As more employers seek to integrate workers' compensation into benefits packages, a range of market trends and regulations are slowing what could be a natural fit.
More Americans gaining insurance should actually mean a healthier workforce, and thus fewer workers' compensation claims, argues Milliman actuary Derek Jones. But "perhaps more significant," he wrote in a recent analysis, "is the potential shift of costs between the workers' compensation and the health insurance markets."
The new expanded availability of health insurance could shift payments for injuries and illness that would otherwise be covered by workers' comp to health plans. "To the extent any of these claims are larger, there may be a significant cost shift from workers' compensation to healthcare," Jones wrote.
Or, treatments typically covered by health plans might end up covered by workers' comp.
"You're going to see changes in both directions, and it's probably too early to tell at this point," said Steve Kokulak, a senior vice president of workers' compensation and no-fault insurance at MagnaCare, which operates PPO networks for health plans, self-funded plans, unions and municipalities in New Jersey and New York.
In the near term, a bigger issue is the fact that more employers would like to have their workers' comp, health and disability insurance benefits more integrated, said Kokulak.
While most health insurers currently don't offer workers' comp insurance, Magnacare has seen an interest from both employers and their health plans "for a total product combining health, workers' comp and disability," Kokulak said.
The main barrier to offering that is not so much a need for large insurers to acquire workers' comp companies, but the patchwork quilt of state laws that in many places prevent the use of narrow provider networks.
Overcoming barriers to integration
Many states regulate whether carriers and employers can offer direct care for injured workers and have mandated workers' comp fee schedules.
The "biggest impediment" to the type of integrated insurance some employers are seeking is "a matter of a matter of bringing a product to the marketplace and making sure it's compliant with state workers' compensation rules."
It might be possible to move this piece of the group market in Oklahoma and Texas, which let employers opt out of state-workers' compensation program, as well as another 10 states that allow dispute resolutions with unions as an alternative to state workers' compensation programs, Kokulak said.
It's also far more simple for self-insured employers, like many municipalities, large corporations and union-based employers.
"It's just a matter of creating a program that would be legally compliant, and finding service partners, the TPAs and PPO networks," Kokulak said.
An open question for integrating health, disability and workers' compensation, though, is whether health plans are open to covering possible cost-shifting, Kokulak said.
"Will a health carrier be willing to absolve the cost of the additional two to five percent in claims, and how much would they raise the premiums?"