Costs for Occupational Injury and Illness Shift to Private Insurers and Tax Payers

Photo: J. Paul Leigh
J. Paul Leigh

The national price tag for occupational injuries and illnesses totals nearly $250 billion annually, yet only 21 percent of these costs, or $51.7 billion, are covered by Workers’ Compensation Insurance, a recent study from UC Davis has found.

Employer paid health insurance, Medicare, Medicaid, Social Security, and other payers absorb roughly 80 percent of the tab, or $198 billion. “Costs are being shifted from Workers’ Compensation to private insurance companies and tax payers, in addition to workers and their families,” says lead author J. Paul Leigh, who is a professor of Health Economics in UC Davis’ School of Medicine.

“Two hundred and fifty billion is a big number,” Leigh points out. “It’s more than the cost of cancer, yet when you look at research funding, cancer gets far more attention than job-related occupational injuries and illnesses. For example, the most recent budget for the National Institute for Occupational Safety and Health was roughly $300 million whereas it was $5 billion—17 times larger— for the National Cancer Institute.”

“From an economic stand point, if you are interested in spending your money where you will get the greatest return on investment, it makes sense to spend more to address occupational health and safety,” says Leigh.

Lost productivity accounts for over $182 billion of the $250 billion annual price tag, with only $21.86 billion of this total paid by workers’ compensation insurers. Leigh says this cost-shifting of premiums from workers’ compensation to other sources leads to lower premiums and reduced incentives to promote workplace safety.

Using data from the Bureau of Labor Statistics, the National Council on Compensation Insurance, and other government and non-profit sources, Leigh concluded that, in addition to $29.86 billion paid by workers’ compensation insurers for medical costs for occupational injuries and illnesses, workers and their families paid $5.81 billion, Medicare and Medicaid covered $12.63 billion, and other non-workers’ compensation health insurance covered $14.22 billion.

Leigh believes workers may prefer employment-provided insurance because filing a claim with Workers’ Compensation may leave a mark on their employment history.

The study, published in the April issue of the Journal of Occupational and Environmental Medicine, was partially funded by grants from the National Institute for Occupational Safety and Health.

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