Entering 2012, it’s good to think on what the future holds for California Workers’ Compensation rates. Two questions stand out:
– What is the impact of current changes made to the Workers’ Compensation base rate?
– Is there any better understanding on the effects of the Health Care Reform Act on Workers’ Compensation?
Workers’ Compensation Base Rate
This Year, the Workers ‘ Compensation Insurance Rating Bureau adopted base rate changes representing a rate rise of 37 percent. Already carriers have altered rates between 2% and 20% and the likelihood exists for more changes moving forward.
These rate changes have impacted most employers and will have an even greater impact on employers with high experience modifiers. This underlines how vital it is to maintain strong safety and risk management programs.
Health Care Reform
There are potential negative and positive outcomes for Workers’ Compensation as a consequence of health care reform change.
Positive Aspects:
Harry Shuford, chief economist for the National Council on Compensation Insurance, indicated during a presentation at The Ratemaking and Product Management Convention, the health care reform law is a “totally new health care system that seems to have material implications for the way forward for medical care delivery in the U.S.”
– Workers’ Compensation costs may lower as a outcome of the reform since medical claims are such a huge part of Workers’ Compensation costs.
– Workers’ Compensation share of medical costs is slight and shrinking and Workers’ Compensation is only 3 percent of all healthcare spending in the U.S. as a whole.
– The Patient Protection and Affordable Care Act includes aspects of administrative simplification and standardizing, which may have a potential positive result on California Workers’ Compensation rates.
– Medicare fees are going to be adjusted rather less frequently which should also help to hold down overall costs.
Negative Aspects:
Swiss Re notes there are potential negative and unexpected consequences to reform in the report, “The Impact of U.S. Health Care Reform on Workers ‘ Compensation and Other Casualty Lines”
– As govt. mandated cost containment starves the provider community, insurers could have to deal with cost shifting into the Workers ‘ Compensation system.
– Medicare reimbursement levels are marginal for the medical profession now. As these lessen, this may pressure providers to cost shift wherever possible and the Workers ‘ Comp system is a fat target.
– Individual workers do not bear the weight of costs and they don’t have any reason or motivation to review the expenses for any services they receive. Without buyer oversight, cost shifting to the Workers ‘ Compensation system becomes easier.
– As more individuals use the healthcare system with healthcare needs, the percentage of patients to medical professionals is likely to increase creating an impact on availability of care.
– Cost cutting will make healthcare practitioners less likely to take part in occupational medical networks that offer reduced rates off fee schedules.
The Cure for The Unknown
It is really important to note that health care reform faces many challengers and while it may be the law of the land today, it could easily see changes if there’s a major change in the political leadership of our country.
The best technique during uncertain times is for each employer to be sure their organization has developed and implemented effective risk mitigation programs, that will allow them to minimise exposure to any potential Workers ‘ Compensation premium increases resulting from rate changes and healthcare reform.
Final Thoughts
As the New Year starts, be totally certain to perform a fast review of your policies and practices:
– Are you working with an Independent Insurance Agency that will help you find the best California Workers ‘ Compensation solution between different carriers for your particular situation?
– Do you have well-established programs to help you mitigate your risk profile?
– Have you got continuing worker education that serves to re-emphasize the significance of creating and maintaining a safe place of business?
If you’re unsure of what you can face because of the changing Workers ‘ Compensation landscape or if you have not taken a thorough look at your risk management in a while, we at ISU Bob Gabriel Insurance are here to help. We provide both experience and access to the best Workers ‘ Compensation insurance carriers and would welcome the opportunity to review your current policies and help you move into 2012 with trust that you have the best Workers ‘ Compensation program in place to meet your requirements.
Since 1936, ISU Bob Gabriel Company, an independent insurance agency, has been serving the business insurance needs of firms in Southern California including Santa Monica, Pacific Palisades, Brentwood, Mar Vista, Westwood, Malibu, West LA, Beverly Hills, Marina Del Rey, San Fernando Valley and the Greater LA Area. ISU Bob Gabriel Company has over 60 years of experience aiding clients with their workers’ compensation needs. Our staff is extremely experienced in workers’ compensation and understands the controls needed to produce the best outcomes for our customers and their staff.
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