I.I.I. chief actuary James Lynch reports from DayÃ‚ 2 of the WCRI annual conference in Boston:
Health insurance and workers compensation are sort of kissinÃ¢â‚¬â„¢ cousins, in that changes that affect one inevitably affect the other.
But thatÃ¢â‚¬â„¢s my metaphor. Dr. Richard Victor, executive director of the Workers Compensation Research Institute (WCRI), likens the impact of health care reform to a hurricane.
Like a storm whose path is not quite defined, health care reform could take a significant toll – but we donÃ¢â‚¬â„¢t know precisely where. Since workers comp differs from state to state, the impact of the Affordable Care Act (ACA) will differ from state to state. Like a good weatherman, Dr. Victor told an audience of about 400 at WCRIÃ¢â‚¬â„¢s annual conference in Boston on Thursday he could make some educated guesses what might happen.
He is assuming the ACA is enacted exactly as written – a tough assumption but as good a starting point as any. In that case, the increase in insured Americans will increase demand.
The marketplace might decrease the use of doctors, relying instead on well-trained nurses or even sophisticated computers to help provide care.
Or doctors might raise prices in the face of rising demand.
What actually happens will differ by state. Some states make it difficult to take diagnosis and treatment out of the doctorsÃ¢â‚¬â„¢ hands. In those states, medical costs – and their kissinÃ¢â‚¬â„¢ cousin, comp costs Ã¢â‚¬” are likely to rise. Elsewhere, the effect will be muted.
Ã¢– Health care reform will result in a healthier work population. This will tend to help the comp system, because healthy workers are less likely to get hurt on the job, and if they do get hurt, they get well faster.
Ã¢– Changes in billing, Dr. Victor said, will Ã¢â‚¬Å“absolutelyÃ¢â‚¬ lead to upcoding – in which a doctor exaggerates the severity of a treatment to receive a bigger reimbursement. The practice is well-documented in workers comp, he said, citing examples from Florida and California.
Ã¢– Changes are likely to shift into workers compensation. ThatÃ¢â‚¬â„¢s because many employers are increasing deductibles that employees pay for treatment. Workers comp, meanwhile, has no deductibles and no co-pays – giving an employee the incentive to label an injury as work-related.
I blogged about DayÃ‚ 1 of the conference here. Other highlights from Day 2:
Ã¢– Alex Swedlow, president of the California Workers Compensation Institute (CWCI) noted that even after all appeals are exhausted only about five percent of denials of comp claims are overturned. Swedlow also said evidence-based pain management guidelines effectively control costs; and a comparison of California and Washington pharmaceutical costs show that more cost savings are possible.
Ã¢– Harry Shuford, chief economist of the National Council on Compensation Insurance (NCCI), argued that underwriting cycles are closely linked to bond yields and that when it comes to managing their business, insurers in the long run Ã¢â‚¬Å“do a much better job than other financial intermediariesÃ¢â‚¬ like banks.