Workers’ Compensation Benefits Decline Relative To Wages For Eight Years In A Row

NASI Study Finds Benefits Rise in 2000, But Not as Fast as Wages

For Immediate Release: May 21, 2002
Contact: Jill Braunstein, (202) 452-8097

WASHINGTON, DC — Workers’ compensation benefit payments and costs continued to decline relative to wages in 2000, according to a new report released today by the National Academy of Social Insurance (NASI). This marks the eighth consecutive year of declining benefits relative to covered wages and the seventh consecutive year that employer costs declined relative to wages. Workers’ compensation provides medical care and cash payments for workers who are injured on the job or become ill due to job-related causes. Cash benefits are also paid to survivors of workers killed on the job.

Workers’ compensation benefits for every $100 in wages declined by 39 percent from their peak of $1.68 in 1992 to $1.03 in 2000. Employer costs declined by 42 percent between 1993 and 2000, or from $2.16 to $1.25 per $100 of wages (see Figure 1).

“The long-term decline in benefits and costs relative to wages is due, in part, to strong wage growth and fewer reported accidents,” explained John F. Burton, Jr., of Rutgers University and chair of the NASI Panel that produced the study. The number of workplace accidents that result in lost work days declined from 3.0 per 100 workers in 1992 to 1.8 per 100 workers in 2000, according to employer reports compiled by the U.S. Department of Labor.

“At the same time,” Burton continued, “some are concerned that more injured workers have been denied benefits as states have tightened eligibility rules for workers’ compensation.” These trends are discussed in a NASI Brief, Workers Compensation and Older Workers, at www.nasi.org. “Other reasons for the continued decline include more active management of medical care and more efficient return to work programs. Many of these changes were put in place in response to rising costs in the late 1980s and early 1990s,” Burton concluded.

The actual dollar amount of benefits and costs rose in 2000 for the third year in a row. Total workers’ compensation benefit payments for the year were $45.9 billion, up from $43.1 billion in 1999. The total costs to employers in 2000 were $56.0 billion, up from $54.4 billion in 1999.

The report, Workers’ Compensation: Benefits, Coverage, and Costs, 2000, New Estimates, is the fifth in a NASI series that provides the only comprehensive national data on this largely state-run program. The study provides estimates of workers’ compensation payments — cash and medical — for each state, the District of Columbia, and the federal programs providing workers’ compensation benefits.

“Because each state has its own rules for workers’ compensation in terms of benefits, financing, administration, and coverage,” Burton noted, “it is essential to have comprehensive and consistent national and state data to evaluate the impact of these programs on workers and employers.”

In providing health care and cash benefits to disabled workers and their families, the $45.9 billion in workers’ compensation benefits in 2000 is second in size only to Social Security disability insurance and Medicare. In 2000, Social Security paid $56.8 billion to disabled workers under 65 and their dependents, and Medicare paid $28.7 billion for hospital and medical care for those disabled workers. Social Security and Medicare provide protection to workers with long-term disabilities that preclude work, regardless of the cause of the condition. Workers’ compensation, in contrast, pays for work-related injuries and diseases, but covers temporary and partial, as well as permanent and total disability. It also pays survivor benefits to dependents of workers killed on the job. (See NASI Brief, Social Insurance for Survivors: Family Benefits from Social Security and Workers’ Compensation at www.nasi.org.)

Source for all figures: National Academy of Social Insurance, 2002. Workers’ Compensation: Benefits, Coverage, and Costs, 2000 New Estimates.

NOTE TO REPORTERS AND EDITORS: The full report and state-specific information are available from the Academy’s website at www.nasi.org. For a free copy of the printed report, contact Jill Braunstein at (202) 452-8097 or by e-mail at jillbraun@nasi.org

EXPERTS TO CONTACT:

Daniel Mont
Workers’ Compensation Project Director
National Academy of Social Insurance
(202) 452-8097, e-mail: danmont@nasi.org

Virginia Reno
Vice President for Research
National Academy of Social Insurance
(202) 452-8097, e-mail: vreno@nasi.org

John F. Burton
Professor, Labor Studies and Employment Relations
Rutgers University
(908) 753-2254, e-mail: jfburton@rci.rutgers.edu
website: www.workerscompresources.com

Donald Elisburg, worker perspective
Attorney
(301) 299-2950, e-mail: delisbur@infi.net

Eric J. Oxfeld, employer perspective
President
UWC — Strategic Services on Unemployment and Workers’ Compensation
(202) 682-1515

The National Academy of Social Insurance (www.nasi.org) is America’s only private, non-partisan resource center made up of the nations’ leading experts on Social Security, Medicare, workers’ compensation and other public and private programs. Its mission is to enhance public understanding of social insurance by conducting research, developing new leaders, and providing a non-partisan forum for exchange of ideas on important issues in the
field.

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