Workers’ Compensation Under Romneycare Provides Clues for Nationwide Future of Systems

By John Stahl, Esq.

Uncertainty regarding how the U.S. Supreme Court deciding that the Patient Protection and Affordable Care Act (ACA) was constitutional would impact workers’ compensation systems makes this a good time to review an expert’s related research. RAND Director for Research Paul Heaton  prepared a report entitled “The Impact of Health Care Reform on Workers’ Compensation Medical Care: Evidence from Massachusetts” earlier this year.

The report analyzed “the impact of health care reform on treatment and billing for medical care received through the workers’ compensation (WC) system, drawing on the experience of Massachusetts” regarding “Romneycare.” Heaton added that “there has been no broad consensus on the magnitude or even the direction of the likely impacts of reform.”

Despite the uncertainty, the empirical evidence from Massachusetts since Romneycare was implemented in 2006 and common-sense theories regarding the impact of available forms of health insurance on workers’ compensation allowed educated guesses regarding the ACA’s effect on injured workers’ care.

Broad Findings

General effects of Romneycare on Massachusetts workers’ compensation included that “relative to nearby states, Massachusetts has a lower rate of recorded workplace injuries and illnesses.” Additionally, “its WC fee schedules provide a comparatively low rate of reimbursement to providers for medical services.” The analysis suggested as well “that the reform can account for a roughly 5 percent to 10 percent decline in WC [emergency room] ER bill volume.”

Heaton further addressed the factor of the recession beginning in 2007, which was roughly one year after Massachusetts implemented Romneycare. He determined that the following four developments proved that the healthcare reform in Massachusetts “had impacts separate and apart from any changes in WC billing that occurred because of the business cycle.”

  • Population segments with the greatest increase in insurance coverage experienced the largest changes in WC billing.
  • WC billing decrease occurred between implementing Romneycare in late 2006 and the recession beginning in 2007.
  • Regions that did not experience much change in their unemployment rates experienced declines in WC billing as Massachusetts was implementing Romneycare.
  • “The relationship between health coverage expansions and WC billing declines was strong even after measures of business cycle activity were directly controlled for.”

Relationship Between the ACA and Workers’ Compensation

The ACA reflected efforts in Massachusetts and other states “to enact comprehensive health care reforms that would expand the availability of coverage, increase quality, and lower costs.” Impetuses for these reforms included two observed flaws with the current system. The first problem related to “the large share of individuals who remain uninsured under the primarily employer-based system for providing health coverage.” The second problem was described as “the rising costs of health care as a share of total income.”

One anticipated impact of the health care reform described above on workers’ compensation was that increasing the number of employees with quality health care insurance would reduce seeking workers’ compensation for medical services for needs that did not directly relate to compensable harm. Possibilities included a workers’ compensation claim for a general checkup several months after a full recovery from a work-related injury.

Heaton speculated conversely that “it is possible that[, under healthcare reform,] some work-related injuries legitimately belonging in the WC system might be compensated through health insurance.”

Reasons for avoiding the workers’ compensation extended beyond healthcare reform to motives that resulted in work-related harm going uncompensated long before anyone conceived of Romneycare or Obamacare. These included concern that filing a workers’ compensation claim “would have negative job repercussions.” Potential reform-related reasons for avoiding the workers’ compensation system included concluding that filing a health insurance claim would avoid risking that a workers’ compensation claim would be disputed.

Cost Containment

In addressing the impact of reform-related cost containment, the report observed that most workers’ compensation systems incorporated fee schedules. A common element of these schedules was that WC rates were often tied to Medicare or Medicaid reimbursement rates. Those reimbursement rates were a significant element of the ACA.

More uncertainty existed regarding other cost-containment proposals in Massachusetts and other jurisdictions. Examples included stricter control regarding health insurer rate increases and adopting a global payments system that related “provider reimbursement to individual patients rather than specific services.”

Speculation included anticipating that preventing private health insurers from increasing premiums might prompt those insurers to reduce provider reimbursements. A possible domino effect of that practice was that providers would shift the burden of their expenses to patients with other types of insurance. This could increase workers’ compensation costs.

Bottom Line

Heaton cut to the chase well in stating that “regardless of whether there is cost shifting into and/or out of the WC system, coverage expansions essentially provide a substitute for WC coverage, so they can be expected to, if anything reduce the amount of care consumed within the WC system, and thus lower [workers’ compensation] costs.”

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