The Impact of Health Care Reform on Workers’ Compensation Medical Care

Evidence from Massachusetts

by Paul Heaton

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Research Questions

  1. How were workers' compensation hospital billing volume, charge patterns, and treatment volume affected by Massachusetts's health care reform?
  2. Did the impacts of the reform differ for hospital inpatients or patients with high-cost medical conditions?

Abstract

Although it is widely recognized that health care reform has the potential to affect the volume and cost of medical care received through the workers' compensation (WC) system, to date there is little empirical evidence of this effect. This study used the experience of Massachusetts, which implemented a health care reform package with several provisions similar to those in the Patient Protection and Affordable Care Act of 2010, to empirically estimate how health reform impacts WC hospital care. It was found that WC billing frequency for both emergency room visits and inpatient hospitalizations fell by 5 to 10 percent as a result of reform, but that billed charges and treatment volume were not measurably affected. These impacts were observable among patients with more costly injuries and persisted even after various approaches were used to account for the effects of the economic downturn that began at the end of 2007. While many outstanding questions about the impacts of health reform on WC remain, this early quantitative, empirical evidence suggests that reform may reduce medical costs borne by the WC system.

Key Findings

The Experience of Massachusetts's Heath Care Reform Suggests that Reform may Reduce Medical Costs

  • Following Massachusetts's implementation of a health care reform that included provisions similar to many of the key provisions of the Patient Protection and Affordable Care Act, workers' compensation (WC) hospital billing volume fell by 5 to 10 percent.
  • The decline is plausibly attributable to the reform rather than other factors, such as the 2007 economic downturn, and is observable for emergency room patients, hospital inpatients, and those with more costly medical conditions.
  • Billed charges for patients covered through WC increased in a manner consistent with general medical price inflation and were not obviously affected by the reform.
  • Measures of treatment volume, such as length of hospital stay, were not discernibly affected by the reform.
  • Health care reform may affect costs of insurance products beyond health insurance.

Recommendations

  • In enacting, implementing, and evaluating health care reform, policymakers should consider potential spillover effects on workers' compensation insurance.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Background and Data

  • Chapter Three

    Estimates of How Health Care Reform Impacted WC Billing

  • Chapter Four

    Limitations

  • Chapter Five

    Conclusions

  • Appendix

The research described in this report was supported by the Willis Research Network and the Hartford Financial Services Group, Inc. The work was conducted in the RAND Institute for Civil Justice, a research institute within RAND Law, Business, and Regulation.

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