For Immediate Release:
To download the full report, click here.
For press releases on specific states, click on the state below:
California, Michigan, Minnesota, New Jersey,Ohio, Pennsylvania
WASHINGTON, DC—Employers' costs for workers' compensation grew faster than combined cash benefits for injured workers and medical payments for their treatment, according to a new study issued today by the National Academy of Social Insurance. The cost increase in 2004 (the most recent year for which data are available) continues a trend that began after 2000, when workers' compensation costs and benefits relative to wages were at their lowest point in the last 15 years.
Total workers' compensation benefit payments for injured workers rose by 2.3 percent to $56.0 billion, while employer costs rose by 7.0 percent to $87.4 billion. “The fact that employer costs rose faster than payments for benefits and medical care reflects broader developments in the insurance industry,” according to John F. Burton, Jr., of Rutgers University, who chairs the panel that oversees the report. “Employer costs reflect rising premiums insurers charge to cover future benefit costs,” he explained. “The recent rise in costs appears to be part of a longer cycle of ups and downs in the insurance market.”
Relative to wages of covered workers, benefit payments fell by 3 cents for every $100 of wages in 2004—from $1.16 to $1.13 (see Figure 1). Most of this national decline can be attributed to changes in California, where medical benefits dropped by 10 cents per $100 of covered payroll. Nationally, the costs to employers—primarily the premiums they pay for workers' compensation insurance (or the benefits they pay plus administrative costs if they self insure)—rose by 3 cents per $100 of wages, to $1.76 in 2004. The increase in costs in 2004 was the smallest annual increase since the current cycle of higher costs began in 2001, and Burton suggests, “This development may signal a period of more modest increases in workers' compensation costs.”
Ishita Sengupta
National Academy of Social Insurance
(202) 452-8097
isengupta@nasi.org
John F. Burton, Jr.
Study Panel Chair
Rutgers University
(732) 274-0600
jfburton@rci.rutgers.edu
Allan Hunt
Assistant Executive Director
W.E.Upjohn Institute
(269) 343-5541
hunt@upjohninstitute.org
Jim Ellenberger
worker perspective
Former Deputy Commissioner
Virginia Employment Commission
(703) 938-8349
ellenbergerjn@cs.com
Robert Steggert
employer perspective
Marriott International, Inc.
(301) 380-7499
bob.steggert@marriott.com
Eric Nordman
National Association of Insurance Commissioners
(816) 783-8005
enordman@naic.org
The National Academy of Social Insurance (NASI) is a nonprofit, nonpartisan organization made up of the nation's leading experts on social insurance. Its mission is to promote understanding and informed policymaking on social insurance and related programs through research, public education, training, and the open exchange of ideas.
# # #