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Workers' compensation premiums not high enough, study says

A new study in the Journal of Occupational Environmental Medicine says that nearly 80 percent of Michigan's workplace injuries and illnesses are not covered by workers' compensation payments. Instead, they are covered by Medicaid, Medicare, Social Security and employer-provided health insurance plans. This has resulted in companies paying artificially low workers' comp premiums, leading to a lack of incentive for corporations to establish and/or promote workplace safety policies.

The study, partially funded by the National Institute for Occupations Safety and Health, said workers' compensation has traditionally paid for the medical care and wage replacement for those employees injured at work. In 2007, that annual cost of employee illnesses and injuries in the United States was about $250 billion.

Most of that number was related to the cost of lost productivity at a whopping $183 billion. The Bureau of Labor Statistics and National Council on Compensation Insurance says that only $22 billion of that is covered by workers' compensation. The bulk is paid for by Social Security Disability insurance, state disability funds and the workers themselves.

As a result, all taxpayers have to pay higher taxes to cover the high Medicare costs that should be paid by employers. The researchers suggested a few ways to try to achieve balance in the system again by:

  • Removing the stigma associated with filing a work-comp claim
  • Acknowledging the legitimacy of using workers' compensation for its intentions
  • Saving administrative costs by establishing single-payer systems
  • Creating company and injury-specific premiums, not industry estimates
  • Encouraging companies to reduce workplace hazards

Source: futruty.org, "Most job injury costs not paid by worker's comp," Karen Finney, June 1, 2012

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