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Paduda: Work Comp Is Worried About the Wrong Thing

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I'm finishing up the second survey report on the impact of COVID-19 on workers’ comp, and one takeaway has me shaking my head.

Joe Paduda

Joe Paduda

There’s a lot more fear and trepidation about presumption than I think is warranted. Across the 24 payers surveyed (including very large third-party administrators, insurers, state funds and employers), there were fewer than 7,000 COVID claims accepted to date. Yes, several have considerable business in California, Kentucky and Illinois, and more than a few have a lot of health care and public entity clients.

Relatively few of those 7,000 claims are expensive, perhaps less than 5%. And even then they aren’t nearly as costly as real cats with expenses above $1 million. And this in an industry that is wildly over-reserved, like $10 billion over-reserved.

There’s some, but significantly less, concern over plummeting premiums driven by business closures and dramatic declines in payroll. That should be a lot scarier; we are talking billions of dollars of premiums lost, and the potential that premiums will not return to pre-COVID levels for a long time, if ever.

This will get worse as governmental entities are forced to lay off workers when sales tax revenues aren’t sufficient to cover payroll.

This is like worrying that your cable bill is going up when your salary’s been cut 30% and your hours reduced.

What does this mean for you?

Focus on the dollars. The pennies are just pennies.

Joseph Paduda is co-owner of CompPharma, a consulting firm focused on improving pharmacy programs in workers’ compensation. This column is republished with his permission from his Managed Care Matters blog.

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