Workers’ compensation is an easily identifiable cost for most employers. Their payments of premiums stand out from many other costs that they have little control over. They can only reduce their electric bill or gas bill to a point. They could lay off workers and may save money, but they may not be able to manage their workload.
So the pressure is placed on lowering the cost of the insurance. With insurance products, the less you pay, the less coverage you receive. When states do that to their workers’ compensation programs, it often does not result in fewer or less serious injuries to workers.
They will need the same amount of treatment, surgeries, drugs or rehabilitation as before, but they will likely receive less. This may make businesses that have carry workers’ compensation insurance happier, but it only transfers the costs from the employers to the injured workers.
This makes little economic sense, as the workers may not be able to afford those costs. With inadequate treatment or with disability payments that simply terminate at some arbitrary time limit, these men and women are left in a kind of limbo. Unsurprisingly, when disabled workers on “permanent” disability lose their benefits, they are not suddenly transformed back into healthy workers.
They are still disabled. So they are then forced to apply to a program such as Social Security Disability. This means other workers are paying for their benefits, instead of the employer via their workers’ compensation insurance.
The system is designed to reward good employers with low premiums and punish poor employers with higher premiums. By removing the economic incentive from employers to maintain a safe work environment, it potentially leads to more injured workers and higher costs to other workers and the system as a whole.
Source: truth-out.org, “The War on Workers’ Compensation,” Stephen Franklin, In These Times, June 20, 2016