E M P L O Y E E B E N E F I T S , C O
M P E N S A T I O N
A N D P E N S I O N L A W
Vol. 2, No. 12: June 21, 2001
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Publisher: LSN Subject Matter Journals
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Topic
of This Issue: Workers Compensation
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"Deregulating Property - Casualty Insurance Pricing: The Case of
Workers' Compensation"
As published in Journal of Law and Economics,
Vol. 44, No.
1, Pt. 1, April 2001
ANTHONY J. BARKUME
United States Bureau of
Labor Statistics
JOHN W. RUSER
United States Bureau of
Labor Statistics
"The Illusion of Efficiency in Workers' Compensation 'Reform'"
Rutgers Law Review, Vol. 50, Spring
1998
MARTHA T. MCCLUSKEY
University at Buffalo Law
School
"Rate Regulation, Safety Incentives, and Loss Growth in Workers'
Compensation Insurance"
Journal of Business, Vol. 73, No. 4,
October 2000
SCOTT E. HARRINGTON
University of South Carolina
Darla Moore School of Business
PATRICIA M. DANZON
University of Pennsylvania
Wharton School
WORKING PAPERS
"Trends in Common Law Remedies for Work Injuries in Australia: An
Examination of the Process and Principles"
ROBERT GUTHRIE
Curtin University of Technology
School of Business Law
"Is Workers' Compensation Covering Uninsured Medical Costs?
Evidence from the 'Monday Effect'"
DAVID CARD
University of California
at Berkeley
Department of Economics
National Bureau of Economic
Research (NBER)
BRIAN P. MCCALL
University of Minnesota
Carlson School of Management
"Did Workers Pay for the Passage of Workers' Compensation Laws?"
PRICE V. FISHBACK
University of Arizona
National Bureau of Economic
Research (NBER)
SHAWN EVERETT KANTOR
University of Arizona
National Bureau of Economic
Research (NBER)
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EDITORIAL POLICIES
To provide the broadest coverage of research in Employee
Benefits, Compensation and Pension Law we do not referee working
papers. We accept abstracts of working papers in Employee
Benefits, Compensation and Pension Law whose topics suit the
coverage of the journal and which are part of the worldwide
scholarly discourse.
N E W and F O R T H C O M I N G
Articles
_________________________________________________________________
"Deregulating Property - Casualty Insurance Pricing: The Case of
Workers' Compensation"
As published in Journal of Law and Economics,
Vol. 44, No.
1, Pt. 1, April 2001
BY: ANTHONY J. BARKUME
United States Bureau of Labor Statistics
JOHN W.
RUSER
United States Bureau of Labor Statistics
Contact: JOHN W. RUSER
Email: Mailto:Ruser_J@bls.gov
Postal: United States Bureau of Labor Statistics
2 Massachusetts
Avenue, NE
Washington,
DC 20212 USA
Phone: 202-691-7392
Fax: 202-691-6310
Co-Auth: ANTHONY J. BARKUME
Email: Mailto:Barkume_A@bls.gov
Postal: United States Bureau of Labor Statistics
2 Massachusetts
Avenue, NE
Washington,
DC 20212 USA
ABSTRACT:
Property and casualty lines of insurance have traditionally been
subject to more regulatory price control than most goods in the
U.S. economy. However, beginning in the 1970s, some states began
to deregulate these lines of insurance, dropping either
mandatory pricing in concert by means of rating bureaus or, in
addition, dropping regulatory prior approval of premiums. This
paper assesses the impact of rate deregulation in workers'
compensation insurance. Besides examining the impact of
deregulation on price, we examine effects on injury rates, as
rate regulation may have reduced incentives for workplace safety
by restricting price differences across risk classes. We find
that eliminating both rate bureau pricing and prior approval
reduced long-run premiums by 13.7 percent and reduced injury
rates by at most 8.2 percent. In contrast, eliminating only
rating bureau pricing had small effects.
______________________________
"The Illusion of Efficiency in Workers' Compensation 'Reform'"
Rutgers Law Review, Vol. 50, Spring
1998
BY: MARTHA T. MCCLUSKEY
University at Buffalo Law School
Contact: MARTHA T. MCCLUSKEY
Email: Mailto:mcclusk@acsu.buffalo.edu
Postal: University at Buffalo Law School
Buffalo,
NY 14260 USA
Phone: 716-645-2326
Fax: 716-645-2064
ABSTRACT:
In the last decade, most states have enacted major revisions
to
their workers' compensation systems. These law changes aim to
restrict benefits for injured workers in response to perceptions
that rising workers' compensation insurance costs had reached
crisis levels by the late 1980s. This article analyzes the main
features of these benefit reforms, and shows how these reforms
reveal the problems of the predominant economic efficiency
rationales underlying recent retrenchment of social welfare
programs in general.
Using workers' compensation as an example, I argue that a
premise central to much of contemporary law and policy - the
distinction between economic efficiency and redistributive goals
- is illusory. Although efficiency principles commonly have been
used to explain recent benefit limitations as neutral economic
measures aimed at maximizing overall resources, these principles
inevitably incorporate value judgments about the proper
distribution of resources. Rhetoric about restoring an
"efficient" balance between workers and employers masks a
redistribution of resources away from workers and toward
employers and insurers. I show how concepts central to economic
analysis of law, such as externalities, moral hazard, and
transaction costs, disguise political power as economic fact.
I challenge the conventional wisdom that high workers'
compensation costs are a problem of increased medical
uncertainty resulting from expanded compensation of "subjective"
injuries and illnesses, such as repetitive motion injuries or
mental stress claims. By restricting access to benefits for
these "subjective" injuries, recent reforms claim to reduce
fraud, friction, and claims "external" to work. I argue instead
that restrictions on such injuries will redistribute, not
reduce, opportunities for fraud, friction, and externalization.
I show how the costly uncertainty which plagues workers'
compensation is not a problem of particular injuries or
illnesses, but of the inherent subjectivity of the underlying
ideal of the workers' compensation "bargain" between workers
and
employers which frames the debate. The predominant focus on
restoring this supposedly efficient "bargain" obscures the value
conflicts about the distribution of work accident costs which
should be at the center of discussions of workers' compensation
reform.
______________________________
"Rate Regulation, Safety Incentives, and Loss Growth in Workers'
Compensation Insurance"
Journal of Business, Vol. 73, No. 4,
October 2000
BY: SCOTT E. HARRINGTON
University of South Carolina
Darla Moore School of Business
PATRICIA
M. DANZON
University of Pennsylvania
Wharton School
Contact: SCOTT E. HARRINGTON
Email: Mailto:scottnet@darla.badm.sc.edu
Postal: University of South Carolina
Darla
Moore School of Business
Francis
M. Hipp Building
Columbia,
SC 29208 USA
Phone: 803-777-4925
Co-Auth: PATRICIA M. DANZON
Email: Mailto:danzon@wharton.upenn.edu
Postal: University of Pennsylvania
Wharton
School
3641 Locust
Walk
Philadelphia,
PA 19104 USA
ABSTRACT:
We analyze the relationship between insurance rate regulation,
inflationary cost surges, and incentives for loss control using
state-level data on workers' compensation insurance for 24
states during 1984-90. Regulators often responded to rapid-loss
growth during this period by denying rate increases or approving
increases that were less than initially requested by insurers.
We test whether rate suppression increased loss growth by
distorting incentives for loss control. Our regressions indicate
a positive and statistically reliable relationship between loss
growth and lagged measures of regulatory price constraints,
suggesting that rate regulation increased the frequency and/or
severity of employee injuries.
JEL Classification: J28, L50
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Trends in Common Law Remedies for Work Injuries in Australia: An
Examination of the Process and Principles"
BY: ROBERT GUTHRIE
Curtin University of Technology
School of Business Law
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=255013
Contact: ROBERT GUTHRIE
Email: Mailto:guthrier@cbs.curtin.edu.au
Postal: Curtin University of Technology
School
of Business Law
Perth,
WA 6845, AUSTRALIA
Phone: 61 8 9266 7626
Fax: 61 8 9266 3222
ABSTRACT:
For nearly 100 years in Australia, Governments have assumed the
responsibility for statutory compensation schemes. In most
States, compensation schemes existed side by side with access
of
injured workers to damages at common law. In the mid 1970's the
Federal Government instigated an enquiry into the compensation
and rehabilitation schemes operating in Australia. From that
time onwards there has been debate as to the justification for
the continuation of the right to pursue damages at common law.
In the mid 1980's a number of States instituted enquiries into
their own compensation systems and in some cases following those
enquiries the rights to pursue damages at common law were either
modified or, in some cases, abolished. This paper examines the
trends in Australia in relation to the reduction in common law
rights. It also examines the rationale for the continuation of
those rights.
______________________________
"Is Workers' Compensation Covering Uninsured Medical Costs?
Evidence from the 'Monday Effect'"
BY: DAVID CARD
University of California at Berkeley
Department of Economics
National Bureau of Economic Research (NBER)
BRIAN
P. MCCALL
University of Minnesota
Carlson School of Management
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=225837
Paper ID: NBER Working Paper No. W5058
Date: March 1995
Contact: DAVID CARD
Email: Mailto:card@econ.berkeley.edu
Postal: University of California at Berkeley
Department
of Economics
Room 3880
Berkeley,
CA 94720-3880 USA
Phone: 510-642-5222
Fax: 510-643-7042
Co-Auth: BRIAN P. MCCALL
Email: Mailto:bmccall@csom.umn.edu
Postal: University of Minnesota
Carlson
School of Management
321 19th
Ave. S.
Minneapolis,
MN 55455 USA
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
Steady increases in the costs of medical care, coupled with a
rise in the fraction of workers who lack medical care insurance,
have led to a growing concern that the Workers' Compensation
system is paying for off-the-job injuries. Many analysts have
interpreted the high rate of Monday injuries - especially for
hard-to-monitor injuries like back sprains - as evidence of this
phenomenon. In this paper, we propose a test of the hypothesis
that higher Monday injury rates are due to fraudulent claims.
Specifically, we compare the daily injury patterns for workers
who are more and less likely to have medical insurance coverage,
and the corresponding differences in the fraction of injury
claims that are disputed by employers. Contrary to expectations,
we find that workers without medical coverage are no more likely
to report a Monday injury than other workers. Similarly,
employers are no more likely to challenge a Monday injury claim
- even for workers who lack medical insurance.
JEL Classification: J2
______________________________
"Did Workers Pay for the Passage of Workers' Compensation Laws?"
BY: PRICE V. FISHBACK
University of Arizona
National Bureau of Economic Research (NBER)
SHAWN
EVERETT KANTOR
University of Arizona
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=226547
Paper ID: NBER Working Paper No. W4947
Date: December 1994
Contact: PRICE V. FISHBACK
Email: Mailto:price-fishback@ns.arizona.edu
Postal: University of Arizona
Tucson,
AZ 85721-0108 USA
Phone: 520-621-4421
Fax: 520-621-8450
Co-Auth: SHAWN EVERETT KANTOR
Email: Mailto:skantor@u.arizona.edu
Postal: University of Arizona
Tucson,
AZ 85721-0108 USA
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
Market responses to legislative reforms often mitigate the
expected gains that reformers promise in legislation.
Contemporaries hailed workers' compensation as a boon to workers
because it raised the amount of post-accident compensation paid
to injured workers. Despite the large gains to workers,
employers often supported the legislation. Analysis of several
wage samples from the early 1900s shows that employers were able
to pass a significant part of the added costs of higher
post-accident compensation onto some workers in the form of
reductions in wages. The size of the wage offsets, however, were
smaller for union workers.