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Opt out – the final word from the experts

Wrapping up WCRI’s opt out marathon, a four-person roundtable dove into the issue with AIA’s Bruce Wood leading off.  Bruce began with something I kept thinking during the earlier talk: what problem is opt out solving?

Work comp rates are down, no systems are in crisis, benefits are decent and in many states improving, and medical costs are, with a couple notable exceptions, not increasing too much.

Yes, there are problems in many states, some much worse than others – opioids, crappy docs, too much litigation, some outright lousy incentives that motivate bad behavior, and some bad employers, but overall, we’re doing ok.

Bruce went thru a litany of reasons opt out isn’t viable or appropriate; as one of the nation’s most knowledgeable experts on all states’ systems, he knows of what he speaks. One key point is that opt out is a federally regulated plan, therefore states can’t require financial stability or standards or minimums or audits.  Thus, even if states pass laws requiring financial standards, guarantee funds, etc, these laws will not apply to opt out.

Next up Elizabeth Bailey of Waffle House gave her views; the covered-smothered-chunked-and-served company is a non-subscriber in TX and insured thru the work comp system in OK. For those unfamiliar with WH, they sell waffles and related foodstuffs in sort of a mini-diner setting.  WH opted out in TX because the system was broken back in 2002; Bailey indicated that the lack of settlement ability and lifetime medical benefits coupled with the strength of providers made the TX WC system untenable.

That’s worked out pretty well – according to Bailey their plan features solid benefits, the ability to direct to specific medical providers, a strong focus on workplace safety have delivered much lower costs due to a dramatically lower injury rate, almost no indemnity expenses, and an overall decrease of almost 90% in costs.

My based-on-almost-no-real-knowledge-of-WH’s-program view is these folks are doing things the right way, which benefits their workers greatly – far fewer have injuries, which is the core goal of any occupational program.  And they get back to work quickly, so they don’t get stuck in a disability mindset.

Attorney Alan Pierce then weighed in; his slides were very detailed (much better for future reading than trying to follow live).  Perhaps his key point was the contention work comp is a right, not a benefit; a right owned by the employer.

Aside – Pierce’s pontification was more than a bit annoying; his attempt to denigrate the sessions and attendees by asserting that there were few/no injured workers in the audience, and therefore he, as an “injured worker advocate” was somehow uniquely qualified and special.  A physician friend and colleague noted afterwards that this was offensive indeed as there were several treating docs in attendance, all of whom likely had just as much experience “advocating” for injured workers.

Pierce made a case that opt out results in a dramatically greater cost shifting.  While I don’t agree with all the examples of potential issues, he made a reasonable case that opt out may well increase cost shifting of both medical and wage replacement expense away from the employer.

The session wrapped up with a representative from the Oklahoma Insurance Dept, James Mills.  He provided a concise overview of the program, which is regulated much more tightly than Texas’.

The key takeaway is one offered by…once again…David Deitz MD.  There just isn’t enough data, or, arguably, any data that would allow anyone to make a reasonable assessment of opt out and/or a comparison with workers’ comp.

Until and unless there is, it is difficult if not impossible to evaluate opt out.

3 thoughts on “Opt out – the final word from the experts”

  1. Joe,

    Opt-out is a creature of the Koch Brothers’ attempt to turn this country into a libertarian dictatorship where business gets to do anything it wants, to anyone it wants, whenever and wherever it wants.

    In short, they want to take us back to the 19th or 18th century, economically speaking.

    You need to understand, as I do, the historical context of the labor movement, the struggle that occurred in the late 19th century for workers’ rights, and the struggle that began in the 18th for fair labor practices.

    To illustrate, I direct you to the seminal work by Jesse Lemich, “Jack Tar in the Streets”. It was a book I read at NYU’s History department, and was taught to me by a labor historian named Daniel Walkowitz, whose own book about cloakmakers and their unionization hit home because he was from Troy, NY. The book was called, “Worker City, Company Town”.

    The Koch’s, Art Pope (NC), and those in TX who don’t subscribe to state WC want to see workers go backward and don’t care what happens to them, as long as they profit from their misery.

    Opt-out is a sham.

  2. Opt out is never going to work under the current federal administration if you have a one-day or same day reporting requirement with no leniency. A suit to block that has already started. I think one-day mandatory accident reporting could lead to strong abuses and headlines where an injured worker would have an insidious problem that escalates to a full blown medical catastrophe to then face complete denial due to late reporting. To me, that concept is unworkable and doomed to fail.

  3. OPT out is a pathway to poverty for the injured workers, just like the US Labor secretary has recently stated. IM so glad the FEDs are putting state workers comp systems under the microscope.

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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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