Falling Workers’ Comp Trend Ends
California workers’ compensation benefits rose 13.9% to $8.9 billion in 2000, ending several years of declines relative to wages, according to a study to be released today by a non-partisan think tank.
Total wages paid rose 13.5% in 2000, and the number of workers covered by the state program rose 3.4%, according to the report by the Washington-based National Academy of Social Insurance. As a result, workers’ compensation benefits for every $100 in wages held steady at $1.49 in California.
Nationally, benefits, which include cash payments and health-care coverage, rose to $46.1billion, up from $43.1billion the year before. For every $100 in wages, the national average benefit dipped slightly from $1.04 to $1.03. That marked the eighth decline in the national average in as many years, from a peak of $1.68 in 1992.
The study’s authors attributed the downward trend in relative benefits to strong wage growth, a decline in reported accidents and the imposition by many states of managed health care and other reforms in workers’ compensation systems in the early and mid-1990s. But they suspect that increases in workers’ comp benefits may soon outpace total wages.
“In the past couple of years, we have seen a reduction nationally in cash benefits, but the medical benefits are starting to pick up,” said John F. Burton, a labor studies professor at Rutgers University and chairman of the National Academy of Social Insurance panel that compiled the report.
The 13.9% increase in California benefits reported by the study for 2000 went entirely to pay higher medical costs, said Tom Rankin, president of the California Labor Federation, AFL-CIO.
“The claim frequency went down somewhat, but there were no dollar cash benefit increases during those years,” Rankin said.
The academy has issued analyses of workers’ compensation for five years, pegging the payouts to wages in order to make more uniform comparisons among the state-run systems. The report also found that employer costs relative to wages declined slightly in 2000 on a national basis.
Allan Zaremberg, president of the California Chamber of Commerce, said he believes employer costs are running ahead of wages now because workers’ compensation insurance premiums have gone up 77% since 1998. He attributed the increases to rising medical costs and the need for insurers to recoup losses they incurred during a cost-cutting frenzy induced by the 1994 deregulation of the industry in the state.
