NCCI: rising medical expenses add to workers' comp premiums. (Briefing: NCOIL Spring Meeting).

Rising medical costs are just one reason the future of workers' compensation insurance doesn't look pretty, according to a representative from the National Council on Compensation Insurance.

Medical costs have been driving up costs for the past three years. Inflation, an aging work force and ergonomic standards have contributed, but the biggest cost driver has been pharmaceuticals, said Mona Carter, who heads national policy development for NCCI.

About 53% of workers' comp costs are medical, and 25% of that is for pharmaceuticals, Carter told the National Conference of Insurance Legislators during its Spring Meeting in Savannah, Ga. In cases where pharmaceuticals may be used instead of hospitalization, it doesn't appear to be a trade-off in terms of costs, she added.

NCCI annually releases market trend figures, with 2001 numbers expected in June, but Carter was giving NCOIL members a preview of the statistics.

The pain reliever OxyContin is the most prescribed drug, but it is addictive and has been at the center of many class-action lawsuits, Carter said. Vermont State Rep. Kathleen Keenan, a Democrat and president of NCOIL, said the drug is used often to treat terminally ill cancer patients. But the drug has also attracted the attention of illegal drug users, particularly young people, Carter said. Rhode Island State Rep. Brian Kennedy, a Democrat, said pharmacies now are refusing to carry OxyContin because people are holding them up just to get to the drug.