There’s no question the Republican sweep will hugely affect workers’ comp.
There are nothing BUT questions about what that impact will be. Here are a few thoughts based on what little we know so far.
The quick take – huge uncertainty; if Trump delivers on his campaign promises, there’s a high likelihood of higher claims frequency and increased medical expenses.
I preface this by noting Trump is already backing off campaign promises – including repealing “Obamacare”.
The DOL “intervention” in workers comp is dead. There will be no new National Commission, no federal standards, no study or research or advisory panel. There will be much less emphasis on OSHA enforcement and workplace safety as well.
Energy projects will likely be fast-tracked, although there will be big battles in court as environmental concerns rally to intervene in the only way left open to them – civil suits. Pipelines, coal mines, oil will all see more jobs – although the world economy will have much more to say about that than the White House.
Trump has been touting a trillion dollar investment in infrastructure – anathema to Republicans who don’t want any increase in government spending. Where this will end up is anyone’s guess; if it does go forward, premiums, along with claims costs and medical expenses will rise significantly as these jobs are in high-claim-frequency and high-severity industries.
Trade drives jobs, consumer buying, and inflation. All of which impact work comp.
Trump will label China – our largest trading partner – a currency manipulator (it’s been keeping the value of the renminbi low to make its exports more attractive). He has to, as that’s a big part of his campaign. BUT it’s going to be a lot of talk and NO action – this is going nowhere, for four simple reasons.
The law requires three conditions to be met for a country to be declared a currency manipulator; China only meets one.
Third, consumer demand has been a big part of our economic recovery. If Trump starts a trade war, consumer goods will get a LOT more expensive, driving down consumer purchasing power and consumer confidence. The working class that supported his election would be hurt the most.
Fourth, China owns a shipload of our debt. China can stop – or greatly reduce buying our debt, which will drive up borrowing costs, triggering inflation and more damage to consumer buying power especially for baby boomers who are already living paycheck-to-pacheck.
Oh, and we have a $28 billion surplus in the service sector. If a trade war does start, China will stop sending students here, stop importing movies and music, and its new moneyed class will find other travel destinations.
That said, even the whiff of a trade war will hurt work comp. Inflation will hurt investment returns and lower the value of claim reserves, export jobs will be lost, and the tourism, educational, and cultural industries will suffer as well.
For a brief and helpful summary of Trump and trade, click here.
Evidence suggests the Affordable Care Act has helped work comp. Work comp medical costs have declined since ACA’s full implementation despite rising employment and middling cost increases in group health. The newly-insured are in higher-frequency jobs.
If Trump rips out ACA “root and branch”, we can expect medical costs to increase and cost- and case-shifting to ramp up significantly.
There’s a lot more to this and we will be tracking it closely.
What does this mean for you?
Given Trump’s already walking back campaign promises, this is just speculation. For now, expect higher premiums, more claims, and higher medical costs.