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Benefit reductions not easing employer's workers comp cost increases

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Employer costs for workers compensation continue to rise despite the fact that workers comp benefits as a share of payroll were lower in 2013 than any other period, according to a report published Wednesday by the National Academy of Social Insurance.

Benefits per $100 of covered payroll declined to 98 cents in 2013, a 5% drop from 2009, according to Workers Compensation: Benefits, Coverage and Costs. But a growing, post-recession workforce has resulted in rising employer costs of $1.37 per $100 of covered payroll, a 5% increase from 2009, according to the report.

In 2013, total workers comp benefits were $63.6 billion, while employer costs were $88.5 billion, the report found.

Benefits as a percentage of payroll declined in 39 states between 2009 and 2013, continuing a national trend in lower benefits relative to payroll that began in the 1990s, according to the report.

“The decline is due to a drop in workplace injuries as well as changes in many state laws that made it more difficult for workers to qualify for benefits,” John Burton, professor emeritus for Rutgers and Cornell universities who served on the panel studying workers comp data, said in a statement. “These state laws include more stringent compensation rules, the reduction of coverage for certain medical diagnoses, and new legal requirements that make it more difficult for workers to succeed in their claims for benefits.”

Medical benefits account for a greater share of total workers comp benefits due to rising health care costs, with these benefits at a 50% share in 2013 compared to 29% in 1980, according to the report.

Costs for employers insured through private carriers constituted $54.9 billion, or 62.1% of total costs, while self-insured employers accounted for $17.3 billion, or 19.5% of the costs, in 2013. Costs for employers insured through state funds amounted to $11.8 billion, or 13.3%, while costs to the federal government were $4.5 billion, or 5.1%.

The greatest increases in employer costs in the 2009 to 2013 period occurred in New York and California, while the biggest decrease over that period happened in West Virginia, which converted from an exclusive state fund to a private carrier system after 2009 and substantially reduced benefit levels, the report noted.