The Workers' Compensation Health Initiative

In 1910, New York enacted the country's first workers' compensation law. Wisconsin followed a year later, and by 1949 every state had passed a workers' compensation statute. The theory behind workers' compensation is simple—both employees and employers trade risk for certainty. Employees exchange the risk of going to court—which could result in a financial bonanza but more likely will return nothing—for the certainty of receiving limited compensation for their work-related injuries. Employers agree to pay job-related injury claims, whether or not it was their fault, and in return are assured that they will not be sued.

Although workers' compensation was created to simplify claims and avoid lawsuits, it has evolved into an expensive, complicated, legalistic system that all too often pits an injured worker against an employers' insurance company. In 1998, about $16 billion was paid out to provide medical care for job-related injuries and illnesses through the workers' compensation system. Although this represents just 1.3 percent of all health care spending, at its best high-quality workers' compensation care can promote the well-being and employability of workers and improve the productivity of American businesses.

In the late 1980s and early 1990s, many states reformed their workers' compensation systems, allowing managed care organizations to provide medical care for injured workers and encouraging the integration of workers' compensation and other health care systems. President Clinton included similar changes as part of his health reform proposals in the early 1990s. These developments piqued the interest of the Robert Wood Johnson Foundation, which in 1995 funded a national program called the Workers' Compensation Health Initiative to better understand the workers' compensation system and to promote innovations in how care is delivered to injured workers.

This chapter of the Anthology by Allard Dembe and Jay Himmelstein explains the workers' compensation system, the research undertaken by the 21 grantees supported by the program, and key findings from their work. It places the findings in the context of other efforts to improve workers' compensation, and concludes with a discussion of the emerging trends and policy implications.