Work comp medical expense is on the rise
I've been watching a disturbing trend in workers comp medical costs - they appear to be headed up. New information from California adds fuel to that fire.
The insurance rating board in California has recommended a premium increase of 17.8%, driven mostly by medical inflation - inflation that has caught regulators somewhat by surprise. According to an article in WorkCompCentral (sub req):
"new medical data from 2006 and 2007 convinced the board that an even bigger increase is necessary. The rating bureau says the rate must jump by 10.8% just to cover rising medical costs.
[California Work Comp Insurance Rating Board Communications Director Jack] Hannan said the governing board, in its last two filing recommendations, adjusted pure premium rate recommendations based on an assumption of 1% medical inflation. He said the board believes the inflation trend in medical costs is actually closer to an increase of 5% per year. [emphasis added]
Hannan could not say specifically what area of medicine is spurring the rise in costs, but he said the bureau hopes to have a breakdown by the time the Insurance Department holds hearings on the rate recommendation in September."
I'll take an educated guess. Facility costs, with a big push from surgical implants, and a smaller contribution from drug pricing.
After a year of essentially little to no increase in drug pricing, manufacturers raised prices for a relatively small number of brand drugs - few of which are commonly (or ever) used in work comp. But that was a year ago, and manufacturers, stung by flat utilization, are going to have to get top-line growth from somewhere. If they can't sell more drugs, they'll have to increase pricing on the pills they do sell.
What does this mean for you?
Nothing good.