A very cold Vermont winter suddenly broke in early March. Maple syrup lines are flowing. 

In another kind of spring awakening, a surge of seemingly unrelated challenges question if workers’ compensation’s "Grand Bargain" should be saved or abandoned. There’s a common understory, which when uncovered, helps us anticipate the future of workers’ comp.

On March 5, OHSA issued, out of the blue, a report, "Adding Inequality to Injury." Citing extensive research, the agency says that the workers’ compensation system is "broken." Benefits are inadequate, employers are unwilling to prevent millions of injuries and they pay only a fraction of the cost of recovery. Not in memory has OHSA, or any executive branch agency, dealt so harshly with workers’ comp. It’s as if OSHA’s leadership decided it had to help rescue the system.

The "Grand Bargain" refers to a stand-alone system of mandatory no-fault work injury benefits, a different version for each state. It was an early addition to the country's social contract. The designers recognized that significant numbers of workers were at predictable risk of serious work injury.

They assigned oversight to states. Interest groups at the state level would resolve disputes over how the system should work. State administrators would implement the system, privately financed by employers.  

Now, time has dislodged each foundation stone to the Grand Bargain: injury, worker, and overseer.

Injury. Serious injuries are far fewer today. Shifts in employment out of manufacturing and mining played a relatively small role, compared to worksite factors and government safety laws. It’s happened throughout advanced economies. In the United States, worksite improvements include job redesign, sending dangerous work overseas, safety training and greater attention to fresh injuries.  

Employers see their workers’ comp burden declining (by half since the early 1990s) but find benefits harder to manage and efficiently integrate into their burgeoning agenda of employee protections and benefits. Work injuries account for about a 10th of medically-related lost work days in a workforce, including sick leave and disability.

Less risk, of course, does not at all lessen the urgency of work safety, any more than do the fewer infectious disease cases imply that one should take the diseases less seriously. 

Worker. When manufacturing was strong, the model worker at risk was male, career-attached to one industry and native born. Work safety was a terrific organizing theme for unions. Today a weaker voice speaks for workers who are much more diverse, mostly un-unionized, largely foreign born, undocumented and have increased options for free agent career paths and personal concerns.  

The worker is simply less visible. One of the industry’s most popular publications, the biennial 50-state report prepared by an Oregon state agency at the request of the state Legislature, ranks states by insurance costs to employers but ignores benefits to workers.

Overseer. On March 4, ProPublica issued the first installment in a scorching critique of what it sees as state mismanagement of workers’ comp. It highlighted illogical variations in benefits, nationwide decline over time of statutory benefits and a bureaucratic benefit delivery that the reporters imply is part of the culture of the state system of benefits. 

Some workers’ comp professionals noted how ProPublica cited a handful of cases all near the very top in medical severity. Some were irked that ProPublica overlooked gaming by lawyers and doctors. But look closely. The reporters zeroed in on system dysfunctions in core, formal design.  

They repeated history. Back in the 1970s, the state systems had to be rescued from mediocrity by a temporary federal commission, which recommended higher benefits and professionalism in administration. Faced with the implied threat of a federal takeover, states responded half-heartedly, implementing at most half of the commission’s recommendations.

The momentum of legal disputation and aggressive medicine can overwhelm efforts to keep the system simple and efficient. In California’s workers compensation system, the average lost-time claim rose by $48,000 between 1997 and 2013. The injured worker herself got only 16% of this increase. 

Had Oregon been tracking benefits, its reports would have noted a systemic trimming back in these benefits. State legislatures may have overreached and crossed a line drawn on benefit adequacy by a 1917 landmark court case. A civil court in Florida decided in 2014, in a case commonly known as Padgett, that the state’s entire workers’ comp statute was unconstitutional for failing to pass adequacy tests. A half-dozen or more states today could be ripe for a Padgett-type challenge. 

Most important, the natural constituencies that should be committed to the state system of oversight seem less interested. 

Unions have been sucked into promoting preferential benefits for selected workers, such as mental health and presumptive benefits for public safety workers.

Employers found opt out. One might expect that the most eager employers would be those wishing to shield themselves from substantial injury risks. The opposite is the case. The typical advocate of opt out today is a national firm with relatively light injury risk that is no longer interested in abiding by hundreds of increasingly complicated state requirements and funding lobbyists to tackle every new state wrinkle. For the large majority of injured workers, opt-out ERISA plans today deliver higher benefits than workers’ compensation. 

Many employers could easily fold their work injuries into their absence management, wellness and health programs. To do so requires them to abandon workers’ comp.  

Even some workers seem intent on abandoning the system. State laws are being altered at their request to permit a worker to declare herself an independent contractor and thus not covered by the workers' compensation policy of her employer.

This slow, chaotic abandonment of the Grand Bargain has no villains. Progressives may see proof of a systematic attack on a key social safety net. But they and union allies blew a chance to reinvent workers’ comp in the 1990s. Negotiated labor-management “carve-outs,” first piloted then, could have spawned an abundant variety of flexible plans with higher benefits, better medical care and no lawyers. It failed to gain nationwide momentum, largely because unions lost their nerve.

What’s in store?   

Padgett suits could proliferate and force benefit changes in the old silo, bureaucratic system. The political and economic leaders in states might decide to completely rewrite their laws, thus serving as innovation labs. Unlikely? Yes. The next U.S. presidency might create a federal option, a kind of federal opt out that employers could embrace. If the likes of Home Depot and Safeway can win over labor advocates for a federal opt-out system, that will be interesting to watch indeed.