The Impact of Rising Group Health Deductibles on Workers’ Compensation Claims

A new study suggests that rising group health insurance deductibles may be increasing the number of workers’ compensation claims, with some caveats.

From 2007 to 2017, the percentage of workers covered by group health insurance that contained an annual deductible increased from 59 percent to 81 percent. Moreover, among those workers enrolled in a group health plan with a deductible, the average deductible increased from $616 in 2007 to $1,505 in 2017. As the cost of using group health insurance to get treatment for an injury that might be work-related increases in this way, is the financial disincentive to use that health insurance enough to motivate workers to file a workers’ compensation claim instead, given that medical treatment provided under workers’ compensation generally has no direct cost-sharing component for the worker?

The Workers Compensation Research Institute (WCRI) study, “Do Higher Deductibles in Group Health Plans Increase Injured Workers’ Propensity to File for Workers’ Compensation?”, by Olesya Fomenko and Jonathan Gruber, explored that question and found that increasing deductibles is causing some medical treatment to be shifted from group health insurance to workers’ compensation, with the amount of remaining deductible, injury type, and control over doctor choice largely determining the extent of the shifting. Given that workers’ compensation claims declined overall during the past decade, the estimated increases due to rising group health costs as found in the Fomenko and Gruber study have been offset by greater reductions in claims attributable to other factors, such as technology advancements, safety improvements in the workplace, and an aging workforce. However, they conclude that the decline in workers’ compensation claims could have been larger had group health deductibles stayed largely constant during this period.

Data and Methodology

In performing their study, Fomenko and Gruber relied on data about new injuries occurring between 2008 and 2014 extracted from the Truven Health MarketScan Research Databases, which capture patient-level information from certain large employers, health plans, and government and public organizations. For a given employee, their data indicated whether a particular medical visit was paid for by a group health insurer or by workers’ compensation, and the authors assumed for purposes of their study that if the medical care was paid by workers’ compensation that the worker decided to claim the injury as work-related. The authors narrowed their focus by looking at workers who had either certain types of soft tissue injuries, such as back, knee, or shoulder pain, or trauma injuries such as fractures, lacerations, and contusions, as those two types of injuries generally account for more than 70 percent of workers’ compensation claims. They also restricted their analysis to full-time workers under the age of 65, with the latter restriction intended to eliminate workers who might be covered by Medicare.

Key Findings

After examining their data, Fomenko and Gruber concluded that the presence of a deductible attached to group health insurance that forces a worker to foot most or all of a medical bill does seem to make a worker more likely to file a workers’ compensation claim. They found that, assuming an average deductible amount, injured workers facing a deductible at the time of injury were 1.4 percent more likely to file a workers’ compensation claim. That number, however, assumes an “average deductible” amount at the time of injury. When adjusting for different deductible amounts, the authors found that for every $100 of deductible remaining on their group health plan, patients were .14 percentage points more likely to select workers’ compensation rather than their group health insurer to pay for the medical treatment.

While these numbers combine both soft tissue injuries and trauma injuries, the authors found that the numbers varied significantly when these injury types were considered separately. For example, patients with soft tissue injuries were .20 percentage points more likely to select workers’ compensation rather than group health for each $100 of deductible remaining on their group health plan, while workers with trauma injuries were just .10 percentage points more likely for each $100 remaining. As noted by the study authors, this difference may be attributable to the fact that it is easier to shift a soft tissue injury from non-work-related to work-related than it would be to shift a trauma injury such as a broken bone or contusion, given that the cause of soft tissue injuries may be harder to determine.

Looking at their numbers to determine trends over time, Fomenko and Gruber estimated that the volume of workers’ compensation claims increased by 3.2 percent from 2008 to 2014 due to group health cost-sharing increases, and by an additional 1.6 percent from 2014 to 2017. However, these numbers also varied by injury type. For example, they found that the increase in workers’ compensation claims for soft tissue conditions attributable to increases in group health deductibles was 6.2 percent from 2008 to 2014, and 3.3 percent from 2014 to 2017, while the increases for trauma injuries for those periods were 1.5 percent and .6 percent respectively. However, as noted earlier, given that overall workers’ compensation claims actually decreased during the period being studied, the authors recognized that these “increases” were offset by claim decreases caused by factors unrelated to group health deductibles.

Impact of Physician Choice

Fomenko and Gruber also noticed another important variable playing a significant role in the decision to shift from group health coverage to workers’ compensation coverage: the ability of an injured worker to choose his or her initial medical provider when pursuing a workers’ compensation claim. Specifically, they discovered that workers in those states in which employers have control over the choice of initial provider in workers’ compensation claims were largely “non-responsive” to cost-sharing issues such as group health deductible. This suggests that the worker’s inability to see his or her own doctor makes filing a workers’ compensation claim less attractive, seemingly even trumping the added cost of having to pay a group health deductible.

For example, as noted above, they estimated that for every $100 of remaining deductible, patients were generally .14 percentage points more likely to select workers’ compensation rather than their group health insurer to pay for the medical treatment. However, they found that number to be .29 percentage points in states in which the worker is provided the choice of an initial medical provider, but only .01 percentage points in states in which the employer is given that choice. Similarly, they estimated that workers’ compensation claims volume increased due to group health cost-sharing growth from 2008 to 2014 by 7.3 percent in states in which workers can choose their initial provider, and by 3.3 percent from 2014 to 2017, well above the overall averages of 3.2 percent and 1.6 percent.

Conclusion

Assuming the accuracy of the numbers presented in the Fomenko and Gruber study, it appears that rising group health deductibles have had a statistically significant impact on the decisions of injured workers about whether to file a claim for workers’ compensation rather than seek medical treatment under his or her group health plan. However, the size of the impact varies with the amount of remaining deductible at the time of the injury and is largely limited to soft tissue injuries in states in which the worker has the right under the applicable workers’ compensation law to select his or her initial doctor.

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