Tuesday, May 25, 2010

To include or exclude Professional Sports Competitors from Workers' Compensation Coverage

Who should be covered by workers’ compensation?  In the beginning, coverage was limited to primarily industrial workers but most systems have expanded who is included within the scope of coverage.  In some cases, inclusions are accomplished by specifically identifying the industries (or occupations) to be covered in legislation.  In others, as in British Columbia, the legislation simply defines a principle (inclusion) and the specifics of any exemptions (exclusions) are defined by policy decision. 

Of jurisdictions with universal coverage, the rationale for inclusion is pretty straight forward.  From a prevention perspective, inclusion of all occupations provides an opportunity to strengthen the barriers, safeguards and defenses against personal injury and disease related to earning a living.  By engineering, substitution and administrative controls, the risks that would otherwise harm the worker can be minimized if not entirely eliminated... and the cost of workers' compensation premiums may provide an incentive to invest in these protections (or an added penalty for failing to).

Further, inclusion means all workers have equivalent protections. From a workers’ compensation perspective, insurance for (hopefully) rare events is provided and crystallizes the likely risk of a rare large financial claim or suit to the employer;  the premium and experience rating for a particular employer with workers in and about an industry serves as an added and (more or less) constant pressure to invest in prevention.  A further rationale is that mandatory inclusion prevents the costs of injury (and necessary healthcare) from being externalized to the public purse.

For jurisdictions with exclusions from universal coverage, the rationale may be more complex.  One rationale may be that the risks are very small and the costs of any actual injury or disease arising from the work very low so the benefits of insurance are negligible.  Other jurisdictions suggest that industries with ‘equivalent’ coverage may be exempted from the provision.  Sometimes, exclusion from some aspects of the workers’ compensation plan can be achieved by ‘carve outs’  and to a certain extent, self insurance with self administration, although this avenue is usually allowed only if the firm is large enough, financially stable enough, and ‘safe’ enough in the eyes of the jurisdictional regulator.  It may be necessary to include all firms under prevention standards but the workers’ compensation coverage by this logic would be optional.  On one hand, this should increase the firms motivation to protect workers since they will bear the costs of a suite or suitable settlement.  Unfortunately, this does not protect the taxpayer (in Canada at least) from the potential costs associated with health care and those who may not receive a speedy settlement (or never get the chance).   Exempting an industry or occupation, therefore, should intentionally consider these consequences. 

Professional sports competitors in hockey, football, winter sports like skiing are obviously poor candidates for inclusion.  The inherent risks and latent defects in the safeguards, barriers and defenses that would otherwise protect them from harm are numerous.  It is hard to think of regulating maximal exertion on razor-sharp blades while carrying long sticks  and making body checks safe without taking these essential elements out of professional hockey.  And on the insurance front,  who would you pool the risk of mixed martial arts competitors with?  In these sports, the economic model of what you can get ‘workers’ to do, is really an economic expected value one.  The pay and contracted benefits are going to have to convince the sports competitor (and his agent) that the residual risks of competing are being properly anticipated and compensated while the ownership (and those setting the rules) are going to have to make assurances sound enough to likely fend off potential suits.

Is there a case for their inclusion of sports competitors? Aside from the inherent externalization of necessary health care  costs to the public purse (or  a violation of the Canada Health Act principles if the sports team ownership pays for those services) and the principle of universality on its own,  I don’t think so.  That said, I don’t see any rationale for excluding coverage for the team coach, trainers, managers and other staff.  Their work and risks are not dissimilar from recreation facility staff, fitness instructors and equipment managers in many other sectors (schools, universities, private gyms, community recreation facilities). 

 I would be interested in your views.

Thursday, May 13, 2010

Are all reported Injury Rates (IRs) equivalent?

I look at a lot of reports and see a wide variation in the reported injury rates among what should be similar jurisdictions. What accounts for these differences? In some cases, there are wide differences in the ‘mix’ of industries covered. You can expect a jurisdiction with a large service sector and small primary resources and construction sectors to have a lower injury rate than one dominated by construction, mining and forestry. That aside, variability can also have a lot to do with definitions.

The AWCBC reports an Injury Frequency statistic based on the following definition:
Number of new lost-time claims for assessable employers per 100 workers of assessable employers

Note the definition depends on what is counted in the numerator (lost-time claims) and what is used as the denominator (workers of assessable employers). AWCBC also defines Lost-time Claims in this way:
A lost-time claim is a claim where an employee is compensated for a loss of wages following a work-related injury (or exposure to noxious substance), or receives compensation for a permanent disability with or without any time lost in his or her employment (for example, if an employee is compensated for a loss of hearing resulting from excessive noise in the work place).

So, another source of variability is in what is reported as compensated. If a jurisdiction has a waiting period or actively promotes ‘stay at work’ programs, claims involving loss of wages will be lower in that jurisdiction than in a similar jurisdiction without a waiting period or significant stay-at-work program.

In a previous blog, I noted the difference in reporting requirements. In addition to those issues, the source of the statistic also needs to be considered. In the US and Europe, most published data is based on Occupational Safety and Health data. In the US, OSHA has specific definitions for what is reportable and these ultimately have an impact on the reported IR. Further, within the reportable cases, there is a distinction between ‘days away from work’ cases and those where ‘alternate duties’ are assigned. While most workers have workers’ compensation coverage in the US, most published IRs are not based on claims.

At WorkSafeBC we report a Provincial Injury Rate in accordance with the AWCBC definition. For BC, where 93% of the employed labour force is covered, this is a pretty reasonable estimate of the provincial IR. Note, however, that it reflects assessable employers only. It does not include, for example, the injuries that occur within the Provincial Government public service as the Provincial Government is not an assessable employer. In provinces with lower covered populations and higher proportions of non-assessed employers, what is reflected in the IR may be far less representative of the provincial injury rate.

Finally, the IR that is reported in some other jurisdictions excludes from the numerator claims (or work absences) of very short duration. WorkSafeBC’s Injury Rate is an IR0 (claims involving at least some wage loss) and the US generally uses IR0 (reportable cases involving days of work absence) although some reports use IR3. In Australia, where one week of work absence is the threshold for a claim in most jurisdictions, their reported claim rates would be equivalent to IR5 or IR7 (depending on the basis for compensation being 5 or 7 days).

So, when you are looking at injury rates in other jurisdictions, dig a little deeper and understand the inherent differences before drawing any conclusions. For the record, WorkSafeBC’s Injury Rates are as follows:
IR0: 2.34, IR3: 1.75, IR5: 1.50, IR7: 1.35 (In the 2009 Annual Report, the Provincial Injury Rate [IR0] is reported as 2.37, the best estimate available at the time of publication).