Illinois has the third-highest workers’ compensation insurance rates of any state in the United States. In Illinois, provision of workers’ comp is compulsory for all employers, and the state government does not provide insurance through a state fund. Employers have multiple options in purchasing insurance: They may insure through private carriers or through groups of employers, or they may self-insure. Illinois has one of the largest numbers of companies writing workers’ compensation policies in-state.
In 2011, the Illinois General Assembly passed a series of reforms to the state’s workers’ comp system, designed to address important cost-drivers. The reforms included addressing high medical costs by reducing fee schedule rates, creating preferred provider networks for physicians who treat workers’ comp patients, and requiring use of American Medical Association guidelines for evaluating workplace injuries.
Despite these reforms, some of which are still being implemented, Illinois employers still pay more for workers’ compensation coverage than employers in any other state in the Midwest. This has played a role in deterring new businesses from entering the state. Business leaders say the reforms did not go far enough and changes are needed to ease employers’ costs for workplace injuries by, for instance, introducing liability caps or moving responsibility for covering injuries to health insurance companies. Currently, several proposals for further reform are under consideration in the General Assembly.
One proposal, SB 3825 by Sen. Kwame Raoul of Chicago (D), would create a state-controlled workers’ comp fund to compete with private insurers. Similar funds have been established in other states, and many of these funds have experienced the same rising medical costs that private insurers and employers in Illinois must address.
Illinois has one of the most active private markets for workers’ comp insurance in the nation. The creation of a state-run workers’ comp insurer would be a mistake. State-run insurers in many states have bowed to political pressure to force down rates, thereby driving private insurers out of the market. While their rates are sometimes lower than those in the private market, the coverage provided by a state-run entity is not as good, and taxpayers may be on the hook for any losses.
The following documents address some of these issues and examine workers’ comp insurance.
Illinois among Top 3 States for Workers Compensation Costs
Steve Tarter and Dave Haney of the Peoria Journal Star report on Illinois’ high workers’ compensation costs and the reaction from local business leaders.
Workers’ Compensation: A Guide for Policy Makers
The American Legislative Exchange Council explains the workers’ comp system—how it developed and how it works—and examines emerging policy issues regarding it.
Insurance Information Institute Issue Update: Workers Compensation
The Insurance Information Institute reviews recent developments in workers’ comp insurance reform in different states across the country and provides background on workers’ comp insurance.
Effectiveness of Workers Compensation Fee Schedules—A Closer Look
This study by the National Council on Compensation Insurance (NCCI) examines workers’ comp medical fee schedules. The study and accompanying research brief use the experience of group health coverage to assess the effectiveness of workers’ comp fee schedules.
Six Steps to Improve Workers’ Compensation
Writing in The Heartland Institute’s Health Care News, John Goodman, president of the National Center for Policy Analysis, examines workers’ comp policy issues and discusses six policy initiatives for addressing concerns.
Workers’ Comp Reforms Need Careful Monitoring
Dr. Richard Victor, executive director of the Workers Compensation Research Institute, argues any workers’ comp reforms must be monitored for years after implementation if any real improvements are to be made in the workers’ comp system.
The Workers’ Comp Tug of War
Penelope Lemov of Governing magazine discusses how workers’ comp benefits have changed as a result of reforms in several states, with a focus on Texas and Pennsylvania.
Three Systems of Workers’ Compensation
The Upjohn Institute examines three different models for workers’ comp, describing their essential features and comparing their effectiveness.
Workers’ Compensation Reform: A Tale of Two States
Writing in Insurance Journal, Joe Woods of the Property Casualty Insurers Association of America examines recent workers’ comp reform programs in Texas and Oklahoma, identifying the strengths and weakness of the two states’ programs.
Open Competition, Workers’ Compensation Costs, and Injury Rates
Anthony J. Barkume and John W. Ruser of the Compensation Research Group at the Bureau of Labor Statistics assess the impact of rate deregulation on workers’ comp insurance, finding that jointly dropping both prior approval and rate bureau pricing leads to a decline in injury claims and workers’ comp premiums.
Privatizing Public Services and Strategic Behavior: The Impact of Incentives to Reduce Workers’ Compensation Claim Duration
Melissa McInerney of the College of William and Mary examines the unsuccessful efforts in the state of Ohio to privatize workers’ comp insurance and considers the effect of incentives in moving workers back into the workplace.