Workers’ compensation benefits as a share of payroll declined in 2016, continuing a five-year trend, while employer costs as a share of payroll fell for the third straight year, according to a new report from the National Academy of Social Insurance (NASI).
Nationally, workers’ compensation benefits fell from $0.86 per $100 of covered payroll in 2015 to $0.83 in 2016, a decrease of 3.5 percent and the lowest level since 1980. Benefits as a share of payroll declined in 36 states – in 19 of those states, benefits fell by more than 5 percent.
Local numbers average – but not definitive
Louisiana ranked 24th among all states for percent change in total workers’ comp benefits paid between 2012 and 2016, with a decrease of 2.3 percent. Workers’ comp benefits paid per $100 of covered payroll in Louisiana declined .09 percent between 2012 and 2016 – this puts Louisiana at 15th among all states. Medical benefits paid are the one area where Louisiana had a significant increase. That segment increased 3.6 percent between 2012 and 2016, coming in at No. 17.
In a phone interview with Louisiana Comp Blog, LUBA Workers’ Comp COO Mike DePaul cautioned that while the numbers might look relatively stable, they are not representative of individual claims. “These numbers are pure totals,” DePaul explained, “They aren’t indicative of the whole picture. Because frequency in Louisiana is declining, it’s not surprising that total dollars spent are decreasing. On a per claim basis though, costs are going up, severity has been increasing.”
Regarding the medical portion of the report, LUBA Claims Manager Russell Michiels added that the severity issue DePaul identified has one major likely cause in Louisiana. “Medical increases could be due to outpatient costs and a lack of an updated fee schedule,” he said.
For his part, attorney Trey Mustian, who represents injured workers at Stanga & Mustian, linked the declines to the local economic picture and how it affects frequency. “Comp payments may have declined simply because Louisiana has and continues to have a higher unemployment rate than the national average, resulting in less people working and less people getting injured on the job,” Mustian said in emailed comments to Louisiana Comp Blog. “With regard to the increase in medical payments, I have noticed that Medicare Set Asides have been consistently raised by CMS when reviewed. When that happens, carriers continue to pay medicals on claims that otherwise might have been settled.”
Costs to employers at national level continue to fall
Across the country, workers’ compensation costs to employers fell for the third year in a row, from $1.33 per $100 of covered payroll in 2015 to $1.30 in 2016, a decrease of 2.3 percent. More than two-thirds of states experienced an annual decline in employer costs as a share of payroll, and 14 jurisdictions had a decline of 5 percent or more. The largest percentage decreases were in the District of Columbia, where costs as a share of payroll fell by 24 percent, and Texas, where costs fell by 14.3 percent.
Employer costs for workers’ compensation amounted to more than $96.5 billion in 2016. Premiums paid to workers’ compensation insurers (nearly $59.9 billion) were the largest share (62 percent) of employer costs. Nearly $18 billion (18.6 percent) of workers’ compensation costs were paid directly by self-insured employers.