Comp Community Has Eyes on ColoradoCare
Coloradans are set to vote on a state ballot initiative that would create the country’s first single-payer health care system – but how would such a system impact employers and their workers’ compensation programs?
Colorado’s Amendment 69 calls for the state to finance health care through ColoradoCare, which would be a new political subdivision of the state governed by a 21-member board of trustees that would administer a coordinated payment system for health care services.
The single-payer system would be paid partly by federal sources, and partly by a new 10 percent income tax that would be shared: two thirds, or 6.67 percent, would be paid by employers and one third, or 3.33 percent, would be paid by employees.
Experts who either support, oppose or are neutral about ColoradoCare spoke to Risk & Insurance® about their perspectives on how the ballot initiative would impact employers and their workers’ comp programs:
Ralph Ogden, senior legal counsel, ColoradoCareYes:
Under the current workers’ compensation system, employers have the right to make an injured worker see the physician of the employer’s choice in the first instance. After that, any physician to whom the worker is referred by the initial treating doctor also becomes authorized. In practice, employers direct employees to physicians who are selected by the insurance company.
Employers and insurers want this control because they are afraid that physicians outside of their networks either don’t understand occupational injuries or are unscrupulous and will keep treating workers long after workers reach maximum medical treatment and the need for treatment has expired.
Workers, on the other hand, believe that physicians in these networks have a bias towards the employers and insurers who select them, and frequently undertreat, force workers back to work before they’re ready, or otherwise give opinions which favor the employer-insurers in order to continue getting business from them.
Also under the current system, any physician can treat an injured worker, and neither certification nor expertise in occupational injuries or illnesses is required.
Workers’ compensation is fundamentally a return-to-work system, not a health insurance system.
The board of trustees has several alternatives for handling job-related injuries and illnesses. It could, for example, require that any physician wishing to treat injured workers be Level I certified, and could further require that employers present employees with a list of these accredited physicians in their locale, leaving the actual choice to the worker. This addresses some of the concerns of employers and insurers as well as those of injured workers.
It could also establish guidelines for initial diagnosis and treatment which would allow employers to direct workers to accredited specialists, depending on the nature of the injury. For example, workers with carpal tunnel injuries could be directed to accredited hand specialists while still leaving the final choice up to the worker.
Another alternative would be to use the worker’s primary care physician as a gatekeeper that the worker sees first and is then referred to the appropriate specialist, or, when the injury does not require specialist care, continues to be treated by their PCP. The advantage to this system is that the PCP would be aware of the worker’s total health picture and could better coordinate their care on a holistic basis.
There may be other, better alternatives for protecting the interests of both the employers and the workers. Amendment 69 intentionally leaves the selection of these alternatives to the board of trustees so they can make the best decisions in light of all information available at the time, rather than having the drafters tie the board’s hands with a system that may later prove inferior to ideas that develop over time.
The amount of money an employer will save under ColoradoCare depends on several factors, including how much, if anything, it currently pays for employees’ health insurance and how much it currently pays for workers’ compensation insurance.
According to the United States Bureau of Labor Statistics, the average employer payment for health insurance is 13.5 percent of payroll. Thus, if total payroll is $100,000, the employer will pay about $13,500 for health insurance. Under ColoradoCare, employers pay only 6.67 percent of payroll, or, in this scenario, $6,670, which saves the employer $6,830.
Computing savings on workers’ compensation insurance is much more difficult because the compensation rates are based on job titles and the risk associated with these positions, with office employees having a low rate and construction workers having a high rate.
Thus, employers with high-risk occupations will save the most on the med pay portion of their compensation premiums, while employers with office workers will save very little. In any event, because med pay accounts for about 59 percent of workers’ compensation payments, compensation premiums should be reduced by that amount.
Edward Pierce, producer, Denver office of Lockton Cos.:
Attempting to accurately quantify the effects that Colorado Amendment 69 will have on any one employer’s bottom line would be far too speculative without more information from the ColoradoCare System Initiative.
The proposed changes in legislation are currently written in an 11-page document, and there a number of issues and gaps from a workers’ compensation perspective. These changes may have ripple effects that are unclear without more insight from those putting the measure forward.
Concerns we have include:
- Currently, workers’ compensation has controls in place for employers and insurers to keep medical costs in check. How medical costs would be controlled under Amendment 69 is not addressed. If medical costs are increased, additional taxes would be necessary to fund ColoradoCare in future years.
- Amendment 69 creates issues for employers in the reporting and tracking of employees’ medical care. Employees may leave work and seek medical attention from government provided health care without informing their employer. How this would be controlled is not addressed in Amendment 69.
- The issue of subrogation for indemnity payments is not addressed in legislation and requires clarification. If the legislation prohibits or weakens the ability for insurers to subrogate, employers would likely bear the burden of increased premiums.
Overall, we do not have a transparent view of how this legislation and the board in charge of these changes will ultimately impact workers’ compensation to affect an employer’s bottom line.
Edie Sonn, vice president, communications and public affairs, Pinnacol Assurance, Denver’s state-chartered workers’ comp carrier:
Workers’ compensation is fundamentally a return-to-work system, not a health insurance system. Amendment 69 would eliminate that crucial distinction — and that’s not good for injured workers or employers. It fails to recognize the important role specialized occupational medicine plays in the recovery of injured workers.
Doctors who have been specifically trained in treating workplace injuries understand exceptional medical care is not simply treating the injury. They recognize how important it is to continually evaluate and facilitate an injured workers’ ability to return to work as early as appropriate.
Our ability to meaningfully contribute to society through our work is as important to the recovery process as providing appropriate medical care. The longer we’re away from our jobs, the more difficultly we face in our recovery process. A “one-size fits all” health insurance system fails injured workers.
In addition, we believe injured workers will be away from their jobs longer if there are no mechanisms to ensure they’re getting appropriate care and helping them get back to work. That will increase employers’ indemnity costs and won’t create value or improve the current workers’ compensation system in Colorado.
Richard Krasner, workers’ comp consultant and blogger:
The ColoradoCare initiative is up for approval by Colorado voters in November, but there has been some pushback because it would create a single-payer system and therefore, take away from the current health care system — including the workers’ comp program. Pushback is from the health care industry. They want to protect employer-provided insurance, as per the Council of Insurance Agents & Brokers, a national trade group.
I contend that the U.S. has unnecessarily created two silos of health care — general health care and workers’ comp health care. We seem to compartmentalize health care in this country, and the separate systems allow for companies to profit from each system. But if it were one system, then very few companies can profit from it. I don’t think there’s any other Western country that has such silos.
There may be certain surgeries, such as knee or back surgery, in which the doctor has no interest in knowing whether the person fell of a ladder at work or while he was putting up Christmas decorations at his home. It may not matter. There may be certain patient-specific precautions and procedures that the surgeon will do for one patient that is not needed by the other patient, regardless of work status, as this is a medical decision, not an insurance decision. Otherwise, the surgery is no different.