Average Total Cost per Workers’ Compensation Claim in California Stabilized after Major Reforms Took Effect in 2013, Finds WCRI

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This study helps policymakers and other system stakeholders compare the performance of the California workers’ compensation system with 17 other states. This study continues to monitor the impact of comprehensive reform legislation enacted in 2013, Senate Bill (SB) 863.

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Indemnity benefits per claim grew while medical payments per claim decreased, consistent with the expected impact of the workers’ compensation system reform provisions.

The average total cost per workers’ compensation claim in California remained stable since the enactment of comprehensive reforms five years ago, according to a recent study by the Workers Compensation Research Institute (WCRI).

“Indemnity benefits per claim grew while medical payments per claim decreased, consistent with the expected impact of the workers’ compensation system reform provisions,” said Ramona Tanabe, WCRI’s executive vice president and counsel.

The system reforms were contained in Senate Bill 863 (SB 863), which took effect in 2013. The legislation was designed to increase permanent disability benefits for injured workers while also creating cost savings and improving the efficiency of the workers’ compensation process, where possible.

The study, CompScope™ Benchmarks for California, 18th Edition, compared California with workers’ compensation systems in 17 other states. For the study, WCRI analyzed workers’ compensation claims with experience through March 2017.

“Stabilization in the average total cost per workers’ compensation claim in California was observed at all claim maturities,” said Tanabe. “Before SB 863 took effect, the average total cost per workers’ compensation claim in California experienced rapid growth after 2005 followed by a moderate increase since 2009.”

The following are among the study’s other findings:

  • Indemnity benefits per claim increased 5 to 6 percent per year since 2013, while medical payments per claim decreased annually from 2 to 6 percent after the implementation of SB 863.
  • The average total cost per workers’ compensation claim in California was higher than most study states for 2014 injuries with an average of 36 months of experience post-reform.
  • Benefit delivery expenses per claim in California were among the highest of the 18 states WCRI studied for 2014 claims with experience through March 2017.

For more information about this study or to purchase a copy, visit https://www.wcrinet.org/reports/compscope-benchmarks-for-california-18th-edition.

WCRI is recognized as a leader in providing high-quality, objective information about public policy issues involving workers' compensation systems.

About WCRI

The Workers Compensation Research Institute (WCRI) is an independent, not-for-profit research organization based in Cambridge, MA. Organized in 1983, the Institute does not take positions on the issues it researches; rather, it provides information obtained through studies and data collection efforts, which conform to recognized scientific methods. Objectivity is further ensured through rigorous, unbiased peer review procedures. WCRI's diverse membership includes employers; insurers; governmental entities; managed care companies; health care providers; insurance regulators; state labor organizations; and state administrative agencies in the U.S., Canada, Australia, and New Zealand.

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Andrew Kenneally
Workers Compensation Research Institute - WCRI
since: 06/2011
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