Historically, workers’ compensation has been the first social insurance program adopted in developed countries. In the U.S. most states adopted workers’ compensation laws during a relatively short period between 1910 and 1920. The first workers’ compensation law in the United States was enacted in 1908 to cover certain federal civilian workers. The first constitutional state laws were passed in 1911 by New Jersey and Wisconsin. The last state to pass a workers’ compensation law was Mississippi, in 1948.
Workers’ compensation as a source of disability benefits is surpassed in size only by the federal Social Security Disability Insurance (SSDI) program and Medicare. These programs provide cash and medical benefits respectively to workers with disabilities who become unable to work prior to normal retirement age. In 2015, workers’ compensation paid $30.7 billion in cash benefits and $31.1 billion for medical care, a total of $61.9 billion. In that year, Social Security paid $143.4 billion in wage replacement benefits to disabled workers and their dependents, and Medicare paid $93.4 billion for medical and hospital care for disabled persons under age 65.
Workers’ compensation costs to employers were $94.8 billion in 2015, an increase of 20.1 percent from 2011. For employers who purchase insurance from private carriers and state funds, these costs consist of premiums written in the calendar year plus benefit payments made under deductible provisions. For self-insured employers, the costs include benefit payments made during the calendar year and administrative costs associated with providing these benefits.
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