Researchers at the University of California, funded by the California HealthCare Foundation, propose having all workers’ compensation related health care paid for as part of general health insurance, creating significant administrative savings which could be used to cover the uninsured. (UC Paper) The report looked at California workers’ compensation insurer expenses over a multi-year period and compared those with health insurers’.
The paper begins by explaining the differences between general health insurance, which typically has premium sharing, copays and provider contracting, and most workers’ compensation insurance, which imposes no costs on the worker and often little control of medical spending. The study then compares administrative costs in general health insurance versus those in workers’ compensation programs. It finds that workers’ compensation administrative costs are several times higher than health insurance ones. Finally the report projects that over ten years the savings from moving workers’ compensation medical care to health insurance would be $500 billion or more. The authors acknowledge that integration would be controversial but give several good reasons for making the change, including better integration of employees’ overall health care.
It is also important to note that the researchers did not include administrative savings by providers, which might also be substantial since workers’ compensation is generally acknowledged to impose higher administrative costs on providers than health insurance does. The history of workers’ compensation and the complexity of the system makes a change hard. Too many people with a vested interest in the current system. Whether integration occurred or not, however, the inefficiency of workers’ compensation health care administration should be addressed.