Insight, analysis & opinion from Joe Paduda

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Is this fiscal cliff thing going to affect workers comp?

Not directly.

But there’s a wealth of indirect effects.  Here are a few worth contemplating…

But first, I’m not seeing a plunge “off the cliff” as all that big a disaster.  Sure, there will be much consternation among pols and pundits, but that’s as much to  generate readers and viewers as to “report” on reality. The negative impact of the political deadlock has already been baked into the economy, so the economy isn’t going to get any worse over the next month or so.

That said, if we don’t get a resolution by mid-January, the proverbial stuff will hit the fan.

So two scenarios.

One, it gets fixed over the next month.  Some delay in premium payments from governmental entities. Perhaps a holdup on changes to Medicare physician reimbursement and docs hold bills in hopes their reimbursement doesn’t get slashed.  Some employers will hold off on hiring while they wait for the kids in the sandbox to get their $%&(@% together. And delays in starting infrastructure work or continuing existing projects will undoubtedly occur…

That’s about it.

Which leads us to the “oh crap” scenario, the one where DC pols decide to cross the stupid line.

Government spending on infrastructure would all but cease; employers would stop hiring and might well lay off workers; health care providers – especially hospitals – would likely cut staff as well; manufacturing would slow appreciably, state, local, and municipal governments would furlough employees…

You get the picture.  As a result, comp premiums would drop significantly, few employers would look to switch insurers or administrators, and service providers/vendors would likely see a significant decrease in business as well.

So, let’s not go there.

I fully expect our elected officials will fix this before it’s too late.  The political consequences (are there any other?) would be catastrophic if they don’t.

As Winston Churchill said of us: “The Americans will always do the right thing… after they’ve exhausted all the alternatives.”



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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