Thursday, August 28, 2008, 08:01 PM - Political developmentsJ.P. Morgan. Savior of Bear Stearns. Now coming to workers' comp.
There's a reason why the folks on Wall Street are on Wall Street. They understand how to gin up new financial opportunities.
Credit debit swaps and slice n' dice mortgage pools. Been there. Done that.
Where's there a huge pool of cash ready for the tapping?
Workers' comp. That's where.
What if we could get the float on some of worker indemnity payments? We'll handle the funds-cash deposited by the insurer up front-and invest those monies, all the while making the funds available to the disabled worker.
Voila! Workers' comp debit cards. The worker can use them like cash to pay for a wide range of items or withdraw cash like an ATM. A toll free number would allow workers to check balances. Workers without bank accounts would not be forced into expensive check cashing services.
Advantages? Problems with account holds and missing or late checks would be reduced if not eliminated. Transaction costs for employers and carriers might be lowered.
But like all plastic, there are problems. ATM-like access to cash might facilitate irresponsible financial planning by impulsive injured workers.
And how to pay landlords and utilities? Many of these workers are not folks who do electronic banking.
And with the entire banking system under cloudy skies, involving large banks in new financial products may be a bit much for many to stomach.
I've yet to hear discussion of workers' comp debit cards in California.
I'll leave it to wiser oracles to analyze whether comp debit cards would be permitted under current statutes or whether there would need to be enabling legislation.
But stay tuned.
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Friday, August 22, 2008, 04:38 PM - Medical treatment under WCCalifornians like to think of themselves as the ultimate trendsetters. From beach volleyball and skateboards to iPods and iPhones, it tends to happen here first.
But consider Alabama. There's a cutting edge place for you. Hey, it's not Santa Cruz, Venice Beach or Cupertino, but even Tuscaloosa can generate a trend now and then.
The State of Alabama plans to start surcharging obese state workers for part of their healthcare coverage. State workers who aren't fat will continue to get coverage for free. Those who don't meet the weight goal
(a body mass index of under 35 or lack of progress thereto) will be paying $25 per month.
Smokers are already surcharged in Alabama.
Other states have been experimenting with various financial incentives to promote wellness and reward healthy behavior.
It's doubtful that we'll see these kinds of penalties in
California workers' comp. As a statutory scheme, using a stick rather than a carrot will probably never fly politically.
But it would be interesting if an insurer offered incentive programs to disabled workers to help keep them in shape. In an era of rising medical costs, might it be cost effective for an insurer to actually give small financial incentives (slightly higher indemnity payments?)
to workers who met certain performance incentives? Incentives to workers who demonstrated motivation in their treatment regimen or progress dealing with associated problems such as obesity?
Granted, the current prevalence of utilization review and ACOEM guidelines seems to discourage such an approach.
Try being a lawyer fighting for a gym membership or a structured weight loss program for a worker who wants to keep in shape. Sometimes you can win these fights, but it's a battle.
But-thinking outside the box-wouldn't it be cost effective for a large insurer like SCIF to provide some gym or pool facilities or gym discounts where workers could keep in shape under proper supervision?
Silicon Valley companies have long recognized the advantages in this type of approach. In the comp arena it won't be effective for everyone. But getting the worker active is the whole concept behind functional restoration.
The problem is that most injured workers have no workout equipment and no concept of how to get started. Keeping motivated is hard and the risk of reinjury is higher without training. And many workers are afraid to be too active lest they be accused of comp fraud.
This is one concept that Arnold would understand.
www.boxerlaw.com (you can subscribe to the blog by clicking on the RSS reader button on the lower right column under "most recent entries")
Wednesday, August 20, 2008, 09:38 PM - Political developmentsThe public's attention is not exactly on workers' comp as the summer winds down. The Olympics, the impending vice-presidential picks and McCain's apparent pull ahead, the financial teeter-totter of Fannie Mae and Freddie Mac, the spectre of a restless Russia... is it John Edward's baby? .There's a lot on the public mind.
You, dear reader, perhaps live in a quiet corner of the state with gated communities and manicured lawns. But here in Oakland the public's mind is on a spate of brazen restaurant robberies. Young hooded thugs in baggy pants barging into restaurants-even in upscale, trendy areas-and holding up diners and staff at gunpoint (there's a comp case for ya!)
Restaurants installing countersecurity measures. Some owners locking doors and considering doing racial profiling before inviting customers into the premises. A lethargic mayor who blames thuggery on lack of hope for young men without economic opportunities.
Sometimes its not hard to image society devolving into shocking lawlessness.
Workers' comp is a backwater.
Last week's announcement that the WCIRB may recommend as much as a 20% increase in comp premiums received some press coverage. But the story dropped out of sight quickly, causing few ripples.
At the WCAB district offices today, a collective sigh of relief. The Governor's plan to reduce state employees to minimum wage pay has been put off til a September hearing. Board employees I've talked to this summer have been dispirited.....concerned over the pay issue and
unenthused over what they've seen of EAMS so far.
Meanwhile, the California legislature grinds towards the finish of this term. Carole Migden's anti-discrimination in apportionment bill cleared its last legislative hurdle yesterday and heads to the Governor.
Here's a link to the roll call vote tally in the California Assembly:
http://info.sen.ca.gov/pub/07-08/bill/s ... floor.html
You'll notice the vote is along party lines. The California Republican party is reliably in the service of California business interests.
Never mind that Migden's bill, SB 1115 codifies basic tenets of fairness that are a consensus in our society. Discrimination is not in vogue.
In coming posts I'll be looking at SB 1115 in more depth.
Monday, August 18, 2008, 10:48 PM - Political developmentsNot UR'd.
The Governor, that is.
The Governor found time to go have a quick knee arthroscopy while the legislature was in full food fight mode over the budget over the budget.
Since the torn ligament was non-industrial, there was no need to wade through ACOEM review under UR.
Turns out the Governor has had quite a bit of surgery. 1997 heart surgery. 2003 rotator cuff surgery. 2006 femur surgery.
If he has a work injury while in office, looks like there may be grounds for apportionment.
One would hope this gives him perspective on the travails of injured workers. Of course, if the Governor wants surgery it's a just do it mentality. Workers, on the other hand, sometimes must run a gauntlet before getting the requisite approvals.
This week I'll be providing analysis on the recent rate increase recommendation filed by the California WCIRB. The proposal-known as a rate filing-was unveiled last Friday.
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Wednesday, August 13, 2008, 02:08 PM - Political developmentsThe WCIRB has just announced that it plans to recommend to Insurance Commissioner Poizner a 16% increase in workers' comp rates effective 1/1/09. The actual "filing"
(a recommendation with the Department of Insurance) will be coming in the next few days.
The Insurance Commissioner can accept or reject the WCIRB
recommendation. The WCIRB recommendation applies to "pure
premium rates"; these essentially set the tone for California workers' comp pricing but are not binding on California comp insurers.
California employers won't be welcoming this news.
The WCIRB recommendation apparently reflects concerns about rising costs, particularly medical treatment costs.
A WCIRB news release claims that the increase breaks down as follows:
10.8% for increasing medical treatment costs
2.8% for increasing loss adjustment expenses
1.8% "due to the annual adjustment to the experience
rating of balance correction factor"
The small PD rating schedule revision currently under consideration would add another 3.7%.
The WCIRB release notes that even with the increase, premiums would be down 60% from the pre-2004 reform level.
Even without seeing the actual filing, its clear that medical costs continue to be THE big driver in workers' comp costs. Despite somewhat Draconian treatment guidelines and utilization review, medical and pharmacy costs continue to spiral. New medical technologies and more expensive medications may be a component of the problem. It's a scenario not unlike that seen in the healthcare system in general.
Insurers have been feasting on large profits in California workers' comp since 2004. Loss ratios have been at historically low levels for most of the last 4 years. But most observers have expected margins to tighten somewhat tighten somewhat.
The scenario that may be emerging is one where benefit levels for disabled workers are low but costs for employers are rising. If that's the scenario, they system is not "fixed", but rather in need of another overhaul.