Workers' Compensation and the US Healthcare Debate

I’ve been traveling in the US for the past few weeks. I had a speaking engagement in Washington DC and then attended the AASCIF conference in Portland, Maine. Wherever I went, the main topic of conversation was the US Healthcare reform and inevitably, I would be asked about how the system works in Canada and how Workers’ Compensation fits in with the Canadian model.

First, the concern over healthcare costs in the US workers’ compensation community is high. At the AASCIF conference, several speakers noted that healthcare now represents 60% of the benefit spending of workers’ compensation systems in the US. In Canada, indemnity benefits still far exceed health care costs (Healthcare accounts for about 26% of benefit expenditures [excluding claim administration] at WorkSafeBC).

In the US, I am told there is some suspicion that some workers without healthcare coverage feign a work-related injury to obtain healthcare and indemnity benefits for non-work injuries. With about a third of Americans lacking medical insurance, the impetus for such supposition is obvious. Yet, in Canada where there is universal healthcare coverage, the same reasoning would support a conclusion that such misapplication of workers’ compensation benefits to cover healthcare is unlikely.

For work-related injuries, workers’ compensation insurers in Canada are first payers just as they are in the US. While Canadian workers’ compensation insurers benefit from the lower costs that prevail in a single payer system, the healthcare costs of work-related injuries must still be reflected in the cost of workers’ compensation insurance to the employer.

It is important to note that any work-related injury or disease healthcare costs not paid by workers’ compensation will usually be paid by the provincial medical insurance plan. Since healthcare is actually funded by more than the nominal healthcare premiums paid by individuals and families, work-related injuries that are not covered by workers’ compensation are a burden on taxpayers and a subsidy to business or work that gave rise to the injury or disease.

As the debate over healthcare reform continues, it is possible that workers’ compensation will be included in at least some of the proposals. The status quo with workers’ compensation as the first payer for work-related injury and disease is conceptually the easiest and most direct method for workers protection. Failure to capture the full healthcare cost of work-related injuries and disease would remove an important incentive to invest in worker safety and health.