Role of Work Comp in 'Medicare for All' System Uncertain
With increasing attention on Congressional proposals that would create a single-payer health system for Americans, industry observers are beginning to ask what the plans would mean for workers' compensation.
Rep. Pramila Jayapal
The answer, like much in workers' comp, is complicated. Ideas range from making workers' compensation a wage-replacement-only plan to leaving it largely the way it is now - carved out and separate from the rest of the health care system - to some sort of hybrid approach.
A "Medicare for All" bill introduced last week by U.S. Rep. Pramila Jayapal, D-Washington state, appears to keep carriers in the comp game but would have them reimburse the national health system for medical treatment provided to injured workers. Doctors would be paid by Medicare, and Medicare would bill the carrier, under provisions of HR 1384.
Employers would be prohibited from providing benefits that duplicate the universal Medicare coverage, and "each workers' compensation carrier that is liable for payment for workers' compensation services furnished in a state shall reimburse the Medicare for All Program for the cost of such services," Jayapal's bill states.
Her plan is similar to that of U.S. Rep. Bernie Sanders, D-Vermont, who championed the Medicare for All idea in 2016 and is promoting it again in his 2020 campaign for the presidency.
The universal health care idea may still be a long way off, but it's being taken seriously by a growing number of interests as newly elected progressive lawmakers try to leave their mark. News reports show that in just the last week, investors have been unloading health insurance company stock amid concerns that the idea is gaining momentum.
And in California, which many thought would forge its own universal health care program, Gov. Gavin Newsom this week instead announced a new council to study how the state could transition to a national Medicare for All plan.
Here's a look at a range of ideas and concerns about how the century-old, state-based workers' comp coverage would fit into a new, nationally based health care scheme.
Don't touch it
Jayapal's bill seems simple enough: Have comp carriers reimburse the national health system for workers' care. But lawmakers and regulators will most likely realize that workers' comp is too entrenched, too complicated and too different from state to state to be included in a Medicare plan, said Robert Hartwig, professor of economics at the University of South Carolina.
That's what happened in 1993 when President Bill Clinton and first lady Hillary Clinton proposed a near-universal health system. After initially rolling comp into the single-payer plan, it was left out of the final proposal altogether, said Hartwig, who analyzed the plan for the National Council on Compensation Insurance at the time.
The insurance industry argued that divorcing medical care from wage replacement means insurers lose control of medical and its emphasis on returning injured employees to work.
"The sense of urgency would be lost," Hartwig said. "It would drive up indemnity costs because it would take longer to get people back to work."
Other health care expansion plans have tended to agree that workers' comp is best left alone. Massachusetts Gov. Mitt Romney's plan in the 1990s left workers' comp out, as did the U.S. Affordable Care Act, known as Obamacare.
Others suggested that the main reason insurers oppose an indemnity-only comp system is that they would lose half their premium revenue. That would mean insurers would have much less to invest, much less investment income and less earned interest, said John Burton, professor emeritus of management at Rutgers and Cornell universities.
On the flip side, an indemnity-only compensation system could be self-limiting to some degree. Smaller premiums, covering wage benefits only, would also give employers less incentive to improve workplace safety and reduce injuries, Burton and Hartwig agreed.
"The beauty of workers' comp is that you have great incentives to invest in workplace safety," Hartwig said.
In the end, stakeholders on all sides may find that it's simpler to leave comp as a parallel system to national health care. Many state governments, with long-established comp administration systems and extensive attorney groups on both sides of the divide, may oppose changing the status quo, Hartwig and Burton said.
"It's already a giant can of worms as it is, so why bite off more than we can chew?" Hartwig asked.
How Canada does comp
Perhaps the best place to look for answers on how workers' comp would meld with a universal health plan is Canada's 55-year-old system. Medical treatment under the Canadian comp system is separate from the national health plan - but only to a degree, explained Terrance Bogyo, who was director of corporate development for WorkSafe British Columbia for 32 years.
Bogyo, a researcher and speaker on comp, said he's had many phone calls in recent weeks about the subject, and he spoke at the California Division of Workers' Compensation Educational Conference about it last week.
First of all, he said in an interview with WorkCompCentral, Canada's national health system isn't truly national. Each of the 10 provinces are in charge of health services, but each agreed in the 1960s to adopt federal standards.
All of the provincial plans exclude workers' comp, Bogyo said. But the injured worker may hardly notice because, like others seeking medical care, the worker has no co-pay, no deductible, and balance-billing is not allowed, he said.
If the injury or disease is work-related, then "the billing and reports are simply routed to the (provincial) workers' comp authority. The doctors and hospitals negotiate fee schedules with the provincial medical plans, and workers' comp can piggyback on those, and add their own fees and codes," Bogyo said.
There is one big difference between Canada and most of the comp systems in the U.S.: All Canadian workers' compensation is insured by province-run, monopolistic systems. Only four states - Ohio, Washington, Wyoming and North Dakota - employ monopolistic systems.
With the government handling most medical costs, Canadian employers have lower workers' comp administrative costs, according to a blog post by Mary Lynch, a consultant on Canada for Marsh Risk Consulting.
Dan Anders, the chief compliance officer for Tower MSA Partners, said the impact on employers depends on the details of any system, but "generally, it helps administratively when you're dealing with just one entity, as opposed to what we have now."
A Medicare for All plan that requires workers' comp carriers to reimburse the federal health system, like that outlined in Jayapal's bill, could also mean more work for those who specialize in Medicare set-asides. Instead of handling set-asides only for older workers or those on Social Security disability, "it could mean a more expansive process because everybody would be on a federal system" such as Medicare, Anders said.
Hartwig noted that a Canadian-style system might not address the end goal of helping injured workers. He said stories abound about delays in some high-end medical procedures in Canada, such as magnetic resonance imaging. Workers' comp systems in the U.S. tend to have built-in deadlines for at least initial medical treatment, he said.
Claimants' attorneys have disagreed with that point, noting that medical care is often denied or delayed by insurance carriers.
On the other hand, many U.S. doctors don't want to treat injured workers because of what some have called low-paying fee schedules and mounds of paperwork involved, Burton said. With a Canadian-style system, there would be no difference in reimbursement for providers, which could mean workers would have better and faster access to care, he said.
Alan Pierce, a Massachusetts claimants' attorney and former president of the Workers' Injury Law and Advocacy Group, said a Medicare for All plan "would solve a lot of problems for workers that have problems with availability of doctors now."
Medicare for All would simplify everything and would end disputes over who is responsible for the bill, he said.
"Having one source of payment would seem to make sense, instead of fighting over who should pay," Pierce said.
He gave an example of a worker with arthritis that's been aggravated by years of manual labor. In some cases, the health care insurer won't pay and argues it's a workers' comp claim, but the workers' compensation carrier decides it's not work-related, and litigation ensues.
Cost-shifting to other benefits programs, and the delays and inefficiencies it brings, would be all but eliminated by a single-payer plan, some have said. In an often-cited 2017 article for the Rutgers University Law Review, Emily Spieler, a law professor at Northeastern University, noted that cost-shifting is on the increase.
"As workers' compensation programs have tightened up on the availability of lifetime permanent total disability benefits, it is no surprise that people with complex health conditions turn to other programs," Spieler wrote. "Some researchers believe that the incidence of this is rising" and is contributing to Social Security disability's underfunding problems.
Under a single-payer system, workers' health could benefit in other ways, Massachusetts claimants' attorney Pierce said. With occupational diseases, for example, a worker may need treatment as soon as he or she is diagnosed, but it can take years for the administrative law and court systems to decide who should be responsible. A Medicare for All system would pay for treatment immediately, without the need to determine who pays the bill.
To be sure, a Medicare for All plan would require a continued shift in U.S. politics before it could be adopted, most of those interviewed for this report agreed. If nothing else, the growing debate has put the spotlight on how convoluted the U.S. health care and workers' compensation systems really are, with 50 different state systems, all with varying requirements for managed care networks, fee schedules, drug formularies and utilization review, they said.
"Somebody from another planet looking at us would say, 'There's got to be a better way,'" Pierce said.