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Paduda: Health Care Reform Implications for Workers' Comp, Part 1

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With Congressional efforts to repeal/replace/revise the Affordable Care Act behind us for now, it’s time to consider what all this means for workers’ comp.

Joe Paduda

Joe Paduda

First up: Medicaid expansion

Currently, 32 states have expanded Medicaid. Expect more states to consider expanding Medicaid as the combination of federal dollars and struggling hospitals makes a compelling case for state adoption.

In addition, the Trump administration may well allow states more flexibility in expanding Medicaid, and this will likely lead to more states opting in. For example, Arkansas has applied for permission to add coverage to a more limited population. Other states will almost certainly follow suit.

Other states, including Texas, are facing the dual realities that their poorer citizens’ health status is declining and hospital financials are deteriorating as well.

A couple of data points illustrate the linkage between work comp and Medicaid.

Sixty-three percent of Medicaid recipients have at least one family member working full time. This varies among states, from 77% in Colorado to 51% in Rhode Island. Fifteen percent have a part-time worker. Only 19% of recipients’ families have no one working.

Many employers (such as those with fewer than 50 full-time employees) that don’t provide health insurance and/or aren’t required to provide health insurance under ACA, and/or have a lot of part-time workers who don’t qualify for employer-sponsored health insurance, recommend that workers who qualify sign up for Medicaid.

The potential implications for claiming behavior are apparent.

We all know workers' comp premiums are driven by employment. Most credible studies indicate Medicaid expansion increased employment in states that expanded Medicaid.

More employment equals more payroll equals more workers’ comp premium and more claims (NOT higher frequency, which is a percentage and not a raw number).

There are also implications for disability filings. A just-published study found “a 3-4% reduction in the number of people receiving supplemental security income … in states that expanded Medicaid.”

What does this mean for you?

The work comp industry dodged a bullet when Congress didn’t repeal ACA. However, watch carefully as other efforts to defund and otherwise cut back on Medicaid are ongoing.

Joe Paduda is co-owner of CompPharma, a consortium of pharmacy benefit managers. This column is republished with his permission from his Managed Care Matters blog.

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