In two separate articles on Tuesday, David De Paolo and Stephanie Goldberg, mentioned a biennial report by the Texas Division of Workers’ Compensation that stated that even with some of the most favorable rates in the country, Texas employers still have issues with work comp.
According to De Paolo, about 2/3, or 67% as reported by Ms. Goldberg, of Texas employers carry workers’ comp coverage, which means an estimated 80% of the state’s workers are covered by the Texas system. In 2004, 62% of employers were covered, according to Goldberg.
About 75% of the employers, De Paolo said who don’t subscribe have some alternative plan. This means, that 95% of private-sector employers have some form of work injury protection.
The remaining 5% of private-sector employees who are not covered total about 470,000 workers, or 30,000 fewer than in the last report in 2012. The percentage is the same in both reports.
Stephanie Goldberg reported that this is due to lower insurance premiums and an increased availability of workers’ comp health networks, as stated in the report.
Yet, as both De Paolo and Goldberg state, larger employers are choosing to opt-out of the state system.
Quoting from the report itself, De Paolo writes, “Despite lower workers’ compensation insurance rates in recent years, it appears that an increasing number of the largest employers in Texas have begun to opt out of the workers’ compensation system since 2010, while an increasing number of small and mid-sized employers have increased their workers’ compensation coverage rates.”
In the prior report from 2012, the non-subscribing rate among the largest employers also increased from the 2010 report. The rate, De Paolo says went from 15% in 2010 to 17% in 2012.
The 19% figure in the table above, is still significantly lower, De Paolo said, than what was reported in 2008, when 26% of employers with 500 or more workers were non-subscribers.
The odd thing, De Paolo said, was that there was a slight decrease in non-subscription for employers with 5 to 9 employees, from 29% in 2012 to 27% in 2014, and for employers with 50 to 99 employees, 19% in 2012 and 18% in 2014.
So what does this mean for the implementation of medical travel, i.e., medical tourism into workers’ comp for expensive surgeries?
It means that as more states follow Texas’ and Oklahoma’s lead in expanding opt-out programs, as I mentioned in my article, Options for Workers’ Comp Getting National Attention, the focus of the medical tourism industry in going after this market is to target large employers, as far as Texas is concerned, and to research the non-subscription rates of all employers in those states that will follow Texas and Oklahoma’s example.
But it does not mean that as far as Texas is concerned, you should not try to go after smaller employers as well. Steven Bent, the executive director of the Texas Association of Responsible Nonsubscribers, and another connection of mine on LinkedIn, said that “…workers’ comp rates have been somewhat cyclical historically, and if rates were to go up again in the future, we would hope that the ability to provide benefits outside of workers’ comp exists as a check valve or as a pressure valve for higher workers’ comp rates.”
And it does mean that there is a market to go after, with large, small, and mid-size employers. The best way to do so is to approach insurance brokers who have experience with international travel insurance and workers’ comp, and even health care. And you should go directly to the employers themselves by finding out who opts out and who does not.
You don’t need thousands of client employers, a few dozen or so large employers will do for a start. Texas is pointing the way.