| July 22, 2005


For Immediate Release: July 21, 2005
Contact: Jill Braunstein at (202) 452-8097

To download the full report, click here.

For press releases on specific states, please click on the state below.

California, Hawaii, Maryland, Michigan, New York, Ohio, Oregon, Pennsylvania, Washington

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 2003, the most recent data available, continues a trend that began in 2000, when workers’ compensation costs and benefits relative to wages were at their lowest point in the last 15 years.

“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.”

Total workers compensation payments for injured workers rose by 3.2 percent to $54.9 billion, while employer costs rose by 9.6 percent to $80.8 billion. When shown relative to aggregate wages of workers, payments rose by just one cent for every $100 of wages in 2003 – or from $1.15 to $1.16 (Figure 1). The costs to employers — which include the premiums they pay for workers’ compensation insurance (or their administrative costs if they self insure) — rose by 12 cents per $100 of wages, to $1.71 in 2003.

Since the low point in 2000, employer costs per $100 of wages rose by 39 cents, from $1.32 to $1.71, while total payments on workers’ behalf rose by 12 cents from $1.04 to $1.16 per $100 of payroll.

Despite the recent rise in costs, both costs and benefits in 2003 remain far below their peak levels relative to wages. Total payments for cash benefits and medical care combined peaked in 1992 at $1.69 per $100 of wages, which is 52 cents higher than in 2003. Costs to employers peaked in 1993 at $2.16 per $100 of wages, which is 45 cents higher than in 2003.

According to Burton, “The decline in employer costs in the 1990s occurred as favorable investment returns led insurance companies to cut premiums in order to expand their market shares. Since 2000, low interest rates and poor stock market returns led insurers to raise premiums in order to cover future benefit costs.”

Since 2000, the growth in payments on workers’ behalf is due largely to increased spending for medical care. Of the 12-cent increase per $100 of wages between 2000 and 2003, nine cents was due to increased spending for their medical treatment, while three cents were increased payments to replace lost wages.

The report, Workers’ Compensation: Benefits, Coverage, and Costs, 2003, is the eighth 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.

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.


Ishita Sengupta
National Academy of Social Insurance
(202) 452-8097

Virginia Reno
National Academy of Social Insurance
(202) 452-8097

John F. Burton Jr.
Study Panel Chair
Rutgers University
(732) 274-0600

Robert E. McGarrah, Jr.
worker perspective
(202) 637-5335
(202) 431-9838 cell

Donald Elisburg
worker perspective
Donald Elisburg Law Office
(301) 299-2950

Eric J. Oxfeld
employer perspective
UWC – Strategic Services on Unemployment and Workers’ Compensation
(202) 637-3463

Robert Steggert
employer perspective
Marriott International, Inc.

Barry Llewellyn
National Council of Compensation Insurance
(201) 386-2627

Eric Nordman
National Association of Insurance Commissioners
(816) 783-8005

The National Academy of Social Insurance 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.

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See related news: Workers' Compensation

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