Capitol Fax.com - Your Illinois News Radar

It’s not as simple as it looks

Posted in:

Illinois

* Claire Bushey at Crain’s takes a look at several angles on workers’ comp insurance. For instance, the price Illinois and Indiana pay for things like lost fingers…

Payments in Illinois diminish across the palm, from $108,584.24 for a thumb down to $31,432.28 for a pinkie. Indiana, meanwhile, prices the same fingers between $46,848 and $14,000.

You can say, like some do, that we pay too much to injured workers for lost limbs, but try voting to cut those reimbursements in the General Assembly. Not easy.

* There’s also the cost of medical procedures, which is often overlooked…

“The idea that the value of this finger is more in Illinois than it is in Indiana, the fact that a doctor working on a carpal tunnel injury is going to charge $2,700 in a Medicare case and $7,500 in a workers’ comp case—those things have to be brought into line,” [Greg Baise, president of the Illinois Manufacturers’ Association] says.

* However…

[In Illinois] Forty-five percent of the money covers medical costs; the rest pays a portion of employees’ wages while they recover or goes toward a permanent disability award. By contrast, payers in Indiana shelled out an estimated $589.2 million, with 73 percent going toward medical costs.

* And then there’s this…

Illinois changed its system in 2011, limiting payments for carpal tunnel syndrome and for employees who can still work but whose injuries force them into lower-paying jobs. The heart of the legislation, though, was a 30 percent cut to payments for doctors, hospitals and pharmacies treating those injured on the job. In the end, Illinois saw a 13 percent dip in workers’ comp medical costs between 2010 and 2014, the fourth-largest drop in the country.

Gov. Rauner has proposed yet another 30 percent cut for medical providers except office visits and physical therapy. But the Medical Society’s opposition is the main reason why only one House Republican voted for the last workers’ comp reform bill.

* The Democrats, the trial lawyers and organized labor blame insurance companies for not passing along savings from that 2011 reform…

Steve Brown, a spokesman for Michael Madigan, and trial lawyers say insurance companies, not employers, have reaped the benefits from the 2011 changes. Last year 332 insurance companies underwrote workers’ comp policies in Illinois, more than in any other state, collecting $2.83 billion in premiums (226 companies insured themselves). In 2010, insurers reported losses of nearly 11 percent; four years later, they reported the same in profits.

A conspiracy involving 332 insurance companies is possible, but you’d think that somebody, somewhere would try to take advantage of the market and offer lower and still profitable rates.

* And we do much better than Indiana when it comes to workplace safety…

Illinois has 2,883 injuries for every 100,000 workers. Indiana has 3,913.

* But…

Catherine Kelly, the governor’s spokeswoman, says in an email that the system is now “absorbing costs caused by heart disease, obesity and other non-occupational health issues; we need to follow the 29 other states that have enacted reforms to protect the system from non-work-related costs.”

Except when you talk about causation, it gets so complicated and politically charged that people just turn off their hearing aids.

posted by Rich Miller
Monday, Nov 21, 16 @ 12:22 pm

Comments

This will be fun
1. There needs to be a good thorough review of how the insurance companies bundle lines (i.e. do they offer policies for execs at discounts while keeping WC rates high. Outbound business wizard Dwight Kay accidently suggested this a few years sgo.
It would nice to hav a little openness by the self insured too.

Comment by Annonin' Monday, Nov 21, 16 @ 12:33 pm
From someone on the insurance side, the fairest way to reform work comp in Illinois would be to reduce the incentives to litigate. Illinois trial lawyers churn out lawsuits (often plagued with typos and other errors) and coach injured employees into shopping around for doctors willing to operate. They then make a settlement offer for slightly less than the cost to operate and you as the insurance company are forced to guess whether you think the 55-year-old worker will really go through with the unnecessary spinal fusion.

Comment by Chicagonk Monday, Nov 21, 16 @ 12:43 pm
Many years ago, I visited the IWCC (it might have had a different title then). I asked a manager why there were no obviously injured people waiting for hearings. He said most of those there were back and soft tissue claims. Another time, I showed up just after Thanksgiving and the area was empty. I asked him why and hs said “Christmas miracle”.

Comment by weltschmerz Monday, Nov 21, 16 @ 1:18 pm
–A conspiracy involving 332 insurance companies is possible, but you’d think that somebody, somewhere would try to take advantage of the market and offer lower and still profitable rates.–

You hit it on the head, trying to blame this on the insurance industry is non-sense. 332 companies are not engaging in price-fixing, nor could they if they wanted to because 333rd would come in and take advantage of the market. The other issue is that self insured companies are having the same issues as those who go through insurance companies. If this was an insurance company issue, the proof would be through the self-insured. This is not happening and it’s very easy to see that it’s not.

Also, Causation is the biggest issue in Illinois, policy makers should just focus on that and not taking away money for people who loose a limb or have lost capacity in some way.

Properly addressing Causation will help Illinois businesses be more competitive and still protect workers so lets just do that for now.

Comment by Ahoy! Monday, Nov 21, 16 @ 1:33 pm
It’s a great issue to debate and find common ground and improve our business environment without hurting employees. All I think when I read it, though, is that it’s a waste of breath. Rauner isn’t interested in doing these things, he just wants them as issues and as cover for not having a budget and intentionally destroying higher education and human services. I may be slipping away into “party of ‘no’” territory.

Comment by Earnest Monday, Nov 21, 16 @ 1:59 pm
===he just wants them as issues and as cover for not having a budget and intentionally destroying higher education and human services. I may be slipping away into “party of ‘no’” territory. ===

So… do you realize that stance puts you on Rauner’s alleged side? Because that’s exactly what will happen without a deal.

Comment by Rich Miller Monday, Nov 21, 16 @ 2:02 pm
Chiseling on the value of limbs perfectly represents the attitude of Republicans and insurers. Why not throw out the whole system and let everybody go back to courts and juries. Then check out the value of limbs. The fact that Indiana’s chiseling is more successful does not suggest it is good public policy.

Comment by JackD Monday, Nov 21, 16 @ 2:15 pm
The corporations want this type of confusion. Into this void they can use their “waste, fraud and abuse” mantra to cut benefits, avoid accountability and screw over the working man and woman.

Comment by Albany Park Patriot Monday, Nov 21, 16 @ 2:43 pm
>So… do you realize that stance puts you on Rauner’s alleged side? Because that’s exactly what will happen without a deal.

I did not realize that. You’re right–thank you.

Comment by Earnest Monday, Nov 21, 16 @ 2:45 pm
Why is it that not one representative from an Insurance company or the Industry will go on the record and explain why there has been no drop in WC rates to employers when filings are down, claims are down, benefits are down and the Insurance Companies’ own rating company WIRC has reccomended a 25% drop in rates.

Comment by Todd Monday, Nov 21, 16 @ 2:54 pm
There is a lot to discuss on work comp. But it is highly irresponsible to publish, or republish false information. Under current IL law, a thumb has value of 76 weeks. The Max rate is $755.22 which is only for people who make in excess of $1258 per week. There is no way to be paid $100,000 for a thumb amputation under IL Law, it is false.

We need to do some work on the how the system functions, but this article goes under the “false news,” post.

Comment by the Patriot Monday, Nov 21, 16 @ 3:07 pm
on medical costs id just limit the drs to medicare rates. On amounts paid remeber work comp shields employers from typical liability in tort. a whole person is worth 500 weeks of pay. so a finger doesnt habe a fixes dollar cost, it has a number of weeks paid for its loss. the more you devalue human life the lower your costs go.

also work comp has unlimited medical for life. a chunk of many settlements is payment to cut off that exposure. So put in a time limit. medical for 5 years or 24 months following last surgery

Comment by Ghost Monday, Nov 21, 16 @ 3:22 pm
Rich I thought that much of the worker comp diff was so to higher wages in general in ILL vs other states???

Comment by scott aster Monday, Nov 21, 16 @ 3:23 pm
“A conspiracy involving 332 insurance companies is possible”

Of course it is: it’s called price fixing.

Comment by Springfieldish Monday, Nov 21, 16 @ 4:03 pm
Presumably , if causation is the issue, those workers whose illness or injury was deemed not work related would have their medical bills paid by the employers health insurance instead. So what’s the net savings to the company?

Comment by Truthteller Monday, Nov 21, 16 @ 4:08 pm
http://www.foreffectivegov.org/blog/six-charts-explain-how-workers-compensation-is-deteriorating

When the workers comp benefits are cut, it is the taxpayers who then bear the costs.

Do we really want to shift the costs of an injured worker from the employer to the taxpayers?

Comment by Chicago 20 Monday, Nov 21, 16 @ 8:27 pm
Payments in Illinois diminish across the palm, from $108,584.24 for a thumb down to $31,432.28 for a pinkie. Indiana, meanwhile, prices the same fingers between $46,848 and $14,000.

You can say, like some do, that we pay too much to injured workers for lost limbs————–

Something I’ve been thinking, since I heard Greg Baise on the radio beating the drum for work comp reform, about a month ago:

He likes to argue that Indiana has lower costs than Illinois, and we need to change to match Indiana. The example he used was the loss of one’s right arm, which has an award about 3X higher in Illinois than in Indiana. I would argue that Illinois is more willing to consider the psychological and day-to-day impacts of these injuries, and that we compensate accordingly. In other words, our work comp system takes into consideration what it means to not be able to wrap both arms around a loved one, or a favorite friend or small child.

I’m not convinced that joining other states in a race to the bottom is the best solution for Illinois or its citizens.

Comment by Lynn S. Monday, Nov 21, 16 @ 11:58 pm
And arguing over the “list price” that someone or some entity pays for surgery is a whole ‘nother issue. If memory serves, aren’t doctors always griping that they lose money on Medicare and Medicaid patients? So how is forcing the cost of surgery down to an unprofitable level going to make the worker whole again? Seems like a way to attempt to ration or deny care to workers injured on the job.

Comment by Lynn S. Tuesday, Nov 22, 16 @ 12:02 am
* And we do much better than Indiana when it comes to workplace safety…

Illinois has 2,883 injuries for every 100,000 workers. Indiana has 3,913.================

So I’m reading this and thinking: there seems to be an inverse relationship going on here. In the state where an employer might really feel the impact of an accident, employers are incentivized to do safety training and aggressively reduce the likelihood of an industrial accident. In the state where employers don’t feel these costs, workers are getting hurt (some very badly).

Comment by Lynn S. Tuesday, Nov 22, 16 @ 12:05 am
@

- Ghost - Monday, Nov 21, 16 @ 3:22 pm:

on medical costs id just limit the drs to medicare rates. On amounts paid remeber work comp shields employers from typical liability in tort. a whole person is worth 500 weeks of pay. so a finger doesnt habe a fixes dollar cost, it has a number of weeks paid for its loss. the more you devalue human life the lower your costs go.

also work comp has unlimited medical for life. a chunk of many settlements is payment to cut off that exposure. So put in a time limit. medical for 5 years or 24 months following last surgery
=======================

Sorry, Ghost, but not cool with this. It’s a way to avoid treating people whose injury may have life-long impacts.

Comment by Lynn S. Tuesday, Nov 22, 16 @ 12:09 am