Workers’ Comp Payouts Rise in State, Decline in Nation

Workers’ compensation payments rose 8% in California from 1996 to 1998 while payments fell nearly 1% nationwide, according to a study to be released today.

The report from the nonpartisan National Academy of Social Insurance comes as political pressure grows to boost workers’ compensation benefits in California. In addition, a five-year price war among insurance companies has left some workers’ comp carriers in shaky financial health.

Workers’ compensation payments for medical care and cash benefits for work-related injuries or illnesses in California totaled $7.4 billion in 1998, the most recent data available, said the National Academy of Social Insurance, a nonprofit organization of insurance experts. That represents an 8% increase from 1996 payments of $6.8 billion, not adjusted for inflation.

Nationwide, workers’ compensation payments fell to $41.7 billion in 1998 from $42.1 billion in 1996.

The national numbers fell because of declining medical costs through active management of medical care, fewer accidents, more effective state-run programs and tightening eligibility for benefits, said John F. Burton Jr., dean of the Rutgers University School of Management and Labor Relations and chairman of the academy’s study panel that oversaw the study. Many of these changes were a reaction to rapidly rising costs in the 1980s and 1990s, he said, but some also made the programs less worker friendly.

In California, rising medical costs, which have pushed up the average cost per claim, are to blame, Burton said.

While worker injury rates have declined, the average indemnity claim in California rose 13% to $30,813 in 1999 because of medical inflation, high litigation costs and other factors, said Bob Young, spokesman for the California Workers’ Compensation Institute. That figure, which includes medical costs and wages for time off the job, has been increasing an average of 11% a year since 1994, he said.

Worker advocates have been pushing for more than a decade to increase the maximum benefits in California, and legislation is pending in the state Senate to do that. Gov. Gray Davis voted a benefit increase in September.