Total U.S. Workers' Compensation Payments to Injured Workers Slow

U.S. workers' compensation payments for medical care and cash benefits for workers injured on the job increased 2.0 percent to $55.4 billion in 2007.

According to a study by the National Academy of Social Insurance (NASI), the modest growth in national spending in 2007 reflects large declines in California cash benefit payments that followed reforms enacted in 2003 and 2004.

A 10 percent decline in California's cash payments to injured workers in 2007 followed declines in 2006 and 2005, as well.

"The reduced spending for cash benefits reflects the continuing effects of cost containment reforms that were put in place in 2003 and 2004," said NASI member Christine Baker, who directs the California Commission on Health and Safety and Workers' Compensation, a nonpartisan labor-management group.

Nationally, workers' compensation payments of $55.4 billion in 2007 include $27.2 billion for medical care (an increase of 3.3 percent over the prior year) and $28.3 billion in wage replacement benefits for injured workers (an increase of 0.8 percent).

In 2007, employers paid a total of $85.0 billion nationwide for workers' compensation. A sharp drop in California employers' costs (of 14.3 percent) led to a small drop for the nation (2.7 percent). Outside California, employer costs for workers' compensation were almost unchanged, (up 0.1 percent).

The new report, Workers' Compensation: Benefits, Coverage and Costs, 2007, compares trends in workers' compensation cash benefits and Social Security disability insurance benefits, each as a share of payrolls covered by each program. Trends in the two programs have moved in opposite directions since 1980. When workers' compensation cash payments rose in the 1980s, Social Security disability benefits declined as a share of payroll. After 1990, workers' compensation cash payments declined and Social Security disability insurance payments rose as a share of payroll.

According to John F. Burton, Jr., chair of the panel that oversees the study, "The different trends suggest that retrenchment in one program may cause injured workers to turn to the other program for benefits to replace their lost wages."

Workers' Compensation Spending, 2007
Type of spending Billions of dollars Percent change

United States
Total benefits paid $55.4 2.0
Medical payments 27.2 3.3
Cash benefits 28.3 0.8
Employer costs 85.0 -2.7

California
Total benefits paid $9.9 -2.2
Medical payments 5.4 5.4
Cash benefits 4.5 -10.0
Employer costs 14.6 -14.3

United States outside California
Total benefits paid $45.5 3.0
Medical payments 21.8 2.8
Cash benefits 23.7 3.2
Employer costs 70.4 0.1