Monday, March 31, 2014

Do California and Canada have a lot in common when it comes to workers’ compensation?

Do California and Canada have a lot in common when it comes to workers’ compensation?   In preparing my presentation to the annual meeting of the California Workers’ Compensation Institute (,  I updated some of the information from a very nice briefing comparing coverage in California and Canada published by the Institute for Work and Health ( 2010.  The broad parameters of the workers’ compensation context are similar:
                                         Canada                     California                
Employed labour force (2013):   17,731,000     17,053,071  (June)
Estimated covered by WC:  14.8 million (2013)   14.7 million (2012)
Actual [weighted]Average
 Assessment Rate for Assessable 
employers  ($/$100):            1.96  (2011)         2.46 (June 2012)
The coverage in California is set by legislation and similar to what you might find in many US states:
  • 2/3rds  Average Weekly Wage
  • Three day waiting period (with two week retroactive period)
  • Max insured 2014: $1,611.96 per week (about $84,000 per year)
Each Canadian province has its own limits.  Most do not have any waiting period; most cover 85 to 90% of Net average earnings to a maximum ($77,900 BC, $92,300 Alberta, $84,100 Ontario, no maximum in Manitoba). 
Administration costs are difficult to compare.  In Canada, each province has a workers’ compensation board or commission that is the equivalent of an exclusive state fund.  The Association of Workers’ Compensation Boards of Canada ( reports Administration Costs for Assessable Employers was $1,474,841,000 in 2011.  The IWH study reports 2007 data for California that pegs  the insurer underwriting profit of  $1,976 million and Administration expense $5,323 million.   That makes the administrative cost in California about five times that of Canada. 
What accounts for this significant difference?  A lot of US commentators have suggested that Canada’s universal healthcare may account for some of the difference.  In fact, however, Canadian workers’ compensation boards are “first payers” for healthcare costs.  Payments by provincial workers’ compensation boards are excluded from the definition of “insured health services” under the Canada Health Act.  So the same healthcare costs paid for by US workers’ compensation insurers are also paid for by Canadian workers’ compensation boards. While the Canadian systems benefit from a population who all have health care coverage and certain economies of scale by building on systems, medical fee schedules negotiated by provincial agencies and lower prescription medicine costs. 
Another possible source for the difference between California and Canada is the number of insurers authorized to provide workers’ compensation coverage.  In Canada, there are a dozen workers’ compensation boards—each with its own exclusive jurisdiction (monopoly providers in their own jurisdictions); in California there are more than 200 authorized insurers writing at least $50,000.00 of premiums (the largest by market share is the STATE COMPENSATION INSURANCE FUND). 
There are, of course, many other differences between Canada and California.  The rate of disputes, the way disputes are settled, differences in self-insurance with and without self-administration, the risk associated with the mix of industry,  and the scope and involvement of workers’ compensation in occupational health and safety (prevention, education, enforcement and regulation) are just the beginning of areas to consider in comparison.   That said, both Canada and California continue to see substantial human and financial costs of work-related injury, disease and death.  Comparing approaches to workers’ compensation between jurisdictions may yield new insights into prevention, treatment and return to work—something valuable to everyone. 

1 comment:

Charles said...

Nice discussion, Terry!