California's Improvement Drives U.S. Comp Changes

A report out Aug. 22 from the National Academy of Social Insurance shows that U.S. workers' compensation payments for medical care and cash benefits for workers disabled by workplace injuries or diseases declined in 2005, and that California's comp reforms were the key factor. NASI said 2005 is the most recent year with data.

California enacted its reforms in 2003 and 2004. Because it alone accounted for nearly 20 percent of national benefit payments in 2005, the state altered national trends. Nationally, worker's comp payments for injured workers fell by 1.4 percent to $55.3 billion that year (including $26.2 billion to providers of medical care and $29.1 billion in cash wage replacement benefits for injured workers). California payments fell by 12.2 percent, based on a 16 percent decline in medical payments and an 8.6 percent drop in cash payments. According to, "The relative stability of benefits outside the Golden State reflects a rough balance between the declining frequency of workplace injuries and higher expenditures for medical benefits," said John F. Burton, Jr., who chairs the panel that oversaw the study.

"The reduced spending for benefits and medical care reflects the initial stages of cost containment measures that were put in place in 2003 and 2004 reforms to the California system," said NASI member Christine Baker, who directs the California Commission on Health and Safety and Workers' Compensation, a labor-management group that advises state policymakers. Outside California, total workers' compensation payments rose by 1.7 percent because of a 4.1 percent increase in payments to medical providers. Cash payments to injured workers outside California actually fell by 0.3 percent.

Available at www.nasi.org, the report, "Workers' Compensation: Benefits, Coverage and Costs, 2005," is the tenth in a NASI series that provides the only comprehensive national data that covers all types of employers, according to NASI.

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