There were fewer workers’ compensation claims in California last year than in 2014, though severity of those claims has kept costs from declining too dramatically, according to a new report from Milliman and Keenan Healthcare.
The report, in its second year, collects data from 35 hospital and individual facilities in the state to create a report benchmarking comp costs. Analysts examine factors including claims frequency and severity, medical and indemnity costs and the impact of any reforms on the comp system.
Researchers found that the projected 2015 loss cost per $100 of payroll was $2.20, and severity per paid indemnity claim increased almost 5.5% from 2005 through 2014.
One reason for this shift in severity could be the increasing number of aging workers in California.
According to the report, workers between the ages of 36 to 55 account for more than half of the paid indemnity claims and for workers under the age of 30, average severity was much less. Researchers note that “in addition to higher average costs per indemnity claim for injured employees over age 30, as workers age a given workers’ compensation incident is more likely to result in an indemnity payment.”
Increased litigation also played a role. While litigated claims constitute just 20% of the total claims with indemnity payment, they account for 54% of total incurred losses, Milliman and Keenan said, as litigated claims exhibit significantly higher average claim severity.
Other trends identified in the report include a flattening of overall losses per $100 of payroll from 2005 to 2014, and estimates of costs per indemnity claim for accidents during 2014 dropped 10% since 2013.
“California’s workers’ compensation environment is complex and always changing, and there are many challenges that employers and hospitals must contend with,” Richard Lord, principal and consulting actuary with Milliman and Keenan, said of the report. “The information…can help both employers and hospitals make more informed decisions regarding workers’ compensation and help them develop plans to improve their overall results.”
