Mass. Data Shows Affordable Care Act Could Lower WC Costs

“We asked: Is there evidence that the reform changed the number of claims that were being sent out by hospitals to workers’ comp insurers? You could think of that as claims volume or claims frequency metrics. We also looked at whether there was evidence of changes in the charges per claims. You could look at that as claim severity-type metrics. And we looked at different measures of treatment volumes and the types of treatment that people were receiving,” he explained.

The basic finding was that the WC billing frequency for both emergency room visits and inpatient hospitalizations fell by 5 to 10 percent as a result of reform. But billed charges and treatment volume were not measurably affected. “The decline in frequency is measurable for both small and larger bills. So it wasn’t just not-very-seriously-injured people that were affected.”

He said there are reasons to think the finding could be applicable to other states. “The major parts of the reform in Massachusetts are the Medicaid expansion, the health insurance exchanges, individual and employer mandates, and below-cost, state-subsidized policies,” he said. “Those five parts, we also see in the Affordable Care Act. Although the details are different, the basic structure is the same. So, if the Affordable Care Act survives the Supreme Court challenge, other states will have to implement measures that are likely to have some similarities to Massachusetts.”

There is also evidence to suggest that in Massachusetts, a lot of coverage that people picked up as a result of the reform came through Medicaid rather than private health insurance. And various studies found that just as in Massachusetts, it is likely that under the Affordable Care Act, the coverage would expand through people becoming eligible for Medicaid.

However, Heaton cautioned that there are also differences between Massachusetts and other states. One important difference is that Massachusetts comp reimbursements tend to be quite low. Also, Massachusetts tends to be a little safer compared to the national average.

So what’s the takeaway lesson for the workers’ comp insurers? “It would depend a lot on which market they are operating in,” he said. “For example, California, like Massachusetts, tends to have low reimbursement rates. It’s also likely to have Medicaid expansion.”

“For insurers with a significant presence in California, it would be wise in reserve planning to consider the possibility that reform might lower claim frequency more than would be expected otherwise.”

Topics Workers' Compensation Massachusetts