Medical benefits continue to soar in the workers compensation arena. They constitute the largest and most significant factor in the payment of workers' compensation claims. At a recent meeting of NCCI Holdings Inc. it was announced that data reflects a huge increase in the medical component.

What is significant is that medical now comprises 59% of the benefit dollar reflected in 2007 projections. The total indemnity in 2007 amounts to only 41% of the benefit dollar. In 1997 medical comprise 53% of the benefit dollar and in 1987. It comprised only 46% of the benefit dollar. This is a significant increase in a critical trend in the payment of workers' compensation benefits.

Workers compensation medical cost trends reflect a 6% increase in 2007. While this change is lower than the increase of 2006 which was 8.6%. The overall expenditures are increasing. Medical severity remains growing at a faster rate than the medical cost per loss-time claim. In 2007 while growth was at 6%., the medical CPI was only 4.4%.

Employer costs in workers' compensation have decreased to a projected 1.8% of the total cost in 2007 significantly down from the 2.2% reported in 1997. However, when combined, both the health insurance and workers' compensation programs, the employer' s costs continue to rise very significantly. Health insurance in 2007 amounted to 7.1% of the cost to employers for employee compensation while. In 1997 there were only 5.5%.

"Given the positive 2007 results, our short-term view of the market is optimistic," added NCCI Chief Actuary Dennis Mealy. "However, our long-term outlook is cautionary due to the myriad of uncertainties that continue to face the business."

Looking at an overview, when both benefit programs are combine, the statistics reflect a significant rise from the 7.7% in 1997 to the 8.9% in 2007. This trend, if continued, will probably result in consolidation of both benefit programs, and elimination of administrative and litigation costs, through use of a single-payer system.

See also:
NCCI Report

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