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* Gov. Rauner as quoted in the Southern Illinoisan…
We need workers’ compensation reform. It is the number one regulation that is pushing manufacturing jobs out of the state, and it is also costing taxpayers hundreds of millions of dollars because workers’ compensation inside government is also very expensive.
* Mark Denzler of the Illinois Manufacturers Association sent this to me a while back about tackling workers’ comp medical costs. He was reacting to a pro-doctor article I sent him which I can no longer find…
It’s a very interesting piece written by medical professionals who may be worried about whether they will buy a new Ferrari or have to settle for the Mercedes or Lexus but it doesn’t reflect the reality of the recent Workers Compensation Research Institute that found:
“Illinois’ ranking did not change materially for major surgery, major and minor radiology, pain management injections, and emergency services, remaining among the highest of the fee schedules states during the same time period.”
Major surgery rates are 339 percent above Medicare rates.
Illinois fee schedule rates for hospital outpatient facility services associates with common knee surgeries were on average 157 percent higher than Medicare rates.
In 2015, the Illinois fee schedule rates for ASC facility services associated with common keen and shoulder surgeries were on average 242 percent and 172 percent higher than Medicare rates for similar knee and shoulder surgeries.
Major and minor radiology rates are 238 percent and 252 percent higher than average.
For example, according to WCRI, an Illinois doctor performing an arthroscopy for a rotator cuff repair will be paid $2,574 under Medicare but that same doctor will receive $7,856. Perhaps, these doctors can explain why they should receive $5,282 more for the same procedure when it’s funded by Workers’ Compensation. Perhaps, its needed to get the luxury package on the new car.
Can they explain why they get paid $14,215 for a simple hand or wrist procedure under the WC system but only receive $6,676 under Medicare. Why is the same identical procedure worth $7,539 more when it’s paid by employers under WC? Maybe this is for the new boat?
There is absolutely NO limit on the number of chiropractor or OT/PT visits under Workers’ Compensation while nearly every private health insurance coverage limits the number of visits. Are they willing to limit the number of visits by a patient unless they can prove that the employee is progressing? If not, then they are simply running up the costs of the system.
In 2011, Illinois did enact a 30 percent across the board cut in the medical fee schedule and our medical costs dropped from 2nd to 3rd highest in the United States. Today, Illinois workers’ compensation costs are 7th highest nationally and NCCI has recommended no further reduction in costs this year.
All emphasis in the original.
* Back to Gov. Rauner…
“What we’ve got to do is what Indiana has already done. The balance of power between taxpayers and special interest groups inside government needs to get balanced,” Gov. Rauner said. “Workers comp costs in Illinois are some of the highest in America. We’re right next door to Indiana which has the lowest workers comp costs in America and manufacturers can compete in Indiana. They can’t compete in Illinois.”
* In These Times looked at Indiana’s workers’ comp system…
Starting decades ago, as Indiana’s leaders sought out factory jobs to supplant the state’s mostly rural economy, they embraced a low-cost, employer-friendly workers’ compensation system. And it has stuck, as the state’s Senate has largely stayed under control of the GOP.
Workers in Indiana must wait seven days before receiving benefits (as opposed to three in Illinois). While permanently disabled workers in Illinois can receive benefits for life, Indiana caps benefits at 500 weeks, just under 10 years.
To qualify for permanent total disability in Indiana, workers must meet a “pretty high bench.” as Terry Coriden, a former chairman of the Worker’s Compensation Board of Indiana, describes it. “If you can be a greeter at any type of store, then that type of employment could be deemed to be reasonable, which would preclude you from total permanent disability,” he says.
Only 45 workers out of 597,058 who filed claims between 2005 and 2014 received permanent total disability status in Indiana, according to statistics from the Worker’s Compensation Board of Indiana. The rate was twice as high in Illinois, according to data from the National Council on Compensation Insurance provided by Burton. Only 13 percent of the Indiana workers who filed claims over those years qualified even for permanent partial impairment.
And the system simply pays out less.
Consider the case of a steelworker in northwest Indiana who suffered third- and fourth-degree burns over two-thirds of his body after being hit by hot metal and slag from a blast furnace.
In the nine years since, he has undergone 38 surgeries and still has no feeling in parts of his arms and legs.
Before the injury, he was earning as much as $130,000 year because of extensive overtime. Today, he gets $600 a week in workers’ compensation as a totally disabled individual, as well as $2,200 monthly in Social Security Disability income. In order to stay afloat, he has dipped heavily into his savings and his wife has picked up low-wage part-time jobs. […]
Asked for evidence that workers’ compensation costs may be driving firms out of state, officials from the Illinois Governor’s office cited their contacts with employers and site selectors and suggested contacting business groups for more information.
But when In These Times posed that question to the Illinois Chamber of Commerce, which has been outspoken about the need to drive down workers’ compensation costs in order to remain competitive, Jay Shattuck, a contract lobbyist for the group, said he was not aware of any studies specifying that workers’ compensation alone made Illinois noncompetitive. (He also notes that the Chamber, while supporting most of Rauner’s plan, doesn’t see Indiana’s low payout system as the ideal.)
posted by Rich Miller
Monday, Jul 11, 16 @ 11:34 am
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“The balance of power between taxpayers and special interest groups inside government needs to get balanced,” Gov. Rauner.
****
I couldnt agree more! For instance, ensuring those who make more, pay more in taxes. Right now its so out of balance. Good to see Bruce figure this out!
Comment by Brian Phelps Monday, Jul 11, 16 @ 11:41 am
2 interesting points made.. the difference in payments to doctors for the same procedure are pretty wide. and the steelworker who was torched has had his standard of living severely lowered..you know what they say..Hoosiers are just Kentuckians who didn’t make it all the way to Chicago..
Comment by Not Rich Monday, Jul 11, 16 @ 11:44 am
==”If you can be a greeter at any type of store, then that type of employment could be deemed to be reasonable…”
Any mention of the amount of time and effort it would take for said greeter to arrive to work? That steelworker will be applying in 2017.
Comment by Jocko Monday, Jul 11, 16 @ 11:51 am
Fully agree on the low payouts for claims, that is just not right what Indiana does with that. But what largely makes Workers Comp claims in Illinois so unbelievable is the causation, or rather lack of any causation. If you have an employee that has a degenerative medical condition, if they suffer an injury at work that contributes just 1% towards their condition, the employer has now bought the entire claim, which can run several hundred thousand dollars. Illinois needs a causation standard most importantly.
Comment by Local Guy Monday, Jul 11, 16 @ 11:53 am
I believe it was Governor Rauner who said something about how we can be more compassionate after businesses start thriving. You’d think with Indiana’s thriving climate they’d be sympathetic as all get-out to that injured steel worker. If the example given exemplifies compassion, I’d hate to see indifference.
Comment by Cheap Seats Monday, Jul 11, 16 @ 12:01 pm
—Local Guy—
The tort system would require the worker to prove causation, but employers don’t want to give up the protection and limits provided to them under worker’s comp.
I’d trade comp for the right to a jury trial any day of the week.
Comment by northsider (the original) Monday, Jul 11, 16 @ 12:10 pm
I take it that a lot of people don’t understanding pricing.
Let’s say you sell grapefruit. You buy them for $1 each and must sell them for $2 to stay in business. Medicare will only pay $1.50 per grapefruit. Someone else has to make up the difference or you will get out of the grapefruit business. It’s that simple.
We get multiple bizarre prices for any given grapefruit purchase because insurance companies don’t just negotiate for grapefruit: their contracts cover everything your store. You may choose to sell Blue Cross $1 grapefruit and then raise the price on their contract of every other fruit by a dime.
What we have is the result of about 100 years of thousands/millions of people making individual decisions that never had to be coordinated.
Ah, free enterprise
Remember, healthcare isn’t the only industry where individuals pay different amounts for the same thing. The travel industry runs on that model too. And every industry that has negotiated pricing. If Office Depot had to publish their prices for their thousands of corporate accounts, people would see that there are a variety of prices for any given item.
(I do appreciate that people have a different relationship with healthcare than they do with office supplies. But free enterprise doesn’t care.)
Comment by Redbright Monday, Jul 11, 16 @ 12:11 pm
==Indiana caps benefits at 500 weeks, just under 10 years.==
Does anyone think that is morally right? Granted, it would generate lower premiums, but is it morally right?
Comment by Joe M Monday, Jul 11, 16 @ 12:21 pm
Medicare has dollar approval limits for what they pay doctors, but that does not mean the Medicare patient does not have to come up with the balance if the charge for a procedure. Either supplemental insurance or the patient, or both, have to make up the difference.
Comment by My New Handle Monday, Jul 11, 16 @ 12:21 pm
Handle: the same is true with most insurance, and would be factored into the prices.
Comment by Redbright Monday, Jul 11, 16 @ 12:26 pm
Where is the State Medical Society on this? I remember when ISMS was a dominant force, practically a wholly-owned subsidiary of the HGOPs (as ITLA is/was to the HDems). Is that still the case, and isn’t that part of the reason an agreed bill is the only way to go?
Maybe the Governor could use his leadership abilities to get the key players together to put some of these issues on the table.
Or he could just keep saying how much he wants Illinois to be like Indiana. Not sure how that helps.
Comment by 47th Ward Monday, Jul 11, 16 @ 12:27 pm
Does anyone have statistical proof that businesses are leaving Illinois?
Comment by 360 Degree TurnAround Monday, Jul 11, 16 @ 12:28 pm
Why should we aspire to treat our workers worse than we do now? Don’t businesses want their workers quickly healed and back on the job? And why should we aspire to pay our doctors closer to Medicare rates? Who said Medicare rates are desirable? Cut surgeons’ rates and they simply won’t accept WC patients - it doesn’t make sense to do so. Insurance companies pocketed the 30 percent reduction back in 2011; they didn’t pass it on to premium-paying businesses. Who’s to say they won’t do it again? And the trial attorneys will never give in on causation either. Sigh.
Comment by Doctor Doctor Monday, Jul 11, 16 @ 12:31 pm
“Does anyone have statistical proof that businesses are leaving Illinois?”
1.4% said so. Isn’t that enough? /s
Comment by Huh? Monday, Jul 11, 16 @ 12:34 pm
===It’s a very interesting piece written by medical professionals who may be worried about whether they will buy a new Ferrari or have to settle for the Mercedes or Lexus===
Denzler is a good guy but it’s not like he’s representing the little guy. Let’s check your member’s vehicle registrations before we go class warfare next time.
Comment by LizPhairTax Monday, Jul 11, 16 @ 12:41 pm
“Only 45 workers out of 597,058 who filed claims between 2005 and 2014 received permanent total disability status in Indiana, according to statistics from the Worker’s Compensation Board of Indiana. The rate was twice as high in Illinois…” 45/597058 = .0075%, whereas Illinois rate would be 90/597058=.015% . Yes, that is 15/1000th of one percent.
Comment by NoGifts Monday, Jul 11, 16 @ 12:42 pm
It should also be noted that the source of the data provided on workers’ comp payments, costs, etc. is WCRI - which is an organization wholly owned and funded by employers, employer groups, etc., that has a vested interest in driving down WC costs. Consider the source. Also consider that medical costs as a percentage of overall workers’ comp costs is far lower in Illinois (~51%) than in other states (national average closer to 60 percent). WCRI never seems to publicize that number!
Comment by Doctor Doctor Monday, Jul 11, 16 @ 12:43 pm
W.C. rates are based on worker’s pay. Average worker’s pay is higher in Illinois then Indiana. So the amount paid will also be higher in Illinois.
Comment by DuPage Monday, Jul 11, 16 @ 2:04 pm
According to WCRI, the average WC medical cost in IL is actually lower than IN now. See Crain’s Chicago Business Article from October 2015: “The report by the Workers Compensation Research Institute may strengthen the arguments of those Democrats who say more time is needed to determine the results of a 2011 law, which reduced medical fees and made other changes.
Medical payments fell nearly 15 percent, to an average of $14,513 per claim, during the 12-month period ended Sept. 30, 2013 (measured as of March 31, 2014), down from $17,140 per claim in 2010-11, according to the institute, which is mostly funded by the insurance industry. Illinois’ average payments are now lower than Indiana’s ($18,863), Wisconsin’s ($17,787) and Iowa’s ($16,051), according to the study, which compares 17 states that handle more than 60 percent of the workers’ comp cases nationwide.”
Comment by Just Me Monday, Jul 11, 16 @ 2:34 pm
Rauner can start changing work comp by fixing some of the issues faced by State employees dealing with the system. A few of the issues being: a completely incompetent and terrible company contracted to administer work comp for State employees (TriStar), cases that could be easily settled being taken to trial because of political/public opinion reasons, arbitrator decisions being appealed simply to delay paying benefits for a longer period of time (the State pays interest, but it is well below 1 percent), holding the State accountable for paying penalties any other employer would have to pay. The State has, on numerous occasions, been told they were operating under / causing a vexatious delay in cases. The problem is the arbitrator doesn’t assign the usual fines or penalties to the State for this behavior because (in the eye of the arbitrator or commission) it only really penalizes the taxpayer. There are more issues, but this would be a good start.
Comment by classified Monday, Jul 11, 16 @ 3:09 pm
Rauner chose to shakeout human services and higher education rather than reform work comp. He could have chosen (and continued to choose) a different strategy, but he’s worked this one brilliantly.
Comment by Earnest Monday, Jul 11, 16 @ 3:21 pm
If Indiana’s WC costs are so attractive to employers then why did Carrier move to Mexico
Comment by Joe Blow Monday, Jul 11, 16 @ 3:33 pm
“He also notes that the Chamber, while supporting most of Rauner’s plan, doesn’t see Indiana’s low payout system as the ideal.”
But make sure you compare Illinois’ WC programs to Indiana’s every chance you get. Ridiculous.
Comment by Dee Lay Monday, Jul 11, 16 @ 3:44 pm
===then why did Carrier move to Mexico?===
Well, according to the info above, Medicare pays about $2574 to repair a rotator cuff injury, while doctors in Mexico will amputate your arm for half that amount.
Comment by 47th Ward Monday, Jul 11, 16 @ 4:51 pm
I suspect he could have brought some costs down through better regulation but it isn’t about governing its about messaging and those are not helping business or workers right now.
Comment by illinois manufacturer Monday, Jul 11, 16 @ 6:17 pm
As to Caarier the establishment has this religious beliefs in trade and it got them Trump. They all need to get over believing their own propaganda.
Comment by illinois manufacturer Monday, Jul 11, 16 @ 6:21 pm
So rauner opposes telling companies how much they have to pay workers as a minimium salary, ie raising the minimum wage above poverty….. but he is all for tell doctors eing forced to take a below market max on what they can charge.
would Rauner support limiting the investment fees that investment companies can charge pension funds…. ot the max he can charge for medication? rememebr rauner bought a 30 pill and raised its cost to 1300…. so basically its
ok for him but no one else?
Comment by Ghost Monday, Jul 11, 16 @ 6:33 pm