Workers’ Compensation Premiums and Benefits Decline: NASI Report
I am a member of the National Academy of Social Insurance, a non-profit, non-partisan organization made up of the nation’s leading experts on social insurance. Its mission: to advance solutions to challenges facing the nation by increasing public understanding of how social insurance contributes to the economy. Social insurance encompasses broad based systems (like workers’ compensation, Social Security, and Unemployment Compensation) that help workers and their families avoid the loss of income due to retirement, death, disability, or unemployment and to ensure access to health care. The most recent data encompassing the five year span ending in 2018 indicates that workers’ compensation premiums for employers have decreased significantly and the benefits to injured workers have also decreased significantly.
Workers’ compensation insures millions of workers and their families against the risks associated with lost wages and medical costs in the event of injury on the job and work-related illnesses or death. It is the only social insurance system run entirely by States and because there is no federal aspect to it, workers’ compensation often receives less attention than other programs such as Social Security and Medicare. The NASI Annual Report fills in that gap. Workers’ compensation is the oldest social insurance program in the U.S. The first State to pass workers’ compensation law (Wisconsin) did so in 1911. At that time many workers who were injured on the job rarely received any compensation and suing employers was costly and very difficult to overcome legal defenses. Wisconsin’s workers’ compensation system provides compensation for lost wages and medical care regardless of negligence. The wage-replacement payments are aimed to correspond with the severity of the injury. Employer costs over the past two decades have fallen from $1.42 per $100 dollars of wages in 1998 to $1.21 in 2018. However, workers’ benefits decreased even more from $1.13 twenty years ago to $.77 per $100 of wages. In the last five years, the decline in benefits represents a 17% loss for workers and a 17% premium cost, a 12% decline for employers.