Turbulence Ahead for Workers’ Comp Market

There may be turbulence ahead for the workers’ comp market, according to an article today on PropertyCasulty360.

The article, by Nancy Grover, says that the market can be characterized as stable, but that there are changes in the nation’s workforce, as well as technological advances, that threaten the balance of the industry. (see “Workers’ Comp Besieged: Independent Views of the Problems Workers’ Comp is Facing” and “Workers’ Comp at a Crossroads: Where Does it Go from Here?“)

Grover states that the industry’s financial outlook is positive, but that the NCCI State of the Line report earlier this year, warned that there was “calm now, but turbulence ahead”.

I will have more to say on the challenges facing workers’ compensation when I publish my second presentation slides that I may present in Mexico this December.

Among some of the challenges, Grover reports the industry is facing are increased medical costs (I have written extensively about this as well), threats to their security systems, and the changing nature of the workforce (another issue I have mentioned before, especially with regard to immigration and medical travel in the Western hemisphere).

According to one industry source she cites, medical costs are the number one cost driver (see “Lost-Time Medical Costs Approaching $30K: When Will You See the Light?“).

NCCI found that the average medical cost per lost time claim grew by 4% in 2014, which was an increase from the previous three years, where the average medical cost rose between 2 – 3%, Grover said.

Drug prices are also a cost driver, according to Joe Paduda (see “Drug Costs Make Up Bulk of Work Comp Medical Costs [Infographic]“).

“The other thing happening is facility costs for hospitals and healthcare systems are going up at or near double-digit rates for many payers and not many are paying attention”, according to Joe.(see “Outpatient Facility Costs Rising Could Benefit Medical Tourism Industry“)

There are also market threats, Grover writes, such as the “on demand” economy with companies like Uber. Lyft and others raising questions for workers’ comp industry personnel.

Unfortunately, Grover does not offer alternative solutions other than those that are being tried, and have been tried, with little or no success.

One such “solution” is medical provider networks, to closely contain costs by managing care for injured workers, but as she points out, they have not proven effective among all states.

Here is what  some in the industry really looks like to this reporter:

hear-no-evil-see-no-evil-speak-no-evil

They keep saying and doing the same things over and over again, and costs continue to rise, challenges are rushing headlong towards them, opt-out expansion threatens to destroy workers’ comp altogether, but they are deaf, dumb and blind to reality and to alternatives. One wonders if they really are like these three. They just act upon instinct and don’t have a grasp of the changes around them outside of their little space.

Oh well, evolution works in strange ways, so there is hope.

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