Every two years, Oregon’s Department of Consumer and Business Services publishes its Workers’ Compensation Premium Rate Ranking Summary. Last week, the state issued its 2016 Study Summary. Just before the Study was released, Workers’ Comp Insider published a Primer on how to interpret it. This from that post:
The executive summary of this year’s study is due to be released in the next few days, and the findings are closely watched in quite a few states. Unlike the National Academy of Social Insurance report, issued last week, the Oregon study takes the comparison beyond simple averages. Instead, Oregon derives average rates for what a hypothetical set of comparable employers would pay, thus factoring out much of the difference in states’ risk profiles.
Oregon’s Premium Ranking Study looks at premium rates for a set of the most common job classifications, establishes a single index rate for each state based on the job classification rates and then compares those index rates among all the states.
California, the state which, if it were a country, would have the world’s fifth leading GDP, is always in its own universe in studies like this. However, after discounting California, the state with the highest index ranking in the nation at $2.92 per hundred dollars of payroll is (drum roll): New Jersey. The New Jersey index rate is 158% higher than the median rate for all states.
New York and Connecticut are right behind New Jersey in cost, with index rates of $2.83 and $2.74, respectively.
There is no medical fee schedule in New Jersey, which is one of the reasons for the high costs. Fee schedules do exist in New York and Connecticut, but they’re quite high. On the other hand, Massachusetts also has a fee schedule, one of the lowest in the nation, and it’s index rate reflects that. Massachusetts’s index rate of $1.29, which is 70% of the median, makes it the sixth lowest cost state in the country.
At Work Comp Psych Net we are highly sensitive to the high costs within New Jersey, because head injuries and psychosocial issues impact those costs in a significant manner. According to the New Jersey ‘ Compensation Rating & Inspection Bureau, total incurred costs (paid plus reserved) for all head injuries for the 5-year period from 2009 through 2013 were $1.72 billion. And that’s just for insured companies. It does not include self-insureds, which means that total state costs are more than likely near $3 billion for the period.
Clearly, carriers and third-party administrators representing insured and self-insured employers need all the help they can get. Early evaluation and intervention in claims that may contain mental health components delaying recovery is a proven way to eat into the high costs that so bedevil workers’ compensation professionals in New Jersey. That’s why we’re here with solutions that are: Sooner, Faster, Smarter.