Many of the bargaining chips in the ongoing budget impasse are big reforms that are pretty understandable, if you take the time to learn about them: term limits, redistricting, pension reform, a property-tax freeze, higher income taxes. But then there’s workers’ compensation reform, an issue that’s far more complicated and esoteric.
Rauner wants to change how claims are evaluated and compensated, which he says would lower the costs on businesses, which in turn would retain or attract them to the state. Democrats are loath to anger labor unions by reducing benefits, so they’ve pushed back against the changes.
Illinois does have relatively high workers’ comp costs. You can see for yourself, literally part by part, at a great interactive from ProPublica, which shows the average maximum payment workers receive for the loss of various appendages in each state, from the pinky to the big toe.
A pinky is worth almost $30,000 in Illinois (fourth highest among all the states and the federal government, where data was available); a big toe, almost $52,000 (fourth highest); a leg, just over $400,000 (third highest); a hand, almost $280,000 (fifth highest). Illinois is in the top 10 for all body parts on ProPublica’s list, except ears.
Bruce Rauner has been pushing the Massachusetts model, a blue-ish state with a blue-collar history, but one where an injury must be at least 50 percent caused by the job in order to be eligible for compensation, known as a standard of causation. In ProPublica’s data, it’s also near the bottom in almost every category in terms of money paid. The average maximum compensation for losing an arm in Illinois is about $440,000; in Massachusetts, it’s $52,000. In Illinois, an eye is $235,000; in Massachusetts, $47,000.
And from 1988 to 2014, the average premium Massachusetts employers paid for workers’ comp insurance, per $100 of an employee’s wages, fell $2.50, from $3.67 to $1.17. In Illinois, it fell $1.23, from $3.58 to $2.35. Illinois was in the middle of the pack; now it pays the seventh highest premiums.
That ProPublica data is tied to a longer investigation with NPR that examines how workers’ comp payments have gone down around the country as states compete with each other in the same way they compete on things like wages and collective bargaining. Reporters found that this change has come with a cost:
In fact, employers are paying the lowest rates for workers’ comp insurance since the 1970s. And in 2013, insurers had their most profitable year in over a decade, bringing in a hefty 18 percent return.
All the while, employers have found someone else to foot the bill for workplace accidents: American taxpayers, who shell out tens of billions of dollars a year through Social Security Disability Insurance, Medicare and Medicaid for lost wages and medical costs not covered by workers’ comp.
Illinois has reformed its workers’ comp laws as recently as 2011. While it did reduce medical fees, it barely budged costs per claim. And as in the rest of the country, insurers have profited from it:
The Illinois Department of Insurance released a report last year showing workers’ compensation insurers’ profits rose nearly 22 percentage points between 2010 and 2014, from negative 11 percent to positive 11 percent. Between 2011 and 2015, insurers’ financial payouts for claims declined to below the national average, according to the report.
Since then legislators have taken a couple runs at regulating workers’ comp insurance premiums, but they haven’t taken hold. Instead, the governor wants to make the causation rules more stringent, and to follow Indiana in using the American Medical Association’s guidelines as the only basis for determining permanent partial disability (use of their guidelines at all is one of the results of the 2011 reforms).
The AMA guidelines determine how seriously a worker is injured, and from there, what kind of compensation they should receive. The organization defines impairment as “a loss, loss of use, or derangement of any body part, organ system, or organ function.” It only judges the injured person’s ability to perform typical daily tasks, excluding work.
The guidelines only take into account one physician’s rating, whereas the current system includes medical records and other physician notes as well. Plus, since they primarily look at a worker’s injury through a medical lens, they don’t consider the unique aspects of a worker’s injury or job specifications.
It’s a long way of saying, as Monique Garcia did in the Tribune, that the AMA guidelines are “considered more conservative” than the current system, which itself is considered more conservative than the prior regime. It’s an arcane corner of the grand bargain, but it looms large over the debate.