnaCare, and a long-time connection of mine on LinkedIn, “You’re going to see changes in both directions, and it’s probably too early to tell at this point.”

A bigger issue, Kokulak states, is the fact that more employers would like to have their workers’ comp, health and disability insurance benefits more integrated. Kokulak also stated that MagnaCare has seen an interest from both employers and their health plans “for a total product combining health, workers’ comp and disability.”

A major barrier to offering an integrated product, according to Brino, is not that large insurers need to acquire workers’ comp companies, but that the patchwork quilt of state laws that in many places prevent the use of narrow provider networks.

This has been a part and parcel of not only my White Paper, but of my entire blogging experience to date. I said so in my blog article, Of ‘Aged Statutes and Old Case Law’ — Why Workers’ Comp Must Change and in my article, Statutes are not Statues ― Why Workers’ Comp Must Open up and Be Flexible.

Many states, Brino writes, regulate whether carriers and employers can offer direct care for injured workers and have mandated workers’ comp fee schedules. Yet, the “biggest impediment” to the kind of integrated insurance some employers are seeking is “a matter of bringing a product to the marketplace and making sure it’s compliant with state workers’ compensation rules.”

Or better yet, state workers’ comp rules need to be brought into the 21st century, and not bound by what transpired last century. There also needs to be a release of the stranglehold that lawyers, doctors, and workers’ comp services providers have on the workers’ comp system, another point I have raised time and again in my articles.

Kokulak said that it might be possible to move this piece of the group market in Oklahoma and Texas, which have let employers opt-out of state-workers’ compensation programs, as well as 10 other states that allow dispute resolutions with unions as an alternative to state workers’ compensation programs.

It would be far more simple, Kokulak said, for self-insured employers, such as municipalities, large corporations and union-based employers. “It is just a matter of creating a program that would be legally compliant, and finding service partners, the TPAs and PPO networks,” Kokulak went on to say.

Finally, an open question for integrating health, disability and workers’ compensation, Kokulak said, is whether health plans are open to covering possible cost-shifting. “Will a health carrier be willing to absolve the cost of the additional two to five percent in claims, and how much would they raise the premiums?”

I am confident that some way or another, injured workers will be able to get medical care abroad through the medical tourism industry, if their employers, their insurance carriers, and others make it possible for them to do so. The naysayers who have attacked my idea as “ridiculous and a non-starter” have not been vindicated by Brino’s article. Rather, it is I who have been vindicated here, as some of the things he mentions, I have already discussed in past articles, and most specifically, rather strongly.

No one knows what the future of health care, let alone health insurance will look like, or where some people will get their medical care. There may be, like the current marketplace, many options out there, medical tourism being one of them. And if integration in some form is achieved, medical tourism would stand to gain significantly from that integration, and it will not matter how the payment is made, as long as the patient gets the best care possible at the lowest cost possible.

The only other impediment is what is between most people’s ears. My advice to them after reading this article is this: Be careful for what you DON’T wish for, you just might get that instead.

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