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Brighter days ahead for work comp

If your definition of “brighter days” is based on higher total premiums, things are looking decidedly sunny.

Factory orders are up significantly, which should lead to higher manufacturing employment.  As these jobs are typically higher risk than average, premiums will be proportionally higher as well.

Other positive indicators include a reduction in initial jobless claims and a healthy increase in private sector employment fueled by construction and trade/transportation/utilities.

If the knuckleheads on Capitol Hill could get their act together and end this stupider-than-stupid sequester, we’d see another 0.5% or more in GDP growth.  Alas, it does not look like sanity will arrive any time soon.

With rates up, employment up, and wages slightly higher, comp’s top line – revenues – will be steadily improving.  

The real issue is claims cost, and more specifically medical expense.  Anecdotal information from discussions with claims execs at several very large payers suggests growing unease about medical trend. Some may chalk that up to comp folks’ inability to ever be completely happy; I’d say they are realistic.

What does this mean for you?

With higher premiums come more dollars to invest in medical management. After hollowing out departments, cutting staff, avoiding IT investment, and counting managed care service fees as “revenue”, payers had best get back to real medical management.  

3 thoughts on “Brighter days ahead for work comp”

  1. Joe, will you dedicate a future column (or two) to helping payers define and understand “real” medical management?

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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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