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Health care reform law may be boosting Calif. workers comp claims

Health care reform law may be boosting Calif. workers comp claims

DANA POINT, Calif. — The Patient Protection and Affordable Care Act may be pushing up claims frequency by driving increased part-time employee hiring, speakers said during a California workers compensation conference.

For now, the Workers' Compensation Insurance Rating Bureau of California is conducting research to determine whether the hiring of more part-time workers, over full-time employees, is driving a spike in California claims frequency by adding “more exposure units in the system,” said Bill Mudge, president and CEO the San Francisco-based WCIRB.

Mr. Mudge spoke Wednesday during the California Workers' Compensation & Risk Conference being held through Friday in Dana Point, Calif.

While workers comp claims in the rest of the nation have been falling, claims in the Golden State are rising. Early data shows, for example, that claims in California rose 6% during the first half of this year, Mr. Mudge said.

The frequency increase is particularly noticeable among employers amenable to staffing with part-timers, such as the hospitality and restaurant industry, Mr. Mudge said.

“There are some hypotheses or theories” about what is causing the rising in frequency of workers comp claims, Mr. Mudge said. “One is a potential unintended consequence of Obmacare, the Affordable Care Act.”

Starting in 2015, companies with 50 or more employees must provide employee health care coverage for those workers working at least 30 hours per week. Employers that fail to do so face a penalty. That has led some observers to theorize that PPACA could drive more hiring of part-time workers over full-time employees, since it would add more workers to the system.


But it does not necessarily drive up payroll, which workers comp underwriters use in combination with rates to determine the workers comp premiums they charge employers, said Pam Ferrandino, executive vice president and casualty practice leader for Willis North America Inc. in New York

“Measuring frequency against rate to payroll, as you normally would, you have a lot more employees, so your risk of loss is not accurately being measured,” said Ms. Ferrandino, who also spoke at the conference.

She said she expects underwriters nationwide will begin delving into their claims data to learn whether a similar trend, driven by PPACA, is occurring outside California.

“I may even go so far to say that potentially, California is a leading indicator” showing PPACA as a frequency driver. Ms. Ferrandino said. “It would not necessarily be exclusively California.”