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Workers' compensation and national health care reform.

AS THE CLINTON ADMINISTRATION prepares to unveil its national health care reform package, many insurers are leery of the administration's plan to fold the medical component of workers' compensation insurance into the new health care system. "Although the Clinton administration believes that merging workers' compensation medical into regular medical coverage would reduce costs, many insurers fear that it would diminish employers' abilities to provide care to injured workers," says Larry E. Kibbee, vice president of the Alliance of American Insurers, based in Schaumburg, Illinois. "This could extend the disability period and increase the cost of treatment."

The industry's position is based on the observation that there is a fundamental difference between the medical services used in workers' compensation and those utilized in ordinary health care, says Mr. Kibbee. "Medical treatment in workers' compensation involves the use of caseworkers, nurses and other medical personnel with the aim of getting the injured employee back to work as soon as possible," he says. Throughout the treatment process, the workers' compensation insurer and employer play an active role in the recovery. "Since ordinary medical plans do not provide many of these services, the specialized treatment unique to workers' compensation and the goal of encouraging a prompt return to work would be lost," says Mr. Kibbee.

Workers' compensation policies can provide this broad range of services and expertise because workers' compensation is a no-fault system. "Employees do not pay for any of their coverage and, under workers' compensation, there are no limits for preexisting conditions," says Mr. Kibbee. The no-fault nature of workers' compensation also gives employers an "exclusive remedy" for legal liability. However, the merger approach could remove the no-fault aspect of the system, says Mr. Kibbee.

Industry experts also point out that the merger proposal would reduce the incentive for companies to maintain safe workplaces. The American Insurance Association (AIA) points out that under the current system, many employers implement comprehensive measures aimed at minimizing the risk of workplace injury or illness. However, since the merger approach would no longer base the price of workers' compensation medical coverage on employers' safety histories, companies with excellent safety records would pay the same rates as those with less exemplary records. The ALA notes that this is in contrast to the traditional principles of workers' compensation.

Both the Alliance and the AIA believe that the workers' compensation system can be improved. The Alliance, for example, recommends applying the cost control techniques used in health care to workers' compensation, and using government controls to prevent cost-shifting. The AIA advocates coordinating workers' compensation with national health care, rather than merging the two systems. This "coordinated approach," the AIA reports, "can be achieved by authorizing insurers and self-insured employers to contract direcfly with managed care plans to provide medical services to injured workers." In the merger approach, "self-insured employers and workers' compensation insurers would be permitted to enter into agreements with individual providers authorized under the national health care plan," wrote Robert E. Vagley, president of the AIA, in a letter touting the plan to Hillary Rodham Clinton.

The AIA believes that its coordinated approach has the advantage of promoting the use of managed care plans and the development of specialized medical plans designed for treating injured workers. This approach "assures the kind of coordination between the workers' compensation insurer and the health plan that will provide effective - and cost-effective treatment," wrote Mr. Vagley. "It retains critical links to the employer that are necessary in order to obtain the earliest possible return to a productive life for the injured worker."
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Title Annotation:insurance industry attitudes
Author:Christine, Brian
Publication:Risk Management
Date:Aug 1, 1993
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