W/C Payouts Increase in California, Decrease Nationwide

May 5, 2000

Workers’ comp payments increased 8 percent in California from 1996 to 1998, while payments decreased nearly 1 percent nationwide, according to a report released by the National Academy of Social Insurance (NASI).

These payments were for medical care and cash benefits for work-related injuries or illnesses. The totals are not adjusted for inflation, the growth in wages, nor for the expanding size of the covered workforce. In California, workers’ comp benefits totaled $7.4 billion in 1998. That figure represents an 8 percent increase from 1996 payments of $6.8 billion.

Meanwhile, nationwide workers’ comp payments fell to $41.7 billion in 1998 from $42.1 billion in 1996. The national numbers fell due to declining medical costs through active management of medical care, fewer accidents, more effective state-run programs and tightening eligibility for benefits, according to John F. Burton, dean of the Rutgers School of Management and Labor Relations. Burton is chairman of the academy’s study panel that oversaw the study. He said that rising medical costs, which pushed up the average cost per claim, are to blame for California’s increase.

The Los Angeles Times reported that while worker injury rates have witnessed a drop, the average indemnity claim in California rose 13 percent to $30,813 in 1999. Bob Young, spokesman for the California Workers’ Compensation Institute (CWCI), associated the increase with medical inflation, high litigation costs and other factors.

According to Young, this figure has been rising an average of 11 percent a year since 1994. The report, “Workers’ Compensation: Benefits, Coverage and Costs, 1997-1998, New Estimates,” is the third in a series by the NASI. NASI is a nonprofit, nonpartisan organization comprised of experts on social insurance.

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