August 2001

Grant Results

SUMMARY

From 1997 to 2000, staff at the National Academy of Social Insurance prepared and published the Workers' Compensation Cost and Benefit Data Series, which tracks trends in claims and payments for job-related injuries and illnesses.

The National Academy of Social Insurance had stepped in to assume responsibility for the 20-year-old series after the federal Social Security Administration abandoned the initiative in 1995.

Key Results

  • Project staff compiled and published data on the costs and benefits of workers' compensation for the years 1994 through 1998.
  • Project staff added several categories of data that had not been included in previous reports on workers' compensation data published by the Social Security Administration, including:
    • State-level information separating medical and cash benefits.
    • Placing workers' compensation into context with other disability insurance programs.
    • Comparisons of recent trends in workers' compensation benefits and costs to those of the Social Security Disability Insurance program.
    • Data on benefits paid by type of disability.

Key Findings

  • From 1993 to 1998, workers' compensation benefits and the associated costs paid by employers to injured or ailing workers declined. Specifically:
    • Workers' compensation benefits (cash benefits and medical care) declined from $45.3 billion to $41.7 billion.
    • Employer costs (insurance premiums or the cost of administering self-insured benefits) decreased from $60.8 billion to $52.1 billion.
  • This downward trend reversed itself in 1998.

Funding
The Robert Wood Johnson Foundation (RWJF) supported this project through two grants totaling $294,671.

 See Grant Detail & Contact Information
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THE PROBLEM

Workers' compensation programs provide benefits to workers who are injured on the job or who contract a work-related illness. Benefits include both cash payments that partially replace lost wages and payments for medical care associated with work-related illness or injury.

For 20 years, SSA's Workers' Compensation Cost and Benefit Data Series provided the most reliable national statistics available on how much employers paid into the workers' compensation system and what injured or ailing workers collected in benefits.

This series provided the information that employer groups, insurers, unions, and researchers trusted as the most objective. For budgetary reasons, SSA stopped collecting these data in August 1995. Policymakers thus faced the loss of the only national data series that tracked trends in workers' compensation.

That loss came at a critical time because the extraordinarily rapid growth in the medical care component of workers' compensation costs during the 1980s appeared to be slowing. An ambitious series of public- and private-sector initiatives to control costs was being enacted. The data were a crucial tool for measuring the impact of those initiatives.

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THE PROJECT

These grants from RWJF funded NASI to track trends in workers' compensation. NASI conducts research and enhances public understanding of social insurance, develops leaders, and provides a nonpartisan forum for the exchange of ideas on issues in the field.

The objectives of the grants were to:

  1. Update the Workers' Compensation Cost and Benefit Data Series to include data for 1994–96.
  2. Improve the data to enhance their uses for policy analyses.
  3. Create a plan for ongoing support of the data series through a consortium of contributions from users of workers' compensation data.

The first grant (ID# 030118) anticipated that within three years NASI would have secured a substantial portion of the long-term funding needed to maintain the series. By March 1999, however, NASI had secured commitments for only half of the $200,000 per year it required to continue the series. Two federal agencies, HCFA and SSA had each committed to providing $50,000 per year to the series, payable once the new data set is produced each year.

In order to continue the data compilation while NASI sought more funding, RWJF provided a one-year supplemental grant (ID# 036815) in April 1999. During the period of the two RWJF grants, NASI received its first $50,000 installment from HCFA, two annual $10,000 contributions from the Liberty Mutual Insurance Company, and one-time awards from the Workers' Compensation Research Institute ($10,000) and the Labor Management Discussion Group on Workers' Compensation ($8,000).

NASI also sought funding from other federal agencies, labor unions, and insurance companies, but encountered difficulties convincing long-time users of the data series to contribute to a product they previously had gotten for free.

During the project, NASI established a Steering Committee for Workers' Compensation (see Appendix 1) and a Study Panel on National Data on Workers' Compensation (see Appendix 2) to guide its activities. The steering committee, comprised of national leaders in workers' compensation, including academic researchers, insurers, employers, and labor representatives, advised the project director on the kinds of policy issues that users want to address with the data series, planned extensions to the workers' compensation research agenda, and developed fund-raising strategies.

The study panel, comprised of technical experts on the sources of data on workers' compensation, included representatives from public and private organizations that are potential sources of data or users of the data series. The steering committee met eight times, and the panel met four times during the project.

This project is a complement to the RWJF's Workers' Compensation Health Initiative, a national program that supports up to $6 million in demonstration and evaluation projects designed to allow state governments, employers, and insurers to launch and assess promising solutions to the increased cost of medical care under the workers' compensation system.

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RESULTS

  • NASI compiled and published data on the costs and benefits of workers' compensation for the years 1994 through 1998. NASI published three reports, all entitled Workers' Compensation: Benefits, Coverage, and Costs, presenting workers' compensation data for 1994–95, 1996, and 1997–98. The continuation of the Workers' Compensation Cost and Benefit Data Series under these grants provided workers' compensation and social insurance researchers with the only available source for credible national data about workers' compensation expenditures.
  • NASI added several categories of data that had not been included in previous SSA-published reports on workers' compensation data. The 1996 report added state-level information separating medical and cash benefits, placed workers' compensation into context with other disability insurance programs, compared recent trends in the benefits and costs of workers' compensation to those of the Social Security Disability Insurance program, and used new methodology to improve the accuracy of state-level estimates. The 1997–98 report included more standardized data collection through a pre-tested survey instrument and new methods for constructing estimates of workers covered by workers' compensation, and provided data on benefits paid by type of disability.

Findings

  • Workers' compensation benefits and the associated costs paid by employers to injured or ailing workers declined between 1993 and 1998. Overall, benefit payments (cash benefits and medical care) declined from $45.3 billion in 1993 to $41.7 billion in 1998. Employer costs (insurance premiums or the cost of administering self-insured benefits) decreased from $60.8 billion in 1993 to $52.1 billion in 1998. The declines represented a sharp break from the steadily rising costs and benefits of the previous 10 years.
  • The downward trend in workers' compensation benefit payments continued through 1997 but then reversed itself in 1998. In 1997, benefit payments totaled $40.6 billion, a decline of $1.5 billion (3.5 percent) from 1996. In 1998, benefit payments rose $1.1 billion to $41.7 billion (an increase of 2.7 percent). This was the first increase in workers' compensation benefits payments since 1992. After falling through much of the 1990s, employer costs leveled off between 1997 and 1998.
  • The number of workers covered under the program rose from 106.2 million in 1993 to 121 million in 1998.
  • Costs per covered employee fell steadily, from $573 in 1993 to $431 in 1998.

Communications

NASI published three reports, all entitled Workers' Compensation: Benefits, Coverage, and Costs, presenting workers' compensation data for 1994–95 (Fall 1997), 1996 (March 1999), and 1997–98 (May 2000). State government officials, federal agencies, researchers, and labor and industry groups received the reports for free or at a nominal cost. There was extensive national and local press coverage of the reports, including www.ABCNEWS.com, Consumer Reports, Insurance Advocate, National Public Radio, USA Today, and the Washington Post.

The reports are also available on NASI's Web site Project staff made presentations at the annual meetings of the Workers' Compensation Research Institute, the International Association of Industrial Boards and Commissions, and the National Council of Self-Insurers. See Bibliography for details.

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LESSONS LEARNED

  1. Collaboration with key stakeholders is essential. In the case of workers' compensation, it was essential for NASI to collaborate with the insurance industry, employers, labor, and government stakeholders, each of whom had a very different perspective and access to different information.
  2. State programs can vary dramatically and may not be generalizable. The experiences of many states need to be studied in order to build a reliable picture of workers' compensation programs.
  3. It is extremely difficult to raise money to fund a public good. Organizations had been using this data series for many years without charge, and it was hard to persuade them to begin paying for it after NASI took over.

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AFTER THE GRANT

NASI plans to continue and expand upon the data series. In addition to the ongoing support from HCFA and SSA, it is working to expand support from private insurers. NASI's plans for further improvements in the data series include adding more state-level information on coverage and costs per covered payroll and per covered worker, breaking down employer costs into their component parts, and developing better methods to estimate medical costs. NASI is using its own funds for two related research projects: an analysis of the adequacy of workers' compensation cash benefits and a study of trends in compensability (the conditions that make a person eligible for workers' compensation benefits). NASI is also pursuing outside funding for these projects.

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GRANT DETAILS & CONTACT INFORMATION

Project

Support of the Workers' Compensation Cost and Benefit Data Series

Grantee

National Academy of Social Insurance (Washington,  DC)

  • Workers' Compensation: Measuring Progress Toward Cost Containment and Quality Care
    Amount: $ 194,671
    Dates: February 1997 to February 2000
    ID#:  030118

  • Estimates of Workers' Compensation Benefits, Coverage, and Costs (Supplemental Support)
    Amount: $ 100,000
    Dates: April 1999 to April 2000
    ID#:  036815

Contact

Virginia P. Reno
(202) 452-8097
vreno@nasi.org

Web Site

http://www.nasi.org

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APPENDICES


Appendix 1

(Current as of the time of the grant; provided by the grantee organization; not verified by RWJF.)

Steering Committee for Workers' Compensation

John F. Burton, Jr., Chair
Dean, School of Management and Labor Relations
Rutgers University
New Brunswick, N.J.

Peter S. Barth
Professor of Economics
University of Connecticut
Storrs, Conn.

Keith Bateman
Vice President for Policy Development
Workers' Compensation and Commercial Lines Division
Alliance of American Insurers
Downers Grove, Ill.

Melody Cathey
Deputy Executive Director
International Association of Industrial Accident Boards and Commissions
Lawrence, Kan.

David Corum
Assistant Vice President
Policy Development and Research
American Insurance Association
Washington, D.C.

Virginia Diamond
Chairman
Virginia Workers' Compensation Commission
Richmond, Va.

Donald Elisburg
Attorney at Law
Potomac, Md.

James N. Ellenberger
Assistant Director
Department of Occupational Safety and Health
AFL-CIO
Washington, D.C.

Barry Llewellyn
Senior Vice President and Actuary
National Council on Compensation Insurance, Inc.
Hoboken, N.J.

Jay S. Himmelstein, M.D.
Director of RWJF Workers' compensation Health Program
University of Massachusetts Medical Center
Shrewsbury, Mass.

H. Allan Hunt
Assistant Executive Director
W.E. Upjohn Institute

Frederick W. Kilbourne
Independent Actuary
The Kilbourne Company
Kalamazoo, Mich.

Alan Krueger
Bendheim Professor of Economics and Public Affairs
Industrial Relations Section
Princeton University
Princeton, N.J.

Paul Mattera
Vice President and Assistant General Counsel
Liberty Mutual
Boston, Mass.

Eric J. Oxfeld
President
UWC, Inc. - Strategic Services on Unemployment and Workers' Compensation
Washington, D.C.

Tom Rankin
President
California Labor Federation, AFL-CIO
San Francisco, Calif.

June M. Robinson
Director
Office of Small Business Programs
US Department of Labor
Washington, D.C.

Emily Spieler
Professor of Law
West Virginia University
Morgantown, W.Va.

Robert Steggert
President
Marriott International, Inc.
Washington, D.C.

Richard A. Victor
Executive Director
Workers' Compensation Research Institute
Cambridge, Mass.


Appendix 2

(Current as of the time of the grant; provided by the grantee organization; not verified by RWJF.)

Study Panel on National Data on Workers' Compensation

John F. Burton, Jr., Chair
Dean, School of Management and Labor Relations
Rutgers University
New Brunswick, N.J.

Melody Cathey
Deputy Executive Director
International Association of Industrial Accident Boards and Commissions
Lawrence, Kan.

James N. Ellenberger
Assistant Director
Department of Occupational Safety and Health
AFL-CIO
Washington, D.C.

Susan Grad
Deputy Associate Commissioner
Office of Research, Evaluation and Statistics
Social Security Administration
Washington, D.C.

Alan Krueger
Bendheim Professor of Economics and Public Affairs
Industrial Relations Section
Princeton University
Princeton, N.J.

Katherine Levit
Director
National Health Statistics Group
Office of the Actuary
Health Care Financing Administration
Baltimore, Md.

Barry Llewellyn
Senior Vice President and Actuary
National Council on Compensation Insurance, Inc.
Hoboken, N.J.

Eric J. Oxfeld
President
UWC, Inc. - Strategic Services on Unemployment and Workers' Compensation
Washington, D.C.

John Ruser
Chief Economist for Compensation Research
Office of Employment Compensation
Bureau of Labor Statistics
US Department of Labor
Washington, D.C.

Robert Steggert
President
Marriott International, Inc.
Washington, D.C.

Richard A.Victor, J.D., Ph.D.
Executive Director
Workers' Compensation Research Institute
Cambridge, Mass.

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BIBLIOGRAPHY

(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)

Books and Reports

Schmulowitz J. Workers' Compensation: Benefits, Coverage, and Costs, 1994–1995 New Estimates. Washington, D.C.: National Academy of Social Insurance, Fall 1997. 450 copies disseminated.

Mont D, Burton JF, Jr., and Reno V. Workers' Compensation: Benefits, Coverage, and Costs, 1996 New Estimates. Washington, D.C.: National Academy of Social Insurance, March 1999. 600 copies disseminated.

Mont D. Sources and Methods: A Companion to Workers' Compensation: Benefits, Coverage, and Costs, 1996 New Estimates. Washington, D.C.: National Academy of Social Insurance, October 1999.

Mont D, Burton JF, Jr., and Reno V. Workers' Compensation: Benefits, Coverage, and Costs, 1997–1998 New Estimates. Washington, D.C.: National Academy of Social Insurance, May 2000. 600 copies disseminated.

Presentations and Testimony

D. Mont, "The Adequacy of Workers' Compensation Cash Benefits," at the Employment and Disability Policy Summer Institute, Cornell University, July 2000, Ithaca, N.Y.

J.F. Burton and D. Mont, "NASI's National Workers' Compensation Data Project," at the Annual Meeting of the National Council of Self-Insurers, May 1999, Lake Tahoe, Nev.

D. Mont, "The National Academy of Social Insurance Workers' Compensation Data Project," at the Annual Meeting of the Workers' Compensation Research Institute, March 1999, Boston, Mass.

D. Mont, "Trends in National Data on Workers' Compensation Benefits and Costs," at the Annual Meeting of the International Association of Industrial Boards and Commissions, October 1999, Washington, D.C.

World Wide Web Sites

www.nasi.org provides information about the academy's workers' compensation program and offers access to the reports done under the RWJF grant. Washington, D.C.: National Academy of Social Insurance. Estimated 600 visits per month.

Print Coverage

"Workers' Compensation Costs, Payments Down," in the Washington Post, December 19, 1997.

"Study Finds Higher Comp Costs," in Gettysburg Times, December 19, 1997.

"Study on Workers' Comp Outdated, Ridge Aides Say," in Pittsburgh Post-Gazette, December 19, 1997.

"Workers' Comp Rates to Fall in Wyoming," in Journal of Commerce & Commercial Insurance, December 19, 1997.

"Study Finds Higher Comp Costs; State Cites Improvements," in Gettysburg Times, December 20, 1997.

"Workers' Comp Payments Plunge," in Arizona Republic, December 26, 1997.

"Today's Briefing," in The Commercial Appeal, March 13, 1999.

"Employer Comp Costs Fell in 1996, Continuing Trend, NASI Reports" in BNA Workers' Compensation Report, March 15, 1999.

"Companies Enjoy Lower Workers' Comp Costs," in USA Today, March 15, 1999.

"Workers' Compensation Payments Down for Fourth Time in Four Years," in Westport Newsroom, March 15, 1999.

"Safety Pays Off Now for Business: Workers' Comp Claims Declining," in Sacramento Bee, March 16, 1999.

"80's, Early 90's Trend of Rising W.C. Benefit Payments and Costs Started Downward Between '95–'96, National Academy Study Reports," in Insurance Advocate, March 20, 1999.

"Study Says Work Safety Cuts Workers' Comp Costs," in Journal of Commerce Special, March 23, 1999.

"Safety Programs Cut Workers' Comp Costs," in Newsday and Newsday-Queens Edition, March 29, 1999.

"Study Shows Work Safety Programs are Lowering Workers' Comp Costs," in St. Louis Post-Dispatch, April 1, 1999.

"Benefit Cost Report," in On Workers' Compensation, May 1999.

"Workers' Comp Falling Down on the Job," in Consumer Reports, February 2000.

"California Workers' Comp Payouts Rise in State, Decline in Nation," in Los Angeles Times, May 4, 2000.

"Workers' Comp Benefits Drop," in Charleston Gazette, May 5, 2000.

"Comp Cost Decreases, Then Flattens; Worker Benefits Up Slightly, NASI Reports" in BNA's Workers' Compensation Report, May 8, 2000.

"Employer's Costs Continue to Fall," in Journal of Commerce, May 8, 2000.

"Comp Study," in Business Insurance, May 8, 2000.

"South Carolina Sees Large Increase in Workers' Compensation Benefits," in Knight-Ridder Tribune Business News, May 9, 2000.

"Study: Workers' Comp Benefits Relative to Wages Still Dropping," in Best's Insurance News, May 10, 2000.

"Workers' Compensation: Cost of Illness, Injuries Flattened in 1998 While Benefits Rose Slightly, NASI Reports," in Occupational Safety and Health, May 11, 2000.

"W.C. Benefit Payments, Costs Relative to Wages Declined, Comparing 1996/1997, National Academy Reports," in Insurance Advocate, May 13, 2000.

"Workers' Compensation Benefits Payments and Costs Declined Relatives to Wages in 1997 and 1998," in Association Trends, June 2, 2000.

"Workers' Comp Benefits Edged Up Slightly," in Insurance West Magazine, June 15, 2000.

"Workers' Comp Costs Continue to Decline," in Employee Benefit News, June 2000.

"Web-sourcing Benefit Plans," in Benefits Quarterly, July 1, 2000.

"Workers' Comp Payments Shrink as Wages Increase," in Best's Review, July 2000.

"Smoother Sailing: On the Job Injuries Continue Falling and Workers' Comp Rates are Steady," in North Carolina Magazine, July 2000.

"The Insurance Industry's Transition Will Affect the Roofing Industry," in Professional Roofing Magazine, July 2000.

"Anti-Fraud Drive Proves Costly for Employee Benefits," in Los Angeles Times, August 7, 2000.

"Workers' Compensation Data Analysis and Services," in Commerce Business Daily, August 8, 2000.

"Works' Comp in Trouble Again?," in Risk and Insurance, August 2000.

Radio Coverage

"Marketplace," workers' compensation benefits, featured report on National Public Radio, nationwide, December 19, 1997.

World Wide Web Coverage

"Compensation Benefit Payments and Costs Continue Decline," www.ABCNEWS.com, March 12, 1999.

"Workers' Comp Payments Jump 11.9% in Arizona," www.tucsoncitizen.com, March 16, 1999.

"Workers' Comp Costs Spiraling Down for Sixth Straight Year," www.insure.com, June 7, 2000.

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Report prepared by: Lori De Milto
Reviewed by: Karyn Feiden
Reviewed by: Robert Narus
Program Officer: Beth Stevens
Program Officer: Michael Rothman

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