COVID effect on comp in New York may be less than predicted

The cost of COVID-19 on the workers compensation system in New York may be less severe than had been predicted, according to a research brief published by the New York Compensation Insurance Rating Board.

Using data from the New York State Workers Compensation Board, the state, the Bureau of Labor Statistics and the Centers for Disease Control and Prevention, the ratings board in late June said in its report that while much uncertainty remains, the state has seen a drop in claims during lockdown and lower-than-predicted COVID-19 infections rates.

In March, the ratings board released a legislative analysis of the potential cost impacts on workers compensation of COVID-19 as an occupational disease. The board estimated that presumptive COVID-19 coverage could cost the workers comp system in the state as much as $31 billion — more than triple the state comp system’s current annual losses in both the insured and self-insured markets. That figure, however, was based on an early predicted infection rate of between 40% and 80% and was announced by Gov. Andrew Cuomo.

As of June 22, the infection rate based on testing in the state was about 2%. Antibody testing, however, revealed a statewide infection rate of about 13%, with the rate of infection at about 22% in New York City and between 2% and 4% for Upstate regions.

The report also noted that federal, state and local paid leave programs could affect the workers comp system by allowing workers who experience mild symptoms to take paid leave in lieu of comp benefits. Initial data samples suggest that the number of COVID-19-related workers comp claims “has been low relative to the estimated infection rate” in the state.

Predicted hospitalization costs from March, appear to reflect the actual non-ICU hospitalization cost range of $20,000 to $30,000, according to the rating board’s report. However, based on other workers comp claims for lung issues, the board said it is “reasonable to assume” that some of these COVID-19 lost-time claims involving hospitalizations will exceed $85,000 and that workers who experience acute respiratory distress syndrome will also require mental health care.

The decrease in claims not related to COVID-19 during the lockdown may mitigate the impact of COVID-19 claims, the research brief said, but it is “unknown whether reduced non-COVID-19 claim activity will be offset by a decrease in workers’ compensation premiums charged to employers.”