For years, Illinois employers and insurers have complained about the state’s workers’ compensation system.
Illinois’ workers’ comp rates have regularly exceeded those of neighboring states such as Indiana, Iowa and even Missouri. The rates have been driven by costs. For example, the average indemnity claim in 2001, according to the National Council on Compensation Insurance, was $18,000 in Illinois, 28 percent higher than Missouri, 63 percent higher than Iowa and 80 percent higher than Indiana.
Meanwhile, average medical claim severity in Illinois in 2001 was $14,900, again higher than the other three neighboring states. Recent reports from the Workers Compensation Research Institute show things have not improved much in the Land of Lincoln since then. Illinois is one of the few states without a medical fee schedule, giving injured workers and their doctors a blank check on how to proceed with treatment.
Back in the mid-1990s, with the GOP in firm control in Springfield, it appeared that reform was in the offing. But it wasn’t to be. Now another reform effort is underway in the state capital, but with Democrats in control it has taken on a different hue, as Laura Kotelman of the Property Casualty Insurers Association of America explains in our Parting Shots,
This time, the medical fee schedule would be accompanied by an increase in benefits and penalties that might dissuade employers and insurers from fighting questionable claims. An analysis by the NCCI shows that the proposed changes would lead to at least a 5 percent increase in comp costs, perhaps more.
As Ms. Kotelman points out in her column, business groups have been split by the proposal. Some think they’ll come out ahead, and some fear that if they reject partial reform now the next bill will be even less employer-friendly. All of this just goes to show that, regardless of the future of federalization, there are some insurance issues that will remain emphatically local.
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