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Jul
1

Obamacare and workers’ comp; Part 1 of 9

The closer we get to January, the more interest there is in how health reform, aka PPACA, aka Obamacare will affect workers’ comp.  In a meeting with a dozen industry executives last week the issue garnered much attention – as well it should.

While there are no direct ways Obamacare will impact work comp, there are a host of indirect ways it will – some of which are obvious, many rather subtle.  I’ll explore the 8 “indirect impacts” over the next couple of weeks, but we’ll begin with a bit of table-setting.

First, recall that worker’s comp is tiny.  Compared to the total US health spend of $2.6 trillion, comp’s $30 billion is just over 1 percent.  The implications are clear – we are the flea on the tail of the dog, and a mighty big dog at that.

Second, while there is no direct impact on workers’ comp, there are a couple things in PPACA that affect occupational disease – some changes to the feds’ Black Lung program, and “LibbyCare”. The Black Lung changes are rather obscure and relate to reinstating presumption of cause and widow’s benefits provisions.  Libby Care is a bit more complicated.

Some background is helpful. In the Senate, PPACA fell under the jurisdiction of the Finance Committee.  The chairman of the Senate Finance Committee, Max Baucus, hails from Montana. Libby is in Montana, and Libby is the site of massive asbestos mining and manufacturing operations, and an attendant public health disaster.  Not only were workers affected by asbestos-related illness, but residents in and around the town have also been harmed.

Briefly, Libby Care is the assumption by Medicare of the responsibility of providing care to Libby residents affected by asbestos and related illnesses/conditions. Victims will also receive special home care, pharmacy, medical device, and other services.  The details are in Section 10323, Medicare Coverage for Individuals Exposed to Environmental Health Hazards.

While some might argue that Libby Care is the first step in some sort of federalization of workers’ comp, that is far-fetched at best.  In fact, this is a powerful politician’s use of that power to serve a specific constituency; a one-time fix to a specific ‘problem’. That’s not to say that the work comp industry has done a good, or even passable, job in addressing occupational disease, but the Libby Care Amendment isn’t an attempt to Federalize management and treatment of occupational disease.

Color me a cynic if you will, but my sense is the Manager’s Amendment (technical term for the Libby Care language) isn’t so much the ‘camel’s nose under the tent’ as a political move by Sen Baucus (D MT) to curry favor and win votes.

Here’s why.
1. The Amendment requires a site be designated a “Public Health Emergency” by the Secretary of HHS. To date, Libby is the only site so designated, and the requirements for designating any site as a Public Health Emergency are stringent indeed.
2. The provision covers care for all affected residents and employees, not just workers. This is clearly far beyond ‘occupational’ and is much more of a public health issue than a work comp one.
3. Care is to be delivered through the Medicare system. This will require allocation of additional funding for each new site, something a cash-strapped CMS is unlikely to encourage.

Finally, PPACA funding includes about $20 billion from a medical device excise tax of 2.3%. This may add a few pennies to workers’ comp medical costs – but remember a) medical devices are just a few percent of WC medical costs, and b) markup on these items is already so high that another couple percent isn’t going to move the proverbial needle. While the device industry is lobbying its brains out to get this repealed, claiming it will cost jobs, hamper innovation, and bring asteroids crashing down on our heads (well, perhaps not that), a dispassionate analysis indicates this is a non-event.

Next up – the impact of increased group and Medicaid insurance coverage on workers’ comp…


4 thoughts on “Obamacare and workers’ comp; Part 1 of 9”

  1. An interesting and typically rational and understated piece, shedding light and thought onto the problem.
    Whatever you think of Mr. Baucus’s motives, he does have a legitimate concern. It seems fair the medical costs of this disaster should be shared by the country as a whole. Just because he was able to get it done does not mean it shouldn’t have been done.

  2. I did a paper for my MHA class on PPACA on this very subject, and found there there are “direct” and “indirect” impacts to the law for WC, but on the whole, not too much because WC was not on the table.

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Joe Paduda is the principal of Health Strategy Associates

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