The Legal and Economic Evolution of Workers Compensation: Prospects for Enhancing Choice in the System

Abstract

Workers compensation in the United States has been designed as a no-fault system that provides comprehensive medical and income benefits to employees with work-related injuries. Under its no-fault concept and the exclusive remedy doctrine, injured workers relinquish the right to sue their employer in tort in exchange for prescribed, guaranteed benefits that are paid promptly without protracted disputes. However, there is considerable evidence of increasing litigation in and outside the system that is undermining its no-fault principles and siphoning resources away from the efficient delivery of benefits to injured workers. This article reviews the legal and economic developments that are reshaping workers compensation and the threats they pose. The authors argue for a comprehensive reexamination of the structure of the system to resolve the conflicts among its stakeholders and improve its efficiency. Specifically, the authors explore several potential measures that would enhance worker and employer choice to reconciIe their interests while restoring the nofault foundation of the system.

Spillover effects of increased health insurance enrollment on workers’ compensation insurance

“…Furthermore, spillover effects are likely to exist given that parallel payment regimes between WC and group health insurance are common (Fomenko & Gruber, 2017) and the phenomenon of certain types of insurance being used as substitutes for others has been previously established (Fortin & Lanoie, 1992). 3 1 To review the evolution of the WC market, see Gabel et al (1999). 2 The medical care component of WC coverage is substantial, with approximately 60% of total expenditures arising from medical costs (Arnautovic, Lipton, & Robertson, 2017).…”