The Effects of Healthcare Reform on Illinois Workers’ Compensation Claims

Lawyers, and the workers’ compensation (WC) system at large, are asking the question “how is the Affordable Care Act (PPACA), also known as Obamacare, going to impact current and future Illinois WC claims?” Unfortunately, there has been no consensus on the magnitude or even the direction of the likely impacts of this law. Moreover, the limited research that does exist on this topic only raises more questions and uncertainty than provides answers.

A recent study, performed by Paul Heaton for the RAND Institute for Civil Justice, based on the Massachusetts model which implemented similar healthcare provisions in 2006 to those of PPACA, found that there is some short-term evidence that suggests that the PPACA may reduce the billing volume and cost of hospital care for WC. However, the study cannot conclude if savings will translate to outpatient visits, prescriptions, physical therapy, or other types of care. Secondly, it is unclear how these results will translate to other states with varied industries and overall worker’s health. Third, the quality and appropriateness of treatment were not a consideration for the purposes of this study.

The conclusion that PPACA may reduce billing volume and costs of hospital care for worker’s compensation was determined based on data drawn from 9.5 million ER visits from the State Emergency Department Data (SEDD) and 3 million inpatient records from State Inpatient Data (SID). Data included diagnoses, medical procedures, patient demographics, billed charges, and payment sources. The data compared the billing and costs from 2005 to those in 2008, after the new healthcare plan was implemented. The data indicated that WC ER bill volume fell by 7% amongst the lower cost and higher cost WC patients and the total evidence suggests that the reform can account for roughly a 5-10% decline going forward.

While this study is relatively small in scope, the results do provide important evidence that healthcare reform will reduce at least some costs associated with worker’s compensation. It is the hope that despite the study’s limitations, that healthcare reform may generate spillover effects on other area’s costs associated with WC.