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The Texas Public Policy Foundation, a research and advocacy group that promotes free enterprise and notably favors the workers compensation opt-out model, released a report Tuesday analyzing the Texas nonsubscription system and says more states may try to emulate the opt-out model.
The report titled “The Lone Star Model for Helping Injured Workers,” says competition between the state’s regulated workers comp system and its nonsubscription system has led to improved claims handling, cost control and better return-to-work rates. About 78% of Texas employers representing 82% of the state’s private-sector employees are covered by the state’s regulated comp system, the report says. Five percent of Texas employees are not covered by workers comp or alternative injury benefit plans, according to the report.
The report compares the state’s opt-out system with group health plans, whereby alternative injury benefit plans set up by Texas nonsubscribers outside of workers comp can limit or expand coverage because they are not subject to statutory workers comp rules.
“One source of the lack of cost containment in workers compensation is that employees who file a claim through workers compensation, unlike employees who file a claim through group health insurance, typically have no strong incentive or requirement to use an employer-designated medical provider,” the report says.
According to the report, 19 of 49 states with mandatory comp systems don’t allow the employer to have input into the initial choice of treating doctor even if the employer or insurer has a managed care arrangement for workers comp. The Texas Public Policy Foundation asserts that this has led to corruption, kickbacks and an increasing problem with over-prescription of opioid painkillers.
Texas is the only state that allows employers to opt out of its workers comp system, although other states have attempted to introduce an opt-out model in their comp statutes. Most recently, Oklahoma’s attempt to implement an opt-out model was struck down by the state’s Supreme Court last year.
The report asserts that more states could try to adopt workers comp opt out models because "more and more elected officials across the country are learning about how employers and employees alike in Texas and Oklahoma have benefited from the availability of alternatives to statutory workers compensation."
About two-thirds of Texas employers purchase workers compensation insurance or provide an alternative benefit plan for their injured employees, and declining comp claim frequency and other comp reforms in Texas have allowed insurers to lower comp pricing for those companies, Texas Workers Compensation Commissioner Rod Bordelon said Thursday.