Workers’ Comp Costs to Increase Due to Medical Care Inflation

Stephanie Goldberg reported last week on Business that medical care inflation could cause workers’ comp costs to rise.

Citing several sources, including NCCI, Moody’s Analytics and the US Bureau of Labor Statistics, Stephanie said that “increased pressure on medical costs per workers’ comp claim is expected as medical care inflation picks up”, according to a briefing published last week by NCCI.

Stephanie also stated that NCCI said that while medical care costs inflation has been muted for the past two years, it is expected to rise at a faster pace, this year and next year.

The following chart illustrates this.

medical cost inflation

*2015 and 2016 inflation rates are projected.

Source: National Council on Compensation Insurance Inc., Moody’s Investors Service Inc. and the U.S. Bureau of Labor Statistics

NCCI said that by measuring only changes in price, medical cost inflation will remain below 4% for both years. That compares with 2.4% in 2014 and 2.5% in 2013.

However, price alone is not enough to predict medical costs, according to the sources cited in the article. Factoring changes in price, as well as utilization, a report released in June by PricewaterhouseCoopers, projected a medical cost trend of 6.5% for next year. An earlier projection claimed a 6.8% increase.

PwC also said that the medical cost trend is influenced by changes in the price of medical products and services, changes in how often these products and services are used. Other factors include expensive specialty treatments, and investments to guard personal health data. The PwC report does not focus on workers’ comp specifically.

When contacted by email by Stephanie, Joe Paduda said that medical benefits could exceed two-thirds of claim costs on a national basis within three years. He also said that in many states, medical benefits already make up more than half of total benefits.

Matt Engels, another of my LinkedIn connections, vice president of network solutions at Corvel, said that “one of the contributors to a potentially disproportionate rise in medical costs is a siloed management.”

I wrote about how we have siloed general medical care and workers’ comp medical care into two different silos in my article, “Betting the Farm”, so Mr. Engles’ observation is accurate.

Stephanie’s article focused on what steps workers’ comp payers should take to control higher medical costs per claim, her sources said, and Joe Paduda said that another way they could control medical costs is by identifying and, where they can, direct injured workers to the best providers.

It is rare that I ever disagree with Joe, as I have always trusted his reporting on workers’ comp and managed care issues, but as my readers know, I have a better way for workers’ comp payers to control costs. There are other alternatives.

Medical travel is one of those alternatives, and it is high time that Americans look beyond our borders for lower cost medical care for injured workers.

It is wrong-headed and quite illogical to ignore the facts that have been presented in the Goldberg article, as well as all other articles, reports and surveys of the costs of workers’ comp medical care.

And it is also wrong-headed and quite illogical to assume that only Americans practice quality medical care. That is like saying that Japanese and Koreans can’t play baseball, that only Canadians can play hockey, and that Russians and Lithuanians and Croats can’t play basketball, and so on.

Our stubborn devotion to “American exceptionalism” has a very high price. If you want to keep paying that price, go ahead, but you’d be foolish to continue do so. The choice is yours, pay higher costs, or look for lower cost health care. Medical travel is the answer.


I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at:

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: Share this article, or leave a comment below.

This entry was posted in Claims, Cost Control, Health Care Costs, Inflation, MEDICAL COSTS, Medical Tourism, Medical Travel, NCCI, Workers' Comp, Workers' Compensation and tagged , , , , , , on by .

About Transforming Workers' Comp

Have worked in the Insurance and Risk Management industry for more than thirty years in New York, Florida and Texas in the Claims and Risk Management spheres, primarily in Workers’ Compensation Claims, Auto No-Fault and Property & Casualty Claims Administration and Claims Management. Have experience in Risk and Insurance Business Analysis, Risk Management Information Systems, and Insurance Data Processing and Data Management. Received my Master’s in Health Administration (MHA) degree from Florida Atlantic University in Boca Raton, Florida in December 2011. Received my Master of Arts (MA) degree in American History from New York University, and received my Bachelor of Arts (BA) degree in Liberal Arts (Political Science/History/Social Sciences) from SUNY Brockport. I have studied World History, Global Politics, and have a strong interest in the future of human civilization in all aspects; economic, political and social. I am looking for new opportunities that will utilize my previous experience and MHA degree. I am available for speaking engagements and am willing to travel. LinkedIn Profile: Resume:

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