{"id":10884,"date":"2014-05-19T15:09:00","date_gmt":"2014-05-19T15:09:00","guid":{"rendered":"https:\/\/www.freeway.com\/knowledge-center\/?p=10884"},"modified":"2025-01-16T23:31:00","modified_gmt":"2025-01-16T23:31:00","slug":"top-issues-facing-the-workers-compensation-industry","status":"publish","type":"post","link":"https:\/\/www.freeway.com\/knowledge-center\/auto\/top-issues-facing-the-workers-compensation-industry\/","title":{"rendered":"The Top 10 Issues Facing the Workers\u2019 Compensation Industry"},"content":{"rendered":"\n

For most of the United States, workers\u2019 compensation rates<\/a> are on the rise. This is driven by high medical costs, the low-interest-rate environment and the general unprofitability of the workers\u2019 compensation industry. But this is just one of the obstacles facing the workers\u2019 comp industry. Below are the top ten issues facing the industry:<\/p>\n\n\n\n

1.The Affordable Health Care Act (AHCA)<\/h2>\n\n\n\n

There has been much speculation about the impact that that ACHA<\/a> will have on workers\u2019 compensation. Many feel that it will increase leakage from group health to workers\u2019 compensation, others feel it will have the opposite effect. Though research shows modest changes, it is still too early to determine the ACHA\u2019s effect on worker\u2019s compensation.<\/p>\n\n\n\n

2. Not Enough Premium Growth to Cover Costs<\/h2>\n\n\n\n

According to the annual Compensation Planning Survey by Buck Consultants, the average U.S. salary increases for 2014 held steady at 3% for the past two years in a row, but pay rises still remained at about one percentage point below pre-recession levels. Low to moderate pay wages hurt the workers\u2019 compensation market. \u201cSalary stagnation or low growth of wages will have a telling impact on the workers\u2019 comp industry in the future for the simple reason that payroll growth is necessary in order to have premium growth,\u201d says John Leonard, president and CEO of MEMIC, a Super Regional workers\u2019 compensation specialist insurer. If wages continue to stay low, soon there will not be enough premium growth to cover the costs associated with the medical component of the claim dollar.<\/p>\n\n\n\n

3. The Lack of Technology<\/h2>\n\n\n\n

The workers\u2019 compensation industry is lagging behind other industries when it comes to the use of technology. When it comes to technological innovations, the health care industry\u2019s advancements dwarf anything that\u2019s developed in the workers\u2019 comp industry for years, says Thomas Lynch, founder and CEO of Lynch Ryan & Associates Inc., a management consulting firm for workers\u2019 compensation cost control. Experts believe that the workers\u2019 compensation industry must start using technology and align itself with the rest of the health care system to avoid rising costs. \u201cEven now, today, the usual way is that when you have a claim, you\u2019ll go online and file a report online or you\u2019ll make a phone call. Why couldn\u2019t you take out your smartphone<\/a>, have a voice activated app that could allow you to report directly into your carrier\u2019s system which would, in real time, display for a claims adjuster?\u201d Lynch says. We can\u2019t do that now and yet we can do it in other areas.\u201d<\/p>\n\n\n\n

4. Prescription Pill Addiction<\/h2>\n\n\n\n

According to Joseph Paduda, principal of Health Strategy Associates LLC, a national consulting firm specializing in managed care for workers\u2019 compensation and group health, the biggest issue facing the industry for years to come is the long-term use of opioids. \u201cThere are probably more than 200,000 workers\u2019 comp claimants who have been on a high dose of opioids for more than six months. The vast majority of those are addicted,\u201d he says. Paduda says that usually these claimants don\u2019t go back to work. \u201cTherefore, their claims are going to continue and that runs up employers\u2019 costs, and taxpayers\u2019 costs, quite significantly,\u201d<\/p>\n\n\n\n

5. The legalization of Marijuana<\/h2>\n\n\n\n

Even though marijuana<\/a> has been legalized in 20 states for medical use, it is still considered an illegal substance under federal law. The problem for the workers\u2019 compensation industry is that there is no proof that medical marijuana is effective in treating workers. This is a huge issue and what the industry is buzzing about, even though there has been no claim activity to date. \u201cMedical marijuana is a tempest in a teapot,\u201d says Paduda.<\/p>\n\n\n\n

6. Manufacturing jobs<\/h2>\n\n\n\n

Thanks to falling domestic natural gas prices, global manufacturing jobs are on the rise in the United States. This is great news for our economy but as new workers enter the manufacturing industry, there is a higher chance of work-related injuries. \u201cThe reality of it is studies confirm that new workers are more subject to injury than experienced workers,\u201d Leonard says. \u201cThere is a potential for an uptick in terms of frequency brought on by the expansion of manufacturing for that simple reason alone, the influx of new and perhaps untrained workers taking on these jobs as the economy expands.\u201d<\/p>\n\n\n\n

7. Safety in the Workplace<\/h2>\n\n\n\n

While workplace safety has improved over the years, there are still areas in certain industries where accidents happen because people are trying to cut corners. \u201cOSHA is focusing on working with the Justice Department and people are going to jail for doing things that are willfully unsafe in the workplace \u2013 where people are getting killed,\u201d says Lynch.<\/p>\n\n\n\n

8. The Rise in Mobile Workforce<\/h2>\n\n\n\n

According to Global Workplace Analytics, the mobile workforce has risen to 80% since 2005. This presents a new issue to workers\u2019 compensation insurers. \u201cIf you consider that in 2013, 26 percent of all automobile crashes<\/a> in the United States involved the use of a cellphone that brings home the idea that if you\u2019re working in a building, the employer can control a lot of things. But once you leave that building and get into your own little car or your employer\u2019s car and you drive somewhere, that arm of control isn\u2019t quite there like it used to be,\u201d says Lynch.<\/p>\n\n\n\n

9.The Expiration of Terrorism Risk Insurance<\/h2>\n\n\n\n

The Terrorism Risk Insurance Program Reauthorization Act will expire at the end of this year. Leonard says this this is essential to the workers\u2019 comp industry because, \u201cyou cannot, in workers\u2019 comp, tell somebody that your injury isn\u2019t covered because it resulted from a terrorist attack. That\u2019s just not the way the statue reads. We cover you for any and all workplace injuries\u201d he says. Without the federal backstop for terrorism coverage, Leonard warns that \u201cit would be catastrophic to the insurance industry and it would have major negative impact on the U.S. economy.\u201d<\/p>\n\n\n\n

10. Workforce Demographics<\/h2>\n\n\n\n

While many would think that the aging workforce poses a concern, experts see the younger generation as a growing concern. \u201cThey are not participating in the labor force the way that they used to. Their labor force participation rates are down. Many of them are not even looking for work. Many do not have job skills or can\u2019t pass a criminal background check or a drug test. We are simply not getting the flow of young and vibrant workers into the workforce like we used to.\u201d says chief economist Harry Shuford.<\/p>\n","protected":false},"excerpt":{"rendered":"

For most of the United States, workers\u2019 compensation rates are on the rise. This is driven by high medical costs, the low-interest-rate environment and the general unprofitability of the workers\u2019 compensation industry. But this is just one of the obstacles facing the workers\u2019 comp industry. Below are the top ten issues facing the industry: 1.The […]<\/p>\n","protected":false},"author":1002615,"featured_media":11079,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"importance":[],"type-content":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10884"}],"collection":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/users\/1002615"}],"replies":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=10884"}],"version-history":[{"count":1,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10884\/revisions"}],"predecessor-version":[{"id":10885,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10884\/revisions\/10885"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/media\/11079"}],"wp:attachment":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=10884"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=10884"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=10884"},{"taxonomy":"importance","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/importance?post=10884"},{"taxonomy":"type-content","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/type-content?post=10884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}