ProPublica, a non-profit investigative journalism organization, recently published a report on the status of workers compensation benefits in the U.S. The report, “The Demolition of Workers’ Comp,” details how state legislators have rolled back protections for injured workers across the country in recent years, and follows the lives of a number of injured workers, putting a human face to these recent legislative trends that have received little media attention.

Lawmakers Unraveling Decades-Old Improvements

As noted in the report, many features of the modern workers compensation system came into existence after a commission studied state’s workers compensation laws with the passage of the Occupational Safety and Health Act (OSHA) in the early 1970’s. The commission, led by John F. Burton, Jr., a Republican economist and law professor, unanimously concluded state workers compensation laws at that time were “inadequate and inequitable.” The commission laid out a number of recommendations that states would come to adopt in modernizing their workers compensation systems. These changes included:

• Requiring that nearly all employees be covered by workers compensation
• Giving employees the right to pick their own doctorsWisconsin State Capital on a clear summer day. Aerial photo.
• Eliminating arbitrary caps on the length of time workers can receive wage replacement benefits while they heal

These protections have been scrapped by many states in recent years. Changes have included:

• Drastically reducing the amount of weekly wage replacement an injured worker can receive
• Placing arbitrary caps on how long a worker can receive wage replacement while they recover from an injury
• Giving insurance companies greater power to tell injured employees what doctor they can see
• Allowing insurance companies greater ability to deny claims using out-of-state doctors who lack relevant expertise and have never seen the injured employee

When John Burton was asked about the recent trends in state’s workers compensation laws, he stated, “I think we’re in a pretty vicious period right now of racing to the bottom.”

Such changes have allowed workers compensation insurance carriers to drastically reduce how much injured workers receive in wage replacement benefits and in health care treatment, even in cases where it was undisputed that workers suffered work injuries as serious as severed limbs and paralysis. A day after ProPublica released its report, OSHA released a report echoing the concerns raised by ProPublica.

Weak Worker’s Comp Laws Shift Costs to Tax Payers

The result of these changes, as both reports point out, is more injured workers are being forced into long-term poverty and left with no other option than turning to government assistance. The costs insurance companies are saving in the form of lesser disability benefits and medical treatment expenses are being shifted onto taxpayers in the form of food stamps, Social Security, Medicare, and Medicaid. This all comes at a time when workers compensation insurance companies have seen increased profits and employers are paying the lowest premiums seen in decades. In Wisconsin, for example, employers paid an average of $3.42 per $100 in wages in 1988. In 2014, they paid $1.92 per $100 in wages.

Walker Budget Bill Would Dismantle Highly Successful State System

These trends are of particular interest to Wisconsin, which has long been regarded as having an exemplary workers compensation system defined by efficiency, stability, and compromise between competing interests. Wisconsin has the oldest workers compensation statute in the country, adopted in 1911 and found constitutional by the Wisconsin Supreme Court. Central to Wisconsin system is the Worker’s Compensation Advisory Council, which brings together representatives of labor, management, and healthcare providers to agree on changes to workers compensation that are then presented to state legislature as a proposed agreed-upon bill.

As recently addressed by Attorney Aaron Halstead of Hawks Quindel, Governor Scott Walker’s proposed budget bill includes unprecedented changes to Wisconsin’s workers compensation system that are widely seen as unnecessary. These changes have been proposed without any input from the Advisory Council, and the passage of the budget with these changes may well threaten the end of a legislative process defined by compromise, common-sense, and expertise rather than the instability and drastic swings that have come to define partisan law-making.

A “Solution” in Search of a Problem

If Wisconsin were to follow other states, such as Oklahoma, that have slashed workers compensation benefits in the name of attracting businesses from neighboring states, it would be the quintessential “solution” in search of a problem (and ultimately a “solution” creating problems). Virtually all of Wisconsin’s workers compensation system, including the budget for the Worker’s Compensation Division of the State, is funded by insurers and self-insured employers. Moreover, Wisconsin workers compensation system has a reputation for efficient outcomes and returning workers to their jobs quicker than other states. A study comparing Wisconsin to 15 other states found that the costs paid per claim in Wisconsin were among the lowest of all the states studied. Despite the above, the Governor’s push for changes to Wisconsin’s existing system have not yet been explained, and it remains to be seen whether further changes to workers compensation in Wisconsin can be expected.

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Matthew Robles