2012 California Workers' Compensation Report
Entering 2012, it's good to think on what the future holds for California Workers' Compensation rates. Two questions stand out:
- What's the impact of up to date changes made to the Workers' Compensation base rate?
- Is there any better understanding on the effect 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 increase of 37 %. Already carriers have increased rates between 2% and 20% and the chance 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 outcome 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 decrease as a result of the reform since medical claims are such a large part of Workers' Compensation costs.
- Workers' Compensation share of hospital bills is small and shrinking and Workers' Compensation is only 3 percent of all medical care 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 effect on California Workers' Compensation rates.
- Medicare charges are going to be altered rather less frequently which should also help to hold down general 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 government mandated cost containment starves the healthcare provider community, insurers could be up against cost shifting into the Workers ' Compensation system.
- Medicare compensation levels are debatable for the medical community now. As these decrease, this can pressure hospitals to cost shift where possible and the Workers ' Comp system is an easy target.
- Individual workers don't bear the load of costs and they haven't any reason or incentive to doubt the costs for any services they receive. Without consumer oversight, cost shifting to the Workers ' Compensation system becomes less difficult.
- As more people use the medical system with medical care needs, the proportion of patients to medical practitioners is probably going to increase making an effect on availability of care.
- Cost cutting will make providers less willing to participate in occupational medical networks that offer discounts off fee schedules.
The Cure for The Unknown
It is important to notice that health care reform faces many in opposition and while it is be the law of the land today, it may readily see changes if there is a major shift in the political leadership of our country.
The best strategy during uncertain times is for each employer to ensure their business has developed and implemented effective risk mitigation programs, that may allow them to minimize exposure to any potential Workers ' Compensation premium increases springing from rate changes and healthcare reform.
Last Thoughts
As the New Year starts, be sure to perform a fast review of your policies and practices:
- Are you working with an Independent Insurance Agency that can help you find the best California Workers ' Compensation solution between different carriers for your special needs?
- Have you got well-established programs to help lessen risks?
- Do you have ongoing employee education that serves to re-emphasize the importance of making and maintaining a safe workplace?
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.
- What's the impact of up to date changes made to the Workers' Compensation base rate?
- Is there any better understanding on the effect 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 increase of 37 %. Already carriers have increased rates between 2% and 20% and the chance 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 outcome 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 decrease as a result of the reform since medical claims are such a large part of Workers' Compensation costs.
- Workers' Compensation share of hospital bills is small and shrinking and Workers' Compensation is only 3 percent of all medical care 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 effect on California Workers' Compensation rates.
- Medicare charges are going to be altered rather less frequently which should also help to hold down general 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 government mandated cost containment starves the healthcare provider community, insurers could be up against cost shifting into the Workers ' Compensation system.
- Medicare compensation levels are debatable for the medical community now. As these decrease, this can pressure hospitals to cost shift where possible and the Workers ' Comp system is an easy target.
- Individual workers don't bear the load of costs and they haven't any reason or incentive to doubt the costs for any services they receive. Without consumer oversight, cost shifting to the Workers ' Compensation system becomes less difficult.
- As more people use the medical system with medical care needs, the proportion of patients to medical practitioners is probably going to increase making an effect on availability of care.
- Cost cutting will make providers less willing to participate in occupational medical networks that offer discounts off fee schedules.
The Cure for The Unknown
It is important to notice that health care reform faces many in opposition and while it is be the law of the land today, it may readily see changes if there is a major shift in the political leadership of our country.
The best strategy during uncertain times is for each employer to ensure their business has developed and implemented effective risk mitigation programs, that may allow them to minimize exposure to any potential Workers ' Compensation premium increases springing from rate changes and healthcare reform.
Last Thoughts
As the New Year starts, be sure to perform a fast review of your policies and practices:
- Are you working with an Independent Insurance Agency that can help you find the best California Workers ' Compensation solution between different carriers for your special needs?
- Have you got well-established programs to help lessen risks?
- Do you have ongoing employee education that serves to re-emphasize the importance of making and maintaining a safe workplace?
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.
About the Author:
Since 1936, ISU Bob Gabriel Company, an independent insurance agency, has been serving the business insurance requirements of companies in Southern California including Santa Monica, Pacific Palisades, Brentwood, Mar Vista, Westwood, Malibu, West Los Angeles, Beverly Hills, Marina Del Rey, San Fernando Valley and the Greater Los Angeles Area. ISU Bob Gabriel Company has over 60 years of expertise assisting clients with their workers' compensation needs. Our staff is highly experienced in workers' compensation and understands the controls required to produce the best outcomes for our clients and their workforce.
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