Insight, analysis & opinion from Joe Paduda


Health insurance and workers comp claim frequency

A recent dialogue on the LinkedIn WC group got me to dive back into the question of what, if any, influence does the presence of health insurance have on work comp claim frequency? The data aren’t conclusive, but the answer appears to be ‘There is a trend, but not in the direction you’d think.’
Commonly accepted thinking holds that workers without health insurance will claim off the job injuries under work comp so the medical bills get paid. (That’s what I thought too.) Turns out that the opposite appears to be the case; workers who have health insurance are more likely to file WC claims than those who don’t.
It isn’t quite that straightforward, so don’t just read this and take it at face value; there are significant complicating factors.

The seminal study on the health insurance: WC claims relationship was done by RAND and published in 2005 . If anything, it appears to indicate that workers with health insurance are more likely to file WC claims, however the driver is not the presence of health insurance but rather the nature of the employer.
From the study abstract:

…uninsured and more vulnerable workers are less likely to file claims than the insured. We study this relationship and find that it emerges as the result of employer characteristics. Workers at firms who offer health insurance to employees are more likely to file workers’ compensation claims: the characteristics of the firm are more important than the insurance status of workers themselves; [emphasis added] moreover, even repeat injury sufferers are more likely to file during episodes in which their employer offers health insurance. This suggests that the workplace environment and employer incentives may have a significant impact on the utilization of the workers’ compensation system.

Key highlights from the study itself:
– injured workers without health insurance are about 15% less likely to file a WC claim than workers with health insurance
– workers in firms that offer health insurance are twenty-one points more likely to file a claim than those in firms that don’t offer health insurance
RAND’s conclusion that the workplace environment is the key factor affecting claim rates and frequency was supported by several recent reports indicating injured low wage workers are particularly unlikely to file work comp claims. One of the more intriguing studies was done under the auspices of the National Employment Law Project which focused on the problems faced by low-wage workers when they are injured on the job. The study looked at a population that accounts for fifteen percent of all workers in just three cities; Chicago, New York, and Los Angeles. Extrapolating the numbers out in just those three cities indicates that 75,446 workers comp injuries were not reported.
Nationally, that works out to about a million claims unreported.
The study reported 92% of low-wage workers don’t file work comp claims for injuries that require medical attention.
Fully half of the workers with on the job injuries “experienced an illegal employer reaction”, including firing the worker, calling immigration authorities, or telling the worker not to file a comp claim.
What does this mean for you?
With health reform with some form of mandate looking increasingly likely, some, steeped in conventional wisdom, will expect claims frequency to decline. Others will expect it to increase now that more workers will have coverage.
The latter group’s view will be more correct than the former’s; or more accurately ‘less wrong’. Bad employers will remain bad employers regardless of whether or not they offer health insurance, therefore, after the mandate is in place, injury reporting behavior may increase somewhat but probably not by much.
(kudos to Mark Walls for starting and managing the LinkedIn group)

3 thoughts on “Health insurance and workers comp claim frequency”

  1. You make a very coherent and, to my reading at least, complete summary of the RAND study’s findings that the tendency of injured workers to make claims depends more on workplace characteristics than on traits of the workers. But in your final paragraph you seem to undermine yourself by claiming that the GHC insurance mandate will increase injury reporting. As you say, “Bad employers will remain bad employers.” Being forced to offer insurance is not going to make them suddenly nice. Workers who fear retaliation for filing comp claims will still fear retaliation. Why would you expect comp claims to rise at all?

  2. Donald – welcome to MCM.
    I certainly didn’t intend to infer that the mandate wil increase injury reporting, in fact that would as you note run counter to RAND’s findings, as well as those of other studies referenced in earlier posts.
    That said, with all the attention paid to comp under reporting, I’d expect group health payers to become even more vigilant, as will providers treating lower-income workers with musculoskeletal injuries.

  3. One million under-reported claims? Talk about skewed IBNR! The element of concern here for me is the link between the workplace dynamic and the unreported claim. I have seen workers fear reporting a loss in all industries because of the retaliation (perceived or real) from their direct manager or the company itself. Its not good. If these folks are knowledgeable about how to report the loss it is likely they will not cite a history of being work related to avoid problems altogether.
    Great interpretation of the results though.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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