Measurement is the first step that leads to control and eventually to improvement.
If you can't measure something, you can't understand it.
If you can't understand it, you can't control it.
If you can't control it, you can't improve it.
Monday, April 20, 2015
What can we take from the ProPublica/NPR investigative reports on Workers' Compensation?
The ProPublica/NPR investigative reports have highlighted what is wrong with workers’ compensation. Make no mistake; there is much to criticize among the US and Canadian workers’ compensation systems. Does that mean we should throw out the current systems and start again?
Marjorie Baldwin, (Professor, Arizona State University, and Chair of the Study Panel on Workers’ Compensation Data of the National Academy of Social Insurance (NASI.org)) recently responded to the main issues highlighted by this investigation. Her post, “Workers’ Compensation: Critical Questions, Elusive Answers” addresses some of the obvious issues. The journalistic approach of focusing on individuals to illustrate the issues effectively shines a light on vivid examples of poor benefits, bad adjudication and abusive processes that re-victimize the victims of work-related injuries, illness, and disease. The scholarly examination of underlying policies at the root of these failures may not grab headlines but it is critical to public policy development. Headlines don’t tell the whole story. Professor Baldwin’s point that stakeholders need “a more informative accounting of how the system performs” succinctly summarizes both what is needed and what has been missing from much of the discussion.
It is not that there isn’t good information out there. The NASI report on Workers’ Compensation: Benefits, Coverage and Costs 2012 provides a starting point. The AWCBC Key Statistical Measures provides similar data for the Canadian workers’ compensation jurisdictions. The work by IAIABC and WCRI to provide objective data on the Workers’ Compensation Laws that ultimately determine the benefits, costs and coverage on both sides of the boarder is another important information resource.
And it’s not as if there is no objective yardstick on what a workers’ compensation system ought to do. The 1972 Report of the National Commission on State Workmen’s Compensation Laws made recommendations that provide clear guidance. ProPublica/NPR journalists the National Commission’s recommendations to design workers’ compensation laws; public policy analysts in Canada, the US and other countries often take the measure of workers’ compensation systems using the National Commission’s recommendations.
Objective assessment of systems’ performance against those recommendations reveals two things. The first is the point of the ProPublica/NPR reports: Worker’s compensation is failing in some states. The second point is really the corollary. Despite the poor performance of some jurisdictions, there are workers’ compensation systems that are providing benefits that meet or exceed most of the recommendations of the National Commission.
Workers’ compensation is not one “system”. There are more than sixty North American jurisdictional attempts at fulfilling a common social policy objective that is the foundation of the Grand Bargain, the Historic Compromise. It is plainly wrong to extrapolate grievous failings from a few jurisdictions to every workers’ compensation system.
Yes, there are failures. Workers’ were promised compensation for work-related injuries but there are jurisdictions where between a third and a half of all workers with lost-time work-place injuries are entitled to no compensation for lost wages—and that does not take into account the issue of claims suppression and under-reporting. Large proportions of the labour force—particularly agricultural workers and domestics—are excluded from coverage in some jurisdictions. Middle-to-high wage earners may have less than half their earnings unprotected by workers’ compensation insurance in states/provinces with low maximum benefits and very low indemnity rates. These inequities are not only unjust, they undermine the social contract and threaten the social policy (and possibly legal) basis of the “exclusive remedy”.
The ProPublica/NPR reports force policy makers to acknowledge these failures and hopefully seek out those jurisdictions that live up to the bargain. Those jurisdictions that come closest to meeting the National Commission recommendations cover nearly everyone who works for someone else and even offer coverage to those who are self-employed; they cover high wage earners and provide compensation that restores 80-90% of spendable (after tax) income. They provide timely decisions and are accountable for their errors in the application of law and interpretation of policy. They seek and earn a measure of social licence for what they do and do it at a cost that is affordable and sustainable.
H. James Harrington (author of Business Process Improvement among others) said:
NASI, WCRI, IAIABC, AWCBC and others provide objective measurement of jurisdictional and national performance. The National Commission recommendations provide a standard against which the measures from each jurisdiction may be assessed and understood. Measuring the performance of each system against those recommendations can be the first step in addressing the failures, controlling the excesses and improving outcomes for injured workers and their families without a wholesale scrapping of all systems.
No system is perfect. Among the sixty-plus systems in North America, however, there are a few that have come close to meeting the recommendations of the National Commission. They are proof that the Grand Bargain, the Historic Compromise can achieve the social policy objective: to protect workers from work-related injury, disability, illness and death in a compassionate and sustainable way that still allows the economic activity and innovation necessary for societies to operate and thrive.
Improvement is not only possible, it is essential—not only because it is the morally correct thing to do but also because every failure erodes the public confidence in all workers’ compensation systems everywhere.
Rather than taking a defensive posture, insurers and policy makers can thank the ProPublica/NPR journalists for raising the level of discourse, highlighting the disparities that exist and illustrating the need for genuine improvement in under-performing systems.