Insurance Business America contributor on impact of ACA on workers' compensation
Since the Patient Protection and Affordable Care Act (ACA) became law in March 2010, healthcare reform began to significantly change the U.S. healthcare delivery system, though its impact on workers’ compensation has been minimal to date.
While the HEALTHCARE.GOV website was introduced on October 1, 2013, approximately 3 million “eligible” citizens have been able to enroll. Unfortunately, an estimated 5.5 million people had their health insurance cancelled and are continuing to search for the new coverage options that offer large premium increases and larger deductibles. The ACA requirements for businesses with 50-100 employees scheduled for this next year have recently been delayed by the President and the HHS to allow these employers more time to phase in healthcare. So what happens now?
Washington D.C. is working to try and fix this problem. Mid-size employers are getting a short reprieve to allow time for them to better assess healthcare options for their employees. While all of this is being worked out, what might be the impact on the workers’ compensation marketplace? Will workers’ compensation benefits be the fall back medical benefit provider for workers that cannot find adequate or affordable healthcare coverage or are channeled into less effective healthcare providers?
There are some insights about the upcoming changes that may impact workers’ compensation costs and availability over time. First, the U.S. Department of Health and Human Services estimates that the physician supply will increase by only seven percent by 2020. Over the same time period, the U.S. Census Bureau projects a 36 percent growth in the number of Americans over age 65, the very segment of the population with the greatest healthcare needs. On a per capita basis, starting in 2015, the estimated doctor shortage will be approximately 63,000. By 2025, the shortage could be as high as 131,000, primarily due to the impact of additional users coming into the healthcare system. This collision of care needs and the shortage of both primary care and specialist physicians (as predicted by the AMA Colleges) could greatly impact the delivery of healthcare in the workers’ compensation marketplace.
Workers’ compensation is a long-tail business and the future impact of medical care access, availability and capabilities could greatly affect final costs of a claim. Today’s current workers’ compensation lost time claims average 60% medical and 40% indemnity, and are greatly influenced by the cost and delivery of professional and unencumbered medical services. Despite many perceived cost savings services in the workers’ compensation system, the measurement of having quality and knowledgeable care for an injured worker is critical in controlling these costs. With increased workloads due to doctor shortages and increased regulatory burdens, injured workers could find themselves waiting for needed immediate and ongoing care. Workers’ compensation relies on getting injured workers to care facilities that are close in proximity and, when claims include lost time, getting the injured worker necessary follow-up care and rehabilitation on a timely basis.
So what are the potential consequences this law might produce for the workers’ compensation marketplace? What U.S. citizens will receive once they are able to sign up thru the HEALTHCARE.GOV website will largely determine the overall impact the law may have on workers’ compensation. If the ACA results in higher cost plans, larger deductibles and limited doctor and healthcare providers, workers could stray out of this system and into the workers’ compensation realm.
The ACA impact on workers’ compensation costs will likely take years to sort out and analyze. Many of the variables will be analyzed as losses mature within the claims system. The nature of the workers’ compensation business is long tail and this will delay accurate data analysis for years to come.
Tom Hebson is the Vice President of Product Development & Government Relations for Safety National.