Average paid and incurred losses on California workers’ compensation self-insured claims rose sharply last year, led by a big jump in medical payments, according to new data issued by the California Office of Self Insurance Plans (OSIP) last week.
The OSIP initial summary of private self-insured data is the first look at private, self-insured claims experience for calendar year 2008, tracking among other things, the number of medical-only and indemnity claims as well as total payments and total incurred losses on those claims through December 31 of last year. Compared to initial summaries from earlier years, the 2008 report showed California’s private self-insured work force increased 4.3% to 2.39 million workers in 2008, though that total was 3.3% less than in 2003 – the last year prior to enactment of SB 899, the workers’ compensation reform bill signed by Governor Schwarzenegger. All together, the private self-insured employers reported 91,715 claims last year, only 36 more than in the 2007 initial report, but the first increase of any kind noted in the initial report in 17 years.
As of December 31, aggregate payments on the 2008 private self-insured claims totaled $191.4 million ($73.7 million indemnity + $117.7 million medical), up 12.1% from $170.8 million recorded in the initial report for 2007 claims. That works out to an average payment of $2,087 for the 2008 claims at the end of the calendar year, a 12% increase from the comparable figure for 2007, and 20.6% more than the post-reform low of $1,730 in 2005. A closer look reveals that the private self-insureds averaged $804 in indemnity payments on their 2008 claims, 5.7% more than in 2007 and 10% more than the recent low of $731 in 2006; while average medical payments on the 2008 claims rose to $1,283, 16.4% more than in 2007 and 29.2% more than the 2005 post-reform low of $993.
Year-end data on incurred losses (paid amounts plus reserves for future payments) also show the growth in private self-insured claim costs. As of December 31, aggregate incurred losses on 2008 claims totaled $583 million, 6% more than the post-reform low of $550 million noted in the initial report for 2007 cases. There was little change in the number of private self-insured claims from 2007, so the increase was mostly due to higher incurred costs per claim, which jumped to $6,360 in 2008, the highest level since reforms were enacted, and 13.8% more than the post-reform low of $5,588. Medical costs were again the biggest cost driver, as average incurred medical jumped to $4,149 in 2008, the highest level since 2003 and 20% more than the post-reform low of $3,450 in 2005.
OSIP also compiles public self-insured claims data, which is reported on a fiscal year basis rather than a calendar year basis, so the public self-insured data now lags the private self-insured data by 6 months. Updated data from the public self-insurers must be submitted to the state by October, so the next report on their experience should be released by early next year. In the meantime, CWCI has issued a bulletin that includes tables and analysis on the public self-insurer paid and incurred losses through FY 2007-2008 (which also show post-reform increases), along with the newly released data on private self-insurer claims experience through the end of last year. Institute members and subscribers may access the bulletin by logging in at www.cwci.org. The OSIP has posted its annual summaries for both private and public self-insured employers from each of the eight most recent years on its website at http://www.dir.ca.gov