What Lessons Can We Glean From Workers’ Compensation State Funds?
Lost in all the debate about healthcare reform and the government option is our experience with workers’ compensation. According to Mark Jablonowski, an analyst at Conning Research & Consulting, twenty five percent of all workers compensation in the United States is written by Workers Compensation State Funds even though these state funds only write in 25 states. The Conning Research study, “Workers’ Compensation State Funds: Evolution of a Competitive Force” analyzes the role of state funds and their competitive positioning versus the traditional workers’ compensation marketplace and alternative forms of workers’ compensation risk financing. The study reviews state funds’ financial and market share results, their effect on the overall market, and the prospects for future growth. “In comparison to the industry as a whole,” said Jablonowski, “state funds’ loss ratios are higher, but they compensate with lower expenses and increased investment income. Overall, operating results are on par with the rest of the workers’ compensation industry.” Interestingly, these state funds have had strong financial results in general and the key may be their dedicated approach to loss prevention and control. Stephan Christiansen, director of research at Conning, added ‘”the mission of these state funds often includes shared responsibility for health and safety with other state agencies, and state-of-the-art loss prevention initiatives and financial rewards tied to the business owners loss performance.”
What Are The Lessons Here?
While the Conning Research & Consulting study was focused on the successes of the workers’ compensation state funds, I believe there are several additional take a ways relevant to the healthcare debate:
Government Option Can Co-Exist With Private Insurers
Except for the handful of monopolistic states, workers’ compensation state funds have coexisted with private insurers for many years. Despite political conflicts in California as to the role of the State Compensation Insurance Fund, SCIF was an invaluable partner during the last hard market when private insurers were leaving the state in droves. Since significant workers’ compensation reforms in California, private insurers have returned in strength and the State Fund exists alongside them.
Government Option Provides A Stop Gap For Less Desirable Insureds
The fact that SCIF still exists is further testament to the need of a strong government option to provide affordable workers’ compensation insurance to select insured’s in higher risk categories or with less than ideal loss experience. Agents and brokers throughout California are fighting the Governor’s plans to sell all or part of SCIF. All recognize this ill advised effort will compromise an important reliable partner for business owners. This is precisely the reason Democrats want a government option for healthcare, not to replace private insurers, but to smooth out the cost for those businesses and individuals that have had undesirable experience or in higher risk categories.
Is Government Option Better Positioned To Encourage Loss Prevention
It is no secret that many of the uninsured are the unemployed or under-employed. Few if any of these people will be able to afford healthcare coverage at any cost. A government option may be in the best position to emphasize better health and the coordination of other government services to best reach these people and potentially better results than possible with private insurance. Coordinating public services is not likely to be of interest to private health insurers.
Urgent Care Options
Long ago workers’ compensation insurers worked hard to better serve injured workers through networks of private urgent care centers. These proved to be lower cost and even better service than hospitals or individual doctors. Can these urgent care centers or something like them be used for more standard healthcare needs for the currently uninsured?
As I have commented previously, I am no healthcare specialist, but I do care about our country. I am concerned that the debate on healthcare has gotten so hot that few are really listening to one another and the debate continues to narrow. Are we witnessing a breakdown of our democracy? I don’t have all of the answers and make these suggestions merely to push the dialogue forward and to remind people that these issues are not new and have been tackled elsewhere before. We need to look at all relevant experience if this debate is going to be healthy and productive.
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