Workers Compensation is by design a wage loss replacement system. Thus, by its very nature, it compensates wages lost due to injuries received at work.
Reform is often a popular political agenda. The rallying cry usually relates to the reduction of benefits paid out by the Ohio Bureau of Workers Compensation. However, examples of Ohio’s workers compensation system becoming a “pay to stay at home” form of welfare, or claims of overpayment of benefits are clearly not supported by years of accumulated research and statistics.
If the detractors of this system were correct, the amount of indemnity would be continuing to rise.
Since 1997 the total amount of indemnity paid by the State of Ohio has been virtually flat – there has been no increase in the amount of benefits paid out. In fact, the Ohio Bureau of Workers Compensation reports that “total (annual) compensation paid” has consistently fallen over the past 3 years.
Indemnity is a result of wage loss due to injury. It is driven by the statewide average weekly wage, which Is the average weekly wage earners pay into the Ohio Unemployment System. Since salaries and wage earnings have increased since 1997, this should have resulted in a correlating rise in benefits and costs coming out of our system. Clearly indemnity is not driving the costs in our present system.
Recently, Deloitte Consulting LLP did a $2.1 Million research project at the request of the Ohio General Assembly that found Ohio is “largely consistent with other States with regard to benefit and compensation levels”. This is confirmed by a 2010 study by the National Academy of Social Insurance, chaired by John Burton (formerly chair of the National Commission on State Workman’s Compensation Laws of 1992). This study compared all 50 states, and Ohio was neither in the upper or lower group of states with regard to payment of benefits, coverage and costs. In another study by Mr. Burton, performed on permanent partial benefits, Ohio is last (or lowest) in the amount of any average permanent partial claim payment.
Necessary reform does not require statutory benefit reductions. We will discuss this more in depth in future blog posts.