Insurance folks decry the difficulty inherent in operating in multiple states, each with their own rules, requirements, standards, and demands. It would be all so much easier if there was one national standard, and some would argue this would make for a “fairer” system.
States have the Constitutional authority to oversee and regulate most insurance functions. While federal legislation and resulting regulations can – and do – supercede State laws (think voting rights, interstate speed limits, education standards, firearm background checks), to date states have been left pretty much alone when it comes to workers’ comp.
Is that going to change?
I think not, but reasonable people can make a good case for some national standardization – which would almost certainly require Congressional action. Of course, given Congress can’t even bother to authorize spending to deal with the opioid disaster or take action on Zika, something as tiny and non-problematic as workers’ comp is not likely to get any Congressperson’s attention.
Here’s where it gets ideologically sticky.
Folks who normally favor small, limited Federal government find themselves advocating for national standards to streamline work comp for insurers and employers. The hodgepodge of state regs creates a whole host of inappropriate incentives;
- injured employees get higher wage replacement payments depending on the state “where they were injured”
- while employers get lower rates in states with low wage replacement levels and
- doctors get paid more to treat workers’ comp patients in Connecticut than in Massachusetts – a LOT more
Those just scratch the surface; talking with Bob Wilson yesterday about this, he noted many payers are most frustrated by EDI rules and regs. Set up in an effort to normalize state requirements around a set of national standards, Bob noted many states seem to have a need to tweak things just a bit here and there. Once that begins, there’s no such thing as “standard”.
What does this mean for you?
Ideology sometimes conflicts with reality.