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Some good news, but still a ways to go on workers’ comp

Tuesday, Oct 27, 2015

* The 2011 workers’ compensation overhaul is beginning to show some results, Crain’s reports

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 have fallen nearly 15 percent, to an average of $14,513 per claim, during the 12-month period ending Sept. 30, 2013 (measured as of March 31, 2014), down from from $17,140 per claim in 2010-11, according to the institute, which is funded by the insurance industry. Illinois’ average payments are now lower than Indiana ($18,863), Wisconsin ($17,787) and Iowa ($16,051), according to the study, which compares 17 states that handle more than 60 percent of the worker’s comp cases nationwide. […]

Despite the drop, Illinois’ average medical payment per claim is still 19 percent above the median for the 17 states. The figures are for claims involving more than seven days of lost time and include bills submitted 12 months after the injury.

* And the Illinois Policy Institute’s news service makes a valid point here

The WCRI study highlighted some costs going down but other non-hospital costs remaining higher than other states included in the study. Governor Bruce Rauner’s office says “The report highlights the need for the reforms that were included in the Governor’s workers’ compensation legislation.” Rauner’s office also says “while the 2011 reforms made progress, there is still much more work to do to make Illinois more competitive.” A statement from the ILTA says the 2011 reforms are having the intended result: lower costs to insurance companies and employers. ILTA also says further changes in workers’ compensation laws must focus on the insurance industry, not injured workers’ rights. Governor Rauner has said workers’ compensation must address causation.

Medical costs are only one part of workers’ comp. Injured workers also receive money for missed work time. And total insurance costs are still rising

Illinois had the seventh highest worker’s compensation insurance rates in the nation as of Jan. 1, 2014, the most recent statistics available, down from the third highest in 2010, according to the Oregon Department of Consumer and Business Services, which tracks rates for all 50 states and the District of Columbia.

Even so, Illinois Democrats contend that what’s really needed here are rules clamping down on insurance company windfall profits. They have a valid point, too.

…Adding… From the governor’s office…

Illinois still has the 7th highest workers’ compensation costs in the country, and Illinois’ workers’ compensation costs are more than double the costs in Indiana. It’s clear we need major workers’ compensation reform if we want to grow manufacturing jobs in Illinois.

- Posted by Rich Miller        

  1. - 360 Degree TurnAround - Tuesday, Oct 27, 15 @ 8:54 am:

    The Governor’s office should be happy. Work comp costs are down. Unemployment continues to drop. Insurance companies continue to see a profit, they are tight with insurance cronies. When will the business community ask the insurance companies for some of the savings back?

  2. - 360 Degree TurnAround - Tuesday, Oct 27, 15 @ 8:56 am:

    sorry, prior post has one too many insurance words, meant “business cronies”.

  3. - Dan Johnson - Tuesday, Oct 27, 15 @ 8:56 am:

    Federal law regulates how much a health insurance company must pay out (they keep 15% of the premiums for profit and promotion; all the rest must be spent on paying claims).

    A good state reform would be to apply the same law for workers compensation insurance companies. They can keep 15% of the premiums for profit and promotion. All the rest must get paid out in claims. And if there aren’t that many claims? Policyholders get a refund.

  4. - Arsenal - Tuesday, Oct 27, 15 @ 9:03 am:

    A causation standard for a profit/promotion cap should be an easy compromise in ordinary times.

    These are not ordinary times.

  5. - Grandson of Man - Tuesday, Oct 27, 15 @ 9:03 am:

    This article reports a study that found workers compensation benefits have been deeply cut.

    Here is a “race to the bottom-y” section of the article:

    “In fact, employers are now paying the lowest rates for workers’ comp than at any time since the 1970s. Nonetheless, dozens of legislatures have changed their workers’ comp laws, often citing the need to compete with neighboring states and be more attractive to business.”

  6. - Truthteller - Tuesday, Oct 27, 15 @ 9:06 am:

    Wages in Illinois are higher than in Indiana.It stands to reason that comp payments, which are tied to wages, would be higher.Plus there was ample testimony before the House as to the woeful inadequacy of the Indiana law. Let’s not for get the price Hoosier workers pay for the shortcomings of its law.

  7. - Arizona Bob - Tuesday, Oct 27, 15 @ 9:10 am:


    “Even so, Illinois Democrats contend that what’s really needed here are rules clamping down on insurance company windfall profits.”

    Is there any evidence that profits by insurance companies for WC in Illinois are any larger than in other states? If not, cut out the hyperbole.

    It’s great that medical costs are going down from two perspectives; first, that the injuries aren’t as serious meaning that apparently the workplaces are getting safer (or maybe the more “dangerous” manufacturing and construction jobs are leaving Illinois), and secondly that costs are being saved.

    The lower medical costs may also be due to the injured having better medical plans. You can’t double bill for medical expenses if your health insurance pays for it.

    The point I’d like to know more about is how Illinois compares in WC eligibility, how long the average “medical leave” is for these injuries compared to other states, and how well the injured are paid for their time off.

    What I understand is the biggest cost riser in Illinois for businesses is that a business workplace may not be responsible for much of the injury, but they’re hit with the full cost of time off and medical expense.

    It would also be interesting to know how many are still receiving WC pay while changing professions to a better job than they had when injured, and how much SSC disability gets into this.

  8. - bizarro - Tuesday, Oct 27, 15 @ 9:20 am:

    From Rep Unes during the House Committee of the Whole on work comp:
    “There has been — we’ve heard from several people today, and there’s been a lot of alluding to and kind of hinting that — and suggestions that we are looking at trying to adopt the Indiana program or become Indiana. But nobody is suggesting with our reforms that have been suggested that we turn into Indiana…”

    Rep Kay: “To the members of the panel, thank you for coming today. I’m just curious as to whether any of you are aware that we’re not talking about reducing rates to Indiana or Oklahoma levels. Does anyone know that? Okay. Thank you.”

  9. - 360 Degree TurnAround - Tuesday, Oct 27, 15 @ 9:21 am:

    I don’t think it is hyperbole to ask where the approximate $1 billion in savings businesses should have realized has gone. It is the business community that continues to harp on work comp as a problem. Passed reforms in 2011, savings continue to roll in. But the Governor and business community continues to look for more sacrifices from labor, as opposed to looking at the windfall profits insurance companies are bringing in.

  10. - Oswego Willy - Tuesday, Oct 27, 15 @ 9:24 am:

    WC has the easiest bridge for both parties here to cross.

    It can and would give Bruce Rauner “a win” and show where compromise can be found, and begin the process of cobbling 60 and 30 (after January, ugh) and with the room to give, Democrats can say, “it could always have been worse”

    I’d suggest - Louis G Atsaves - be involved, no snark, and very respectfully.

  11. - Anon221 - Tuesday, Oct 27, 15 @ 9:26 am:

    This is 2013 data, but it is interesting to look at the “Cases with days away from work” column. Those with high numbers, such as Ag Animal Production, Furniture and Home Furnishing Stores, and Public Administration (that one surprised me!), should, as an industry, look at those specific cases and use the 5 E’s model to improve safety in their business. When I started work in safety education, there were only 3 E’s. Now the 5 E’s model- Engineering, Education, Encouragement, Enforcement, and Evaluation is a wide-spread model. We didn’t use much Encouragement or do much Evaluation.

  12. - 360 Degree TurnAround - Tuesday, Oct 27, 15 @ 9:31 am:

    The House has passed work comp reforms, HB 1287. Still in senate.

  13. - anon123 - Tuesday, Oct 27, 15 @ 9:38 am:

    There are more savings to come for business as Rauner appointed commissioners and arbitrators drastically lower awards and deny cases.

  14. - Dilemma - Tuesday, Oct 27, 15 @ 9:38 am:

    From an opinion I read some time ago. I can’t vouch for any of the statements, but it is food for thought.

    “In 2011, injured workers were forced to give up significant benefits in exchange for the promise that premiums paid by Illinois employers significantly would drop. Unfortunately, that has not been the case. The National Council on Compensation Insurance is an independent, non-partisan insurance industry rate-making agency that assesses workers’ compensation in Illinois and makes premium rate recommendations to insurers based upon its findings. Since the 2011 reforms, NCCI has recommended insurance premium reductions totaling nearly 20 percent that should have resulted in over $1 billion of savings in premiums paid by Illinois employers.
    But what actually happened was that only a small portion of the decreases – about $300 million – was passed on to employers by the insurance industry, while the additional $700 million was kept by the insurance industry as pure profit. If the insurance companies had fully implemented the recommendations, employers should have fully realized that $1 billion in savings.
    Workers’ compensation is the second most profitable line of insurance after auto insurance. More than 300 insurance companies compete for and write workers’ compensation insurance in our state. If Illinois is so unprofitable, why are these insurance companies climbing over one another to sell insurance here? Probably because insurance companies in Illinois essentially are unregulated when it comes to setting insurance premiums.”

  15. - too obvious - Tuesday, Oct 27, 15 @ 9:43 am:

    Nothing like listening to a billionaire who has already made his millions from state business, spending his time now begrudging the 15 or 20 grand an injured worker might receive.

    Also enjoyed seeing John Tillman of IPI in his front row seat at Wrigley during the playoffs. Business is obviously good in the “Illinois is terrible” racket.

    What if we focused more on worker safety and making sure workers don’t get injured in the first place?

  16. - DuPage - Tuesday, Oct 27, 15 @ 9:45 am:

    @Arizona Bob 9:10 =you can’t double bill for medical expenses if your health insurance pays for it.=

    Regular health insurance does not cover injuries or illness arising out of employment. If the WC claim is contested the health insurance sometimes will pay but have a lien on anything paid to the injured worker.

  17. - Mama - Tuesday, Oct 27, 15 @ 10:00 am:

    This Workers Comp info needs to be in the news to educate the public that reforms were made before Rauner took office.

  18. - Anonin' - Tuesday, Oct 27, 15 @ 10:14 am:

    Next stop the insurance companies!
    ICYMI Rep. Unes is a wholly owned subsidiary of CAT…they are called “self insured” and there is no credible way to examine what they claim are are work comp costs ( I.e. when a CAT honcho trip leaving a Hong Kong saloon CAT calls it ……?)

  19. - the Patriot - Tuesday, Oct 27, 15 @ 10:20 am:

    Work Comp is not easy. The proposal is a negative to the GF. In other states when your claim is denied you go to bankrupt. No bid deal as long as it ain’t you.

    In IL, you get medical paid by a very expansive and broke medicaid system, you go on government entitlement programs, and may survive. Better for workers who lose their case, but at a cost to tax payer.

    You can’t have a catch all medicaid and social service system and save money on work comp. Be clear, when you propose reform in IL, you are saying you want the burden to shift from insurance companies who are already profiting to the tax payer. Cutting the system did not make the guy not fall off the ladder.

    If you think fraud is a problem, then fire Lisa Madigan for not prosecuting it, don’t punish people with legitimate claims, and don’t make taxpayers pay for her incompetence.

  20. - Retired lawyer - Tuesday, Oct 27, 15 @ 10:29 am:

    Illinois has the seventh highest average wage rate in the nation, which is very good, so of course its Workers Comp rates are the seventh highest, to provide for wage replacement Nothing obviously wrong here. Except for tweaking Workers Comp should be a non-issue. It certainly should not block a budget deal.

    Comparing Illinois to lower wage Indiana and other poorer states is nonsense.

  21. - Demoralized - Tuesday, Oct 27, 15 @ 10:45 am:

    ==Is there any evidence that profits by insurance companies for WC in Illinois are any larger than in other states?==

    That’s irrelevant. I believe the argument is that while the Worker’s Comp system was changed last time, the insurance companies didn’t lower their rates and pass that savings on. I think that’s what the Democrats want to look into and it’s a perfectly valid question.

  22. - Ahoy! - Tuesday, Oct 27, 15 @ 10:48 am:

    Where is the evidence the insurance industry has these windfall profits that the Democrats keep talking about? I get that the insurance industry is easy to blame and nobody likes them (myself included) but I just don’t see any thing to back up their claims. Also, if this is the case, 43 states have figured this issue out, what did they do if this really is an issue?

    Businesses in Illinois are not seeing workers comp savings and being the 43rd highest is not good for employment and wages.

  23. - DuPage - Tuesday, Oct 27, 15 @ 11:18 am:

    @Ahoy! 10:48 =where is the evidence the insurance industry has these windfall profits=

    The insurance companies in Illinois are not required to open their books on WC. They refuse to do so and spend a lot of money to lobby against any change in the law that would require them to open their books.

  24. - Wordslinger - Tuesday, Oct 27, 15 @ 11:35 am:

    According to the National Association of Manufacturers, in 2008, manufacturing output for both Illinois and Indiana stood at $80B.

    Since then, it has grown to $101.3B in Illinois and $95.3B in Indiana.

    Furthermore, Illinois has 12,853 manufacturing firms to Indiana’s 7,283.

    And the average manufacturing worker in Illinois makes $78,971 compared to $70,333 in Indiana.

    So where does the fiction come from that Indiana manufacturing is thriving at Illinois’ expense?

    The only thing Indiana leads in is dependence on the manufacturing sector, due to its much smaller and less diverse economy.

    Manufacturing represents 30% of GSP and 17.3% of non-farm employment in Indiana.

    In Illinois, it’s 14% of GSP and 9.9% of non-farm employment.

    A high-degree of dependence on one sector is not a good thing.

  25. - Retired lawyer - Tuesday, Oct 27, 15 @ 11:36 am:

    ==Illinois has the seventh highest average wage rate in the nation, which is very good, so of course its Workers Comp rates are the seventh highest, to provide for wage replacement Nothing obviously wrong here. Except for tweaking Workers Comp should be a non-issue. It certainly should not block a budget deal.

    Comparing Illinois to lower wage Indiana and other poorer states is nonsense.==

    Wait, latest reports indicate that Indiana, Wisconsin and Iowa WC payouts are more than Illinois, even with Illinois’ higher wages. Maybe those are the states that need fixing.

  26. - Dummy - Tuesday, Oct 27, 15 @ 12:23 pm:

    isn’t it “ITLA” not “ILTA”?

  27. - 4 percent - Tuesday, Oct 27, 15 @ 1:04 pm:

    The Oregon study is the most respected study in the WC world. Illinois costs are $2.35 per $100 of payroll while the national average is $1.80. Illinois is roughly 30 percent higher than the national average when factoring in all costs (medical, indemnity, etc).

    Picking out one piece (medical) and saying that no reforms are necessary is ludicrous. It’s tantamount to a severely injured person coming into the ER and the doctor taking the person’s temperature and saying it’s fine - no need for more treatment.

    You cannot ignore the companies like Modern Drop Forge and many others that left specifically citing the high cost of WC.

  28. - Nuke the Whales - Tuesday, Oct 27, 15 @ 1:31 pm:

    So then what is this?

  29. - Stuff Happens - Tuesday, Oct 27, 15 @ 1:36 pm:

    Still waiting on medical reimbursement from over half a year ago. At least they’ll pay interest on what they owe.

    How much of the 19% over median average medical payment per claim is in interest charges?

  30. - Just Me - Tuesday, Oct 27, 15 @ 2:12 pm:

    The most direct and only sure way to reduce WC insurance premiums is to do just that, reduce WC insurance premiums. The experiment we have been running for the last 4 years does not work. We have been relying on the “good faith” of the insurance companies to do the right thing and reduce premiums in the face of declining costs. WC cost are undoubtedly falling, but there is no evidence that there has been or will be a corresponding decrease in insurance premiums or any decrease at all for that matter. It is time for the Dept. of Insurance to step up to the plate and do what it is supposed to do: make the premium rate reductions match the declining WC costs. This is especially important now when the duly delegated organization NCCI recently has completely abdicated its statutory responsibility to make any rate recommendation at all for 2016,let alone another decrease,despite the well-documented and ongoing WC cost reductions. Somebody has to take responsibility for WC insurance premiums remaining unchanged and high if that is the case, even though everybody agrees that WC costs are declining constantly and rapidly.

  31. - the Patriot - Tuesday, Oct 27, 15 @ 2:41 pm:

    It is pretty simple, everyone took a cut in 2011, costs are dropping, rates are not, profits are up.

    It is not about comparing profits, it is about the reality that regardless how much you cut benefits and costs, if don’t force insurance companies to cut rates, you do nothing for business.

    The Governor won’t answer the simple question. How does a cut in work comp benefits that does not result in a cut to work comp insurance premiums, help business?

    Also consider that the larger, most expensive claims take 2+ years to get through the system. The Act did not change until Jan of 2012. Acting like anyone really knows how well the changes worked or did not work is ignorant at best.

  32. - Ghost - Tuesday, Oct 27, 15 @ 3:26 pm:

    indiana also way underpayes there workers, sonthe cost of workers compmis lower because they are paid less. indiana households make below the median average and are losing money year over year…. so loss of middle class into low income isnt keeping worker comp costs down… its keeping everyoen but the few weathy at the top down

  33. - IL17Progressive - Tuesday, Oct 27, 15 @ 4:31 pm:

    Right on, the Patriot 2:41. Illinois downgrades have been about (1) unpaid bills, (2) unstable budget environment, (3) unfunded pension liability. Worker’s Comp change do NOTHING for the states financial issues. Why is Worker’s Comp even being considered - expect it’s a nice way to dig ‘wage earners’ & thus unions.

Sorry, comments for this post are now closed.

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