Charting the Future: The Continual Evolution of Workers’ Compensation

Part Three of a Three-Part Series

Phoenix, AZ - At the enlightening presentation at the 2023 Workers' Compensation Research Institute (WCRI) conference in March, Price V. Fishback, Ph.D., a distinguished scholar from the University of Arizona, led an enlightening discussion. His presentation highlighted the intricate interplay of laws, statistical models, and the evolving landscape of workers' compensation. Dr. Fishback explored the econometric results of his extensive research, providing the audience with a data-driven look into the complexities of workers' compensation.

The Building Blocks of the Analysis: Econometric Results 

Dr. Fishback's approach to analyzing the evolution of workers' compensation began with a statistical model, which he used to explore the legal and financial landscape of the field. This model encompassed all 48 contiguous states across twenty years from 1997 to 2016. 

His research's dependent variables were twofold: Cash Benefits per Covered Worker and Medical Payments per Covered Worker. In an intricate dance of statistical analysis, he incorporated five types of laws within the same model, enabling the identification of individual effects each law had while controlling for others. 

Dr. Fishback refined the model to ensure a comprehensive examination by controlling for unchanging characteristics unique to each state:

--> Nationwide system shocks each year
--> A measurement of statutory benefits
--> The fatal injury rate

By incorporating these factors, he provided a rich, nuanced context to the statistical results, giving a complete account of the variables at play.

Diving into the Findings: Cash Benefits and Medical Payments per Covered Worker

Fishback's careful application of econometric models revealed some critical findings. For cash benefits per covered worker, a ban on Liberal Construction correlated with approximately a 20 percent reduction in benefits. Intoxication laws also showed a connection, indicating a 4 percent decrease in benefits, although this finding was not statistically significant.

On the other hand, apportionment laws were associated with a more notable 16 percent decrease in benefits. Contrasting these significant changes, Fee Schedule Laws and Physician Laws were found to have statistically insignificant relationships with cash benefits per covered worker.

Shifting the focus to medical payments per covered worker, the statistical landscape painted a somewhat different picture. A Liberal Construction ban was linked to an approximately 8.5 percent decrease in medical payments. Intoxication and Apportionment Laws showed a downward trend in medical payments, although these relationships did not reach statistical significance.

Interestingly, Fee Schedule Laws were connected to a 6 percent increase in medical payments. In contrast, Physician Network Laws were linked to a more dramatic 22 percent decrease in medical payments.

Linking Laws and the National Drop: The Data Speaks 

Beyond individual state analysis, Dr. Fishback also evaluated the effect of new laws on the overall national drop in workers' compensation. Across the nation, cash benefits per covered worker experienced a decrease of 37 percent, with Liberal Construction Bans and Apportionment Laws contributing 5 percent and 2.6 percent to this decrease, respectively.

Medical benefits per covered worker saw a 29 percent decrease nationwide, with Liberal Construction Bans contributing 2.9 percent and Physician Network Laws contributing a more substantial 6.1 percent.

Revisiting 'The Grand Bargain': A Reflection on the Birth of Workers' Compensation

One of the core thematic elements that Dr. Fishback discussed was 'The Grand Bargain.' This term refers to the historical inception of workers' compensation as a consensus-driven reform brought about through a coalition of reformers, workers, and major employers.

From the birth of this initiative to the 1970s, coverage expanded by about ten percentage points. Accident rates followed a fluctuating pattern – they initially fell but then experienced an uptick in the 1960s. This ebb and flow were primarily due to benefits often trailing behind inflation, as legislatures were slow to adapt weekly maximums. This issue ultimately sparked the formation of the Burton Commission.

Reaping the Aftermath: The Burton Commission's Legacy 

The 1972 Burton Commission Report left an indelible mark on the workers' compensation field. Its influence can be seen in how most states adopted approximately two-thirds of the report's recommendations by 1990. The most significant change ushered in by this adoption was the indexing of benefits to adjust to inflation or rising wages, providing workers with a more stable and fair financial landscape.

Debunking the Demise of Workers' Compensation

In response to the question raised by a Pro Publica article, "Is Workers' Compensation being Demolished?" Dr. Fishback offered a multi-faceted view. He recognized the advantages workers gained from the rise in actual weekly maximums (around an 18 percent increase) and a considerable 37 percent decrease in accident rates.

However, he also shed light on covert procedural changes that have reduced payoffs. These included Liberal Construction Bans, Apportionment Laws, and Physician Network Laws. These procedural shifts significantly impacted the states that adopted them, but their national average effect was more minor due to the limited number of adopting states.

Concluding Insights: Peering into the Future of Workers' Compensation

Workers' compensation's future is a complicated and multi-faceted issue, teetering at the intersection of law, economics, and social justice. The insights from Dr. Fishback's presentation underscore the critical need for continuous evolution in workers' compensation, maintaining a delicate balance between employers, workers, and societal needs.

While significant progress has been made over the past few decades, much remains to be done to ensure that the system stays fair, equitable, and responsive to the changing dynamics of modern workplaces. Dr. Fishback's rigorous analysis provides a solid foundation for future research and policy discussions, setting the stage for meaningful change and progress in the workers' compensation landscape.

As we reflect on this enlightening presentation, we can appreciate the richness of the discussion and the profound depth of analysis that Dr. Fishback brought to the table. His examination of the past, interpretation of the present, and foresight into the potential future of workers' compensation will undoubtedly serve as an invaluable guide in our ongoing efforts to refine and improve this vital aspect of labor rights and employer responsibilities. The future of workers' compensation stands on the precipice of change, and Dr. Fishback's research lights the way toward a more equitable and inclusive system.

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