Workers' Comp Costs Soar for Self-Insured Employers

Workers’ compensation costs for self-insured employers have soared, primarily because of post-system reform increases in medical payments, newly released data shows.

The number of workers’ comp claims for private-sector employers that self insure rose for the first time since 1991, the California Workers’ Compensation Institute reported Wednesday in a summary of new state data.

CWCI, an industry organization, summarized data released last week by the state Office of Self-Insurance Plans.

The data is based on claims information submitted by private-sector employers that self insure. Examples of private-sector employers that self insure in California include Intel Corp., Hewlett-Packard Co. and Catholic Healthcare West.

In 2008, the Golden State had 2.39 million private self-insured employees, which was 4.3 percent more than in 2007, but 3.3 percent fewer than the number of private self-insured employees in 2003 — the year before the workers’ comp system was reformed. Those employees turned in 91,715 claims in 2008. That’s an increase of only four-tenths of a percent, but nevertheless, it is the first bump in the number of claims in 17 years.

Year-end paid losses on 2008 claims totaled $191.4 million, representing a 12.1 percent increase over the year before. The average payment per claim in 2008 — $2,087 —was the highest it has been since the system reforms. It was 12 percent higher than in 2007, the institute said, and 20.6 percent higher than the post-reform low of 2005.

Medical payments on those 2008 claims jumped to $1,283, which is a 16.4 percent increase from 2007 and a 29.2 percent increase from the 2005 post-reform low of $993, the institute reported.

Indemnity, or lost time payments, averaged $804 in 2008, which was 5.7 percent more than the year before and 10 percent more than the low of $731 in 2006.

Data for public-sector employers that self insure, such as the cities of Sacramento and Roseville and the Elk Grove Unified School District, is available only through the first half of 2008. But those results show that the average amounts paid also are rising for public-sector employers that self insure, CWCI noted.

Source: Silicon Valley / San Jose Business Journal - by Kelly Johnson

Sacramento Business Journal

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