Federal takeover of WC: the problem with occupational diseases

In the five and a half years I’ve been publishing this blog, I’ve never had a guest post. Today’s post breaks that tradition. (This is NOT a change in policy; please don’t submit guest posts)
Good friend and colleague Peter Rousmaniere is one of the most thoughtful and interested observers of all things related to workers comp; his work appears in many other publications including Risk and Insurance. Peter and I were discussing the issue of the federal government’s role in work comp, he mentioned the history of federal involvement in occupational disease, and was kind enough to agree to write up his thoughts on the issue. I don’t necessarily agree with Peter’s perspective, but his views are well worth consideration.
Here’s Peter’s view.
There is talk about the threat of complete federalization of the workers compensation system without any evidence that the Administration and Congress is giving the idea any thought. However I envision a scenario for a serious effort in the next few years to take over coverage of work-related diseases. I have four points to make.
First, there is a very apt precedent of a federal takeover of about ten years ago. Thousands of nuclear weapon workers employed from the 1940s through the 1970s at private companies contracted by the federal government filed disease claims in state systems. Hardly any were accepted, an indication less of the merits of the claims than of the torturous, glacial pace of disease claims in virtually all state workers compensation systems.
After decades of inaction at the state level, Congress in 2001, in a bipartisan way, and with tacit concurrence by the states, said that the federal government was assuming the task of managing these claims. Thus emerged the Energy Employee Occupational Illness Compensation Program. The Department of Labor has spent several billions of federal tax dollars paying disease claims that were not paid through the workers compensation system.
Second, there is some interesting evidence that most occupational diseases do not enter into the state workers compensation systems. These ill workers go without the protections provided by these systems. The Massachusetts Department of Public Health studied asbestosis-related hospitalizations between 1996 and 2000 and found that among 3,344 hospitalizations, only 15 were paid for by workers compensation insurers.
Using epidemiological methods, and after analyzing state records of disease claims, other researchers estimated that the large majority of disease claims were missed. They went on to estimate that the annual national medical spend outside the workers compensation system for occupational diseases is between $8 and $23 billion.
Third, if the Democrats maintain their control of Congress in November, they are very likely to return to massaging the issue of OSHA undercounts. Congress could well extend its scope to investigate any kind of systemic barrier to protection of workers from the incidence and effects of occupational injury and disease. Congress will have not problem filling a conference room with claimant bar attorneys and medical reseachers.
Fourth, threats of federal takeover actually work. At the time the Nixon Administration created OSHA, it also launched a National Commission on State Workmen’s Compensation Laws. The commission’s report of 1972 is credited with embarrassing and prodding many states to modernize their workers’ compensation systems.