Research & Commentary: Workers’ Compensation Insurance in Illinois (Update)

Published May 24, 2011

Illinois has the second highest workers’ compensation insurance rates of any state in the United States. Workers’ compensation insurance provides money for medical care and lost wages for employees who are injured as a result of their jobs. In return for guaranteed benefits, the employee agrees not to sue the employer for injuries caused by the employer’s negligence. The size or burden of a workers’ comp system can affect a state’s economy; workers’ compensation costs have proven to be a strong determining factor influencing businesses to expand or relocate in a state.

In Illinois, workers’ compensation is compulsory for all employers and the state government does not provide insurance through a state fund. Employers in the state have multiple options to purchase insurance: They may insure through private carriers, self-insurance, or through groups of employers. The state has one of the highest numbers of companies writing workers’ comp policies instate.

Several bills currently pending before the Illinois legislature would modify this system by capping benefits and changing how injuries are diagnosed. Under one such proposal, benefits would be capped at the age of 67 or five years after the injury, whichever is later. Under current law, these benefits can last into an injured worker’s retirement years. In an effort to combat “doctor-shopping,” the reforms also would require an injured worker to visit a doctor chosen by the employer, preventing multiple visits to get the most favorable opinion.

The workers’ comp benefits provided under law in Illinois are comparable to those in neighboring Midwestern states, but costs in Illinois are far higher. The Illinois Department of Insurance predicts the savings for employers under the workers’ comp reforms could range from a low of 5 percent to a high of 10 to 12 percent. Only a few days remain in the current session to adopt changes to the state’s ailing workers’ compensation system.

Time running out for workers’ comp reform

Madigan: Workers’ comp system ‘ought to be changed’

The following articles address some of these issues and examine workers’ compensation insurance from a free-market perspective.

Workers’ Compensation: A Guide for Policy Makers
This Guide for Policymakers, written and published by the American Legislative Exchange Council, explains the workers’ compensation system – how it developed and how it works – and examines emerging policy issues.

Insurance Information Institute Issue Update: Workers Compensation
This Issue Update, published by the Insurance Information Institute, reviews recent developments in workers’ compensation insurance reform taking place in different states across the country and provides background on workers’ compensation insurance.

The Facts about Big Business Cuts to Workers’ Compensation
This fact sheet from the American Federation of State County and Municipal Employees Council 31 in Illinois outlines the labor union’s response to the proposed workers’ compensation changes.

Six Steps to Improve Workers’ Compensation
This article, written by John Goodman, president of the National Center for Policy Analysis, and published in The Heartland Institute’s Health Care News, examines the policy issues affecting workers’ compensation and discusses six policy initiatives for addressing those concerns.

The Workers’ Comp Tug of War
Penelope Lemov of Governing magazine discusses how workers’ compensation benefits have changed as a result of reforms enacted in several states, with a focus on reforms in Texas and Pennsylvania.

Three Systems of Workers’ Compensation
This paper from the Upjohn Institute examines three different models for workers’ compensation, describing their essential features and comparing their effectiveness.

Workers’ Compensation Reform: A Tale of Two States
This Insurance Journal article by Joe Woods of the Property Casualty Insurers Association of America examines recent workers’ compensation reform programs in two states: Texas and Oklahoma. Woods identifies the strengths and weakness of the two states’ programs.

Open Competition, Workers’ Compensation Costs, and Injury Rates
This paper by Anthony J. Barkume and John W. Ruser of the Compensation Research Group at the Bureau of Labor Statistics assesses the impact of rate deregulation on workers’ compensation insurance, finding that jointly dropping both prior approval and rate bureau pricing leads to a decline in both injury claims and workers’ compensation premiums.

Privatizing Public Services and Strategic Behavior: The Impact of Incentives to Reduce Workers’ Compensation Claim Duration
This paper from Melissa McInerney of the College of William and Mary examines unsuccessful efforts in the state of Ohio to privatize workers’ comp insurance. The author also examines the effect of incentives on moving workers back into the workplace.