The Future of Workers’ Compensation: Opportunities and Challenges.

The last two decades have been ones of both challenge and opportunity for workers’ compensation systems. Many jurisdictions implemented reforms to try to stem rapidly rising costs or improve worker outcomes, insurers faced unanticipated losses, employers called for reasonable, predictable costs and workers sought to ensure or maintain adequate benefits. Change, experimentation and lessons learned characterized these twenty years.

Despite the upheaval and new directions taken, however, the fundamental goals of workers’ compensation systems remained constant: (1) to provide prompt and adequate benefits to injured workers, (2) to ensure workers have timely access to quality medical care, (3) to accomplish the previous goals at reasonable costs to employers, (4) to operate an effective benefit delivery system, and (5) to finance all with well-functioning insurance mechanisms.

At WCRI’s 2003 Annual Issues & Research Conference, prominent workers’ compensation researchers, practitioners and policymakers assembled to assess how well systems currently perform against their goals and to predict the critical issues that will shape workers’ compensation systems in the next decade.

• Dr. H. Allan Hunt, Assistant Executive Director, W.E. Upjohn Institute for Employment Research, assessed the adequacy and equity of workers’ compensation benefits paid to injured workers, outlining the complex issues that arise when trying to measure benefit adequacy.
   
• Dr. Jay Himmelstein, Director of the University of Massachusetts Center for Health Policy and Research, synthesized a growing body of literature and experience that seeks to measure access to quality medical care for injured workers.
   
• Michael Manley, Research Coordinator, Oregon Department of Consumer and Business Services, discussed the Oregon study that ranks state workers’ compensation premium rates and identified issues to consider when defining system “affordability.” 
   
• Cristina D. Dobleman, Director of Global Risk Management, Levi Strauss & Co., outlined key criteria for evaluating and measuring whether or not the systems meet the objective of reasonable costs to employers from the point of view of a large apparel manufacturer.
   
• Duncan S. Ballantyne, Senior Analyst, Workers Compensation Research Institute, outlined a model for an effective workers’ compensation benefit delivery system – one that has the potential to deliver timely and accurate benefits to workers and to reduce significantly benefit delivery expenses.
   
• Stephen J. Klingel, President and Chief Executive Officer, NCCI Holdings, Inc., presented a broad analysis of the efficiency of the workers’ compensation insurance market as it exists today by examining its key functions: risk transfer, risk sharing or risk pooling, administration and safety incentives.
   
• Dr. Richard A. Victor, Executive Director, Workers Compensation Research Institute, identified the “seven habits of highly effective workers’ compensation systems.” He explained how systems that embrace these habits will be successful in coping with critical challenges of globalization and the aging labor force.
   
• Bruce Hockman, Senior Vice President, Towers Perrin Reinsurance, gave an overview of the evolution of the insurance market over the last two decades and offered a forward look at the future shape of insurance markets – their function, concentration and competition.
   
• Joseph Edwards, a former insurance regulator who now administers several self-insured trusts in Maine, focused on the question, “Will the politics of workers’ compensation facilitate or inhibit success?”
   
• Richard P. Gannon, Administrative Director, California Division of Workers’ Compensation, discussed the importance of predictability in workers’ compensation systems – for employers, workers and state agencies.
   
• Art Wilcox, Public Employee Director, New York State AFL-CIO, pointed out deficiencies in the current workers’ compensation system from the workers’ perspective, noting that it is time for employers and workers to work together to improve state systems. He suggested several new innovative approaches.
   
• Kathleen Muedder, Senior Vice President, Emerging Issues, ACE USA, summed up some “take-aways” from the forum from an insurance executive’s viewpoint.

While the presenters at this forum identified many challenges facing workers’ compensation systems, it was also clear that opportunities for improvement exist. Research can help find the answers by detecting system cost drivers, evaluating the effectiveness of policy changes and measuring outcomes for injured workers. By building a body of knowledge about the characteristics of successful systems, decisions can be made and strategies put into practice that will enable systems to better serve injured workers and to make American business more competitive.