Salem, OR – Workers’ compensation costs will increase slightly in 2013 in Oregon to track growth in medical claims costs, the Department of Consumer and Business Services (DCBS) recently announced.
The department approved a 1.7 percent change in “pure premium,” which is the portion of the premium employers pay insurers to cover anticipated claims costs for job-related injuries and deaths. The amount is based on a recommendation from the Florida-based National Council on Compensation Insurance Inc.
(NCCI), which analyzes industry trends and prepares rate recommendations for the majority of states. Pure premium reflects only a portion of workers’ compensation costs but is the key factor behind annual cost changes. The 1.7 percent is an average so an individual employer may see a large increase, no change, or even a rate decrease depending on the employer’s industry, claims experience, workforce, and other factors.
Also, pure premium doesn’t take into account insurer expenses and profit; actual rate changes may vary based on an employer’s insurance company. The changes are effective Jan. 1, 2013, but employers will see the changes when they renew their policies.
“While workers’ compensation costs are relatively flat, we are beginning to see medical costs play a larger role in annual changes,” DCBS Director Patrick Allen said.
Even so, Oregon’s workers’ compensation premium rates remain low nationally. Only 11 states and the District of Columbia had average rates lower than Oregon at the beginning of 2012, according to the preliminary analysis of a DCBS study. Of neighboring states, Washington and Idaho had higher rates, and California’s average rates were more than 50 percent higher. Only Nevada had a lower rate.
“Oregon has minimized rate increases by improving workplace safety, getting injured workers back to work quickly, and controlling medical payments for certain procedures,” Allen said. “For years, in fact, those improvements masked the growth in medical costs.”
From 2003-2010, wages in Oregon increased 20 percent while medical claim costs went up 31 percent, according to NCCI data.
One way the department’s Workers’ Compensation Division has attempted to control medical costs is by establishing fee schedules that limit how much can be paid for certain medical services and equipment and to ambulatory surgical centers.
In addition to any change in pure premium, other workers’ compensation costs reviewed annually by the department include:
- An assessment on workers’ compensation premiums that pay for the state costs of running the program. The department recommends that the rate remain the same in 2013 as in 2012 (6.2 percent for insurers; 6.4 percent for self-insured employers and self-insured employer groups). A public hearing on the recommendation will be held Sept. 20.
- An assessment for programs that increase benefits over time for workers who are permanently and totally disabled and for families of workers who die as the result of workplace injury or disease. The assessment also funds return-to-work programs. The hourly rate for this program is going up a half cent in April 2013 to 3.3 cents so the department maintains a required fund balance that covers approximately 12 months worth of costs.
More details about workers’ compensation, including key charts, can be found here: http://www.cbs.state.or.us/external/dir/wc_cost/index.html
Source: OR DCBS