Single Payer and California Workers' Comp

The push to create a single-payer healthcare system in California is dead for this year.

The bill to create single-payer, AB 1400 (Kalra) was headed to a California Assembly vote. But Assemblyman Ash Kalra pulled the bill before a vote, recognizing that the proposal did not have sufficient support at this time.

What does this mean for California workers’ comp? I’ll share some thoughts on that, but first, some basics about the demise of the proposal.

Proponents of single-payer, such as the California Nurses Association and the Progressive Caucus of the California Democratic Party, are hopping mad that Kalra pulled AB 1400. And knives are out for Democrats who did not announce support. But more moderate Democrats in the Capitol are relieved that a vote on the record was not required. Business interests are happy that a bill they had deemed a “Job Killer” is dead for the moment.

I’ve included a legislative analysis of AB 1400 at the bottom of this post. You’ll note that the affect of single-payer on the workers’ comp system isn’t really mentioned. Workers’ comp is an afterthought for single payer proponents.

This fight is not over, of course. Given the passion proponents have on this issue, we’ll likely see proposals come back in future legislative sessions.So let’s do a thought experiment. Suppose that all of the political and practical roadblocks to single-payer were cleared in California, and workers’ comp medical folded into a new single-payer system. What would the positive and negative implications be for the California workers’ comp system?

With single-payer, medical treatment would probably be removed form the workers’ comp system. That would mean no more medical networks/MPNs. Treatment standards for an injury at work would be the same as treatment standards for non-work injuries. While some treatment standards might remain, goodbye MTUS. Goodbye workers’ comp formulary.

Where an injury and under what circumstances an injury or illness occurred would not dictate the type  or volume of medical treatment received.

And although there might still be some treatment monitoring standards, UR (utilization review) as we know it under the comp system would be gone.

Difficulty accessing specialty care for injured workers would be lessened. The problem of doctors who refuse to take workers’ comp cases would likely be gone.

If single-payer provided truly universal coverage for Californians, claim frequency would likely drop off sharply. Workers who now have no group health coverage or poor coverage may be more inclined to file comp claims. Under single-payer that incentive would be gone.

With much of the red-tape and special comp system rules removed, treatment for work injuries would likely be much more smooth.

What about the indemnity side? Fights over would remain over various issues: industrial causation, entitlement to temporary disability, ratings for permanent disability, and apportionment. Another unknown is whether a future proposal might further integrate EDD’s SDI benefits and workers’ comp TD benefits.

With medical treatment removed from the system, claim volume would likely shrink. Frictional costs would be reduced: medical cost containment, bill review, nurse case managers, copy service costs, UR and IMR, defense attorney fees and applicant attorney fees would all likely be reduced and in some cases eliminated. The large component of broker commissions and acquisition costs would likely be reduced substantially. With medical treatment removed from the system, there would be less opportunity for worker or provider fraud or abuse. Geographical differences in claims under the system would be less pronounced.

Overall, the size of the California workers’ comp system would be reduced substantially. The cost of operating the California Division of Workers’ Compensation would be reduced somewhat, as less medical disputes would mean less activity at the WCAB district offices.

Whether any of these changes would result in increases in indemnity benefits for workers is unclear.

Looking back to the big picture, it is unclear what the total costs would be for employers, both large and small if single-payer was instituted. The legislative analysis projected that AB 1400 could cost between $314 billion and $391 billion. How much of this would be absorbed by business and taxpayers? What would it mean for the California economy long-term? Would it create an exodus of jobs, or stimulate a healthier economy?

At this point there are more questions than answers. But if it is ever adopted, the implications for injured workers is huge.

An overview of the politics surrounding AB 1400 can be found in this Calmatters article:

https://calmatters.org/politics/2022/02/california-single-payer-legislature/

A legislative analysis of AB 1400 can be found here:

https://analyses.chbrp.com/document/view.php?id=1574

By Julius Young

Courtesy of Workers Comp ZONE

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