[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]
[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]
WORKERS' COMPENSATION
Mr. THURMOND. Mr. President, I rise today because this body stands on
the threshold of what promises to be a historic debate concerning
health care. While it is generally recognized that our health care
system is in need of reform, we are nevertheless a long way from
consensus as to what to do. The public will be watching Congress
closely; therefore, we must make sure that whatever changes occur in
our health care system are for the better. Our constituents expect a
lot.
In that regard, Mr. President, I want to take a few minutes to focus
this body on one critical aspect of health care: Workers' compensation.
As a member of the Committee on Labor and Human Resources, this topic
will be of prime importance to me and, I hope, to many of you as health
care reform proceeds.
Workers' compensation was created over 80 years ago and is the result
of a commonsense compact between business and labor. If a worker is
injured on the job, all of his or her medical expenses are covered, and
disability payments, in lieu of paychecks, are made until the worker
returns to the job. In return, the injured worker agrees not to sue his
or her employer to receive compensation for the injury. Thus, both
business and labor have the certainty that an injured worker will not
suffer financially and, equally important, will be given medical care.
The goal of workers' compensation is simple: Get an injured worker back
to work and normalcy as soon as possible.
Mr. President, workers' compensation has always been a State-managed
system, and various States have operated their systems differently.
Private insurance companies provide converge in many States, while
other States operate their own workers' compensation funds. While the
financial condition of workers' compensation programs has varied and
continues to vary widely, States have always had the freedom and
flexibility to experiment with new ideas and approaches to improve the
system. In the last few years, several States, such as California and
Florida, have reformed their workers' compensation programs. Currently,
dozens of workers compensation legislative proposals are pending in
various State legislatures.
Of all the various health care proposals now under consideration,
only the President's plan addresses workers' compensation. The
remaining proposals--be they Democratic, Republican, or both--do not
address workers' compensation and, therefore, leave the present system
unaffected. While I understand the President's desire to include as
many of our health care delivery systems under the umbrella of reform,
I am hesitant to support the inclusion of this traditionally State-
controlled system in any Federal legislation. If workers' compensation
is included, however, there are several key principles against which
any proposal must be judged.
First, workers' compensation must remain a State, rather than a
Federal, system. In that regard, various State reforms should not be
disturbed. Second, insurers or employers who foot the bill for medical
care should continue to have significant decisionmaking authority.
Third, experience rating--which encourages a safe workplace--should be
maintained; and lastly, workers' compensation, as the exclusive remedy
for an injury, must be preserved.6
While there are many things we should not change, let me add how
health care reform could improve workers compensation. Simply put,
health care reform must help end the massive cost shifting onto
workers' compensation that currently occurs. This could be accomplished
by legislatively prohibiting workers' compensation programs from being
charged more for medical services than other programs. Combined with
new access to all types of benefits and delivery systems, this cost-
shifting prohibition could be of significant benefit to workers'
compensation programs in every State.
Mr. President, workers' compensation has been the subject of great
attention not only by those who administer workers compensation
programs, but also by numerous business and insurance groups who are
greatly concerned that health reform causes no harm to this program. In
that regard, I would like unanimous consent to include, after my
remarks, statements by the International Association of Industrial
Accident Boards and Commissions, the National Association of
Manufacturers, the U.S. Chamber of Commerce, the National Federation of
Independent Business, and the Alliance of American Insurers, which
address workers compensation.
Mr. President, as the debate over health care proceeds, I urge my
colleagues to be mindful of workers' compensation and to judge any
proposal to change this program by the principles I have just outlined.
Any changes to workers' compensation at the Federal level must not harm
this vital program.
I ask unanimous consent that material pertaining to this subject be
printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
International Association of Industrial Accident Boards and
Commissions--Resolution Regarding National Health Care Reform
Whereas the President of the United States is committed to
providing every American access to quality health care; and.
Whereas the Administration has proposed to integrate
workers' compensation medical coverage into the health care
package provided to Americans; and,
Whereas the International Association of Industrial
Accident Boards and Commissions (IAIABC) is an organization
of workers' compensation Administrators and Commissioners;
and,
Whereas the primary interest of the IAIABC is to improve
the effectiveness and efficiency of workers' compensation
systems; and,
Whereas state workers' compensation laws already provide
universal health care for occupational injuries and diseases
for all workers covered by workers' compensation laws; and,
Whereas many states are already involved in health care
reform efforts to assure quality health care for injured
workers at a fair and reasonable cost to employers; and,
Whereas state managed care initiatives and other medical
cost containment reforms directed toward improving quality
care at a reasonable cost should not be preempted by any of
the current federal health care proposals; and,
Whereas due to the long pay out pattern of existing
workers' compensation medical liability, under the
Administration's health care reform proposal a dual payment
system would be created resulting in extreme confusion,
indeterminable liabilities and administrative inefficiencies:
Therefore be it
Resolved, That the IAIABC opposes integration or merger of
workers' compensation medical care and financing into a
national health care system at this time. The IAIABC believes
that the proposed system would reduce safety incentives,
delay return to work, increase costs and destroy the many
innovative existing state programs as well as those presently
being put in place, without proof that integration or merger
would improve the quality of care to injured workers and
control or reduce costs to employers while safeguarding the
many beneficial elements of the existing workers'
compensation system; and be it further
Resolved, That the IAIABC continues to support all sincere
and legitimate efforts to improve the workers' compensation
systems. The IAIABC supports creation of a task force or
commission, which includes state Administrators and
Commissioners, to study the feasibility and appropriateness
of coordinating workers' compensation with a restructured
health care system. Such task force or commission should not
be charged to mandate a federal system, preempt state laws or
preserve the existing state programs but, rather should be a
reasoned effort to improve the systems, lower the costs and
assure quality health care and indemnity benefits to injured
workers.
Adopted by the Executive Committee of the IAIABC this 15th
day of November, 1993, Pittsburgh, Pennsylvania.
____
Statement by the National Federation of Independent Business on
Workers' Compensation and National Health Care
Title X of the Administration's Health Security Act
requires each health plan to provide enrollees, or arrange
for the provision of, workers' compensation services--defined
as medical benefits, rehabilitation, long-term care, and
other services commonly used for treatment of work-related
injuries and illnesses. This concept has come to be known as
a coordination between workers' compensation and national
health care, as opposed to a full merger approach which would
entail actually separating the medical component of workers'
compensation from the disability (or wage loss component and
transferring it to a new national health system. Under the
coordinated approach the current workers' compensation
medical and disability would be maintained, but insurers
would contract with approved health plans for the treatment
of workers' compensation medical claims.
Many in the Administration seem to favor the idea of
separating the medical portion of workers' compensation from
the disability component. Under this kind of proposal,
medical would become part of the new national health care
structure and disability would remain under the purview of
existing workers' compensation carriers. Indeed, Title X
contains a provision to create a Commission on Integration of
Health Benefits to study the feasibility and appropriateness
of transferring financial responsibility for all medical
benefits, including workers' compensation and automobile
insurance, to the health plans. In anticipation of such a
proposal, NFIB recently polled its members on this concept
(Mandate 501, June 1993). The following question was posed:
``Should the Medical Portion of Workers' Compensation be
Moved Into a New Standard Health Plan?'' Appropriate
background information was provided to the membership,
including pro and con arguments. The results were 19 percent
voting in the affirmative, 63 percent voting in the negative,
with 18 percent undecided.
Considering the fact that workers' compensation is
mandatory for most employers and that the costs for this
insurance are rising faster than general health insurance,
one might think that employers would opt for any kind of
change that offered some hope of reducing costs. Indeed, the
Administration has put forth its proposed merger of health
insurance and workers' compensation medical as a cost
containment measure. Clearly, NFIB members did not view it as
such. Since workers' compensation medical expenditures are
less than 2 percent of all health care expenditures, it is
hard to conceive of the merger approach as a major cost
containment mechanism. Under either the merger approach or
the coordinated approach, any cost savings are likely to
occur as a result of getting workers' compensation medical
claimants into a managed care environment. This can be
achieved without dismembering the current workers'
compensation program. A recent study by the Workers
Compensation Research Institute (WCRI) of Cambridge,
Massachusetts on the cost implications of the coordinated
approach under Title X presents some disturbing findings.
The WCRI report concluded that:
``On balance, the Clinton plan is likely to increase costs
for workers' compensation--the effects of features that
increase costs are likely to outweigh effects of features
that reduce them. The possible exception is the corporate
alliances which could provide a vehicle for large employers
to counter some of the cost-increasing incentives created by
the Clinton plan.''
The WCRI study identified seven components of Title X which
could be cost-drivers with respect to workers' compensation--
driving costs either up or down. Among those factors which
would tend to increase costs:
Mixing fee-for-service and capitated payment would create
an incentive to shift costs from general health care to
workers' compensation.
Disconnecting responsibility for managing medical treatment
from the responsibility for paying indemnity benefits may
increase these wage-loss payments.
Allowing employees to choose specialized workers'
compensation providers may offer incentives for doctor
shopping and excessive service provision by providers, as
well as delay return to work efforts.
WCRI identified other components of the Clinton plan that
would create incentive to promote cost savings. These
include:
Medical fee schedule, depending on the level that the rates
are set, could drive costs down.
Managed care treatment of workers' compensation medical
claims could lead to lower medical costs and possibly lower
indemnity costs.
The development of promised medical treatment protocols for
work-related injuries and illnesses could lead to lower
costs, depending on the enforcement mechanisms in place.
Selective contracting with the most cost-effective health
care plans by corporate alliances could offset the effects of
the fee-for-service/capitation mix and the medical-
indemnity disconnect, but only for large corporations.
The Administration has repeatedly touted Title X as a way
of bringing down the costs of workers' compensation, and has
argued that business should support the adoption of the
Health Care Security Act, in part, because of this promised
cost savings. The WCRI findings gives us great cause for
concern over the Administration's claims.
There are also several technical problems in merging
workers' compensation and health insurance. These revolve
around the difference between health and comp in such areas
as experience rating, scope of coverage, extent of coverage,
benefit levels, cost sharing, and so forth. In addition,
splitting the system into two parts means that employers/
insurers would essentially lose control over the disability
case management aspect of workers' comp. Eliminating the
rehabilitation and return to work supervision of employees
could seriously inhibit the ability to control costs on the
disability side. Administration officials have come to
recognize that these problems are significant and are
beginning to give serious thought to how they might be
resolved.
Since most employers are required to carry workers'
compensation, they have some understanding of the program,
and they understand that workers' compensation reform is
absolutely essential. It will be difficult, however, to
convince them that a merger of the health and comp systems
represents the road to reform if the technical problems
outlined above cannot be resolved.
NFIB appreciates efforts by the Administration and others
to mitigate the workers' compensation burden on small
business. In testimony delivered before the House Small
Business Committee in September of last year, NFIB stated its
belief however, that a full integration policy, untested in
the United States, is unworkable and may not effectively slow
down cost increases. In that same testimony, we noted that a
``coordination'' policy, that allows cost-saving managed care
programs to be applied to workers' comp cases would be far
preferable and, we believed, more palatable to both employers
and insurers. Now, however, considering the findings of the
Workers Compensation Research Institute with respect to the
workers' compensation cost impacts of Title X of the Clinton
legislation, NFIB believes that it is time to simply drop
Title X altogether from the Health Security Act. No other
health plan before the Congress deals with the workers'
compensation issue. We believe it is time to get on with the
business of fashioning a health care reform bill. Once we
have some idea of what the health care reform will look like,
then we can determine how workers' compensation may, or may
not, fit into a new national health care plan.
____
[From the NAM Board of Directors, Naples, FL, Feb. 5, 1994]
NAM Resolution on Health Care Reform as It Relates to Workers'
Compensation
The members of the National Association of Manufacturers
(NAM) have previously expressed concern with the rising costs
of health care and the high numbers of uninsured Americans.
We are also concerned about the cost impact that changes to
the health care system would have on the workers'
compensation system. After careful study of the President's
reform proposal as it affects workers' compensation (Title
X), we have come to the conclusion that this complex issue
deserves separate attention from that of the health care
system.
Title X would jeopardize successful workers' compensation
reform efforts at the state level, particularly as they
relate to cost control mechanisms. The proposal would, among
other things, eliminate employer choice of provider and
diminish employer input and control of case management. Of
greatest concern is the Federal Commission called for in
Title X which apparently is intended to federalize the entire
workers' compensation system. The members of the NAM believe
that any federalization of these programs would be a serious
error. At the state level, the benefits can best be tailored
to fit local socio-economic conditions and such situations as
may arise as the result of the introduction of new industries
and technologies. Therefore, workers' compensation should
continue to be regulated and administered by the states
without intervention by the federal government.
For the reasons listed above, the workers' compensation
provisions of Title X should be removed from the
Administration's Health Security Act. If a Federal health
care reform plan is enacted, specific statutory language must
be included to prohibit cost-shifting to workers'
compensation.
background
Outlined below in greater detail are our concerns.
Choice of physician: The value of allowing the free
selection of physician is debatable. We have seen no evidence
to support that this is preferable in workers' compensation
cases. Most employees do not have the training, knowledge or
information necessary to make these decisions, particularly
in instances requiring specialists and rehabilitation. The
proposal allowing states to certify specialists available to
injured workers outside their basic Alliance Health Plan
would facilitate doctor shopping and create additional
disputes over medical treatment. Currently, roughly half the
states are split between employee and employer choice of
physician. Under Title X, the employer would have no control
and in some cases no input in that decision.
We believe that there is value to employer input into the
choice of physician and that the employee is better served if
he/she makes this decision with the advice of the employer.
If the system allows the employee to switch doctors, this is
likely to result in the unnecessary lengthening of the
disability period and/or the impairment rating, which will
increase costs.
The bill as substantially written reduces the ability of
the employer to control treatment. This, coupled with the
free choice of physician by the employee, could result in
treatment by inappropriate provider or providers lacking
appropriate training for the injury involved. In any case, it
does nothing to enhance or maintain the quality of treatment
available to the injured workers.
Case management: Case management is critical to the
successful treatment of serious injuries. To speed recovery
and allow a timely return to work for injured workers, the
case manager needs a thorough understanding of the specific
jobs and workplace. This is most effectively accomplished by
employer or carrier case managers. Case managers working for
the alliances or AHP's (as structured under the Health
Security Act) will be subject to internal financial pressures
which are not conducive to the goal of high-quality, cost-
effective care aimed at a prompt return to productivity.
Additionally, dual case managers create further opportunity
for additional strife within the system.
Cost Shifting: We are fearful that there are incentives in
this bill for employees to shift cases to workers'
compensation in order to receive first dollar coverage. While
Title X does contain language calling for the development of
treatment protocols and fee schedules to address all medical
services, until these are fully operational, health plans may
still employ differential pricing to the detriment of
workers' compensation.
Proposed Workers' Compensation Commission: The NAM
questions whether federal commissions produce value
commensurate with their costs. In this case, we do not feel
the commission should be charged with completing a study for
further integration of the workers' compensation system into
the general health care program before the reform program
goes into effect. If the commission is required, it should
not issue any recommendation until it has had time to
evaluate the effectiveness of the reforms. In addition, we
are concerned that the commission may expand its scope into
issues concerning coverage and benefits, areas which fall
under the jurisdiction of the states. The NAM believes these
issues should remain with the states.
____
[U.S. Chamber of Commerce position on workers' compensation
legislation]
Statement on Workers' Compensation and Health Care Reform
As the country reviews proposals that will fundamentally
alter the U.S. health care system and its impact on the
states' workers' compensation systems, the U.S. Chamber of
Commerce seeks to play a constructive role in helping to form
a national consensus on this issue. Accordingly, the Chamber
offers the following guidelines as a basis upon which we will
assess the viability of any plan. There are two underlying
principles, recognized in the first three guidelines below,
that are central to the policy of the Chamber. First, we
remain steadfastly opposed to the federalization of state
workers' compensation systems. Second, the medical component
of workers' compensation must be able to effectively benefit
from any medical cost saving mechanisms instituted under a
reformed health care system.
Workers' compensation must remain within the exclusive
domain of state laws. A reform effort should not operate to
expand any existing federal mandates or create any new ones,
or to otherwise affect benefit levels established by the
states.
Direct and total integration of the medical component of
workers' compensation into nonoccupational health care reform
is unacceptable. An employer's current ability to engage in
overall disability management to ensure maximum
rehabilitation in the earliest time frame with an eye toward
controlling indemnity costs is essential to a workable, cost-
effective workers' compensation system. The Chamber will
strongly and actively oppose any provision aimed at total
integration.
The health care portion of workers' compensation must be
allowed to take advantage of any medical cost savings that
national health care reform would produce. Non-discrimination
in the pricing of medical care between occupational and non-
occupational injuries or diseases should be established.
Health care reform should not leave workers' compensation
more vulnerable to cost shifting.
The current safety incentives, including experience rating
based on both medical and indemnity costs, should be
maintained. Employers with good safety programs should
continue to benefit from their efforts and should not be
required to subsidize unsafe employers.
The current development and implementation of managed care
and effective cost containment in workers' compensation
should be permitted to continue.
The exclusive remedy principle of workers' compensation
should be retained. This principle embodies the practice of
employees giving up their right to sue the employer for a
work-related injury or illness in exchange for reasonable and
necessary medical care and cash benefits replacing a portion
of lost income on a no-fault basis. Relaxing or eliminating
this practice would needlessly expose employers to expensive
and damaging tort litigation and would undermine support for
no-fault benefits for workers.
The ability of employers to select medical care providers,
where such ability exists under state workers' compensation
jurisdictions, should be preserved.
Employers' right to direct return-to-work efforts,
including rehabilitation and associated medical care, should
be allowed to continue. Sole control by providers is
unacceptable.
The determination of work-relatedness and other medical-
legal issues should continue to be governed by state workers'
compensation statutes.
The right to self-insure in accordance with state workers'
compensation laws should be preserved. Self-insurance permits
employers to elect to bear their own risk if they are
financially qualified to guarantee delivery of required
benefits.
The role of federal workers' compensation programs (e.g.,
Longshore Act, Federal Employees Compensation Act, Black Lung
program, etc.) within a reformed system must be considered.
The effect of allowing any of these programs to opt out of
the reformed system should be explored.
Workers' compensation premiums should remain fully tax
deductible and benefit payments should remain excludable.
The current paperwork requirements should not be increased.
State law should continue to govern the definition of
coverage (and obligation to cover). Specifically, coverage
should be based on date of injury, not date of medical
service.
Any reform effort should not impede states' efforts to
effectively deal with fraud.
____
[From the Alliance of American Insurers, Washington, DC]
Alliance of American Insurers Position Paper--Workers Compensation and
Title X of the Health Security Act
The Alliance of American Insurers is committed to achieving
medical cost containment within the state-based workers
compensation system. We are equally committed to opposing any
plan that would sacrifice the high quality medical care and
rehabilitation which victims of occupational accidents now
receive through workers compensation programs.
A key workers compensation element which must be preserved
in any reformed system is the ability of the employer and
insurer to manage recovery from disabling work-related
injuries. Effective medical treatment can reduce disability,
but disability management speeds the worker's return to
employment and often can reduce the amount of medical care
which must be provided. The Alliance believes that any
workers compensation reform proposal should embody the
following principles:
1. Workers compensation providers should be allowed access
to all health care delivery systems in use;
2. Unfair discrimination resulting in cost shifting should
be eliminated;
3. States should continue to regulate workers compensation;
4. Insurers/employers who are responsible for medical care
and disability payments should have substantial control over
decisions related to that care;
5. Experience rating should be maintained; and,
6. The exclusive remedy doctrine should be preserved.
Title X of the Health Security Act clearly would undermine
the first, second, third, and fourth principles listed above.
Title X also would create an unworkable system of regulation
and administration, including health alliances engaged in
price-setting (fee schedules), and unnamed state agencies
controlling access to expert workers compensation medical
care. Furthermore, if the medical care component of workers
compensation were to be merged into the proposed health
insurance system (and this is virtually a pre-ordained result
flowing from Subtitle C), the fifth goal would be lost and
the sixth would be at risk.
The Clinton Administration's ``coordinated'' approach to
workers compensation outlined in Title X is flawed because it
would require, rather than allow, medical treatment for
occupational injuries to be delivered through the employee's
health insurance plan, leaving employers with no meaningful
input into the choice of medical provider. Title X would
shift case management of an injury away from the employer/
insurer--who has expertise in the management and treatment of
occupational injuries--to the health insurance plan,
where expertise would have to be developed. The
requirement that each health plan provide a workers
compensation case manager simply duplicates services
presently provided by the payers for that care and moves
this management function to the health plan, which bears
no financial risk for medical care or disability.
In addition, Title X arguably would prevent the employer
and the state workers compensation agency from questioning
whether appropriate medical treatment is being received by an
injured employee. This would establish a prohibition that
presently does not exist even in states where the employee
has the right to initial selection of a physician.
Shifting medical management of an occupational injury from
the employer/insurer to the health insurance plan is likely
to increase the length of disability (lost productivity) and
drive up disability costs. The parties paying for disability,
who have a financial stake in an employee's swift return to
work, would be restricted in directing treatment toward that
optimal outcome. In contrast, a health plan, its providers,
and its case manager would have no financial incentive to
speed recovery and return to work. This would work to the
detriment of both workers and employers.
Unfortunately, Title X's pre-emption of state workers
compensation laws dealing with medical treatment would wipe
out much of the improvement already achieved in several
states through reform. This is especially true with respect
to the application of managed care to occupational injury and
disease.
Title X also would create a commission appointed from
within the Departments of Labor and Health and Human Services
to ``study the feasibility and appropriateness of
transferring financial responsibility for all medical
benefits (including those currently covered under workers
compensation) to health plans.'' From statements made by
Administration officials, it is clear that this commission is
expected to recommend total integration of the workers
compensation health benefits financing system into the
national health insurance system. Such integration would
seriously and adversely affect employer safety incentives by
moving workers compensation from an experienced-rated to a
community-rated system. The public at large would then have
to bear the cost of an employer's unsafe workplace.
This would be a giant step in the wrong direction.
Integration would create the wrong financial incentives for
health plans to provide the intense and special treatment
intended to quickly return an injured employee to work. Also,
integration would likely erode the exclusive remedy doctrine,
thus flooding the courts with litigation, increasing delivery
costs to employers and delaying payment of compensation to
injured workers.
Overall, Title X would impose an entirely new, unworkable
operating structure on state workers compensation systems.
Title X also would increase workers compensation costs. In
addition, Title X fails to address many state-specific
workers compensation problems. For all of the reasons cited
above, the Alliance of American Insurers and our 214 member
companies believe that Title X would be bad public policy for
both employers and American workers.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Graham). The Senator from Connecticut is
recognized.
____________________