Workers’ compensation, and its cost, see an increase

Workers”™ compensation benefits ”“ and its cost to employers ”“ increased in 2011 after a dip during the recession, according to a report from the National Academy of Social Insurance.

The academy”™s report, “Workers”™ Compensation: Benefits, Coverage and Costs, 2011,” estimated that workers”™ compensation cost employers $77.1 billion in 2011, an increase of 7.1 percent over 2010. New York paid $1.28 per $100 of covered payroll in 2011, an increase of more than 10 cents from 2010. The National Academy of Social Insurance defined costs in the report as the sum of premiums paid in a year plus benefit payments made under deductible provisions.

“The increase in workers”™ compensation costs and coverage reflects, at least in part, the U.S. economy on its way to recovery with slow but positive employment and wage growth,” the report stated.

Coverage and wages increased in all 50 states and the District of Columbia, the report said, and the states, D.C. and the federal government paid a total $60.2 billion in benefits, an increase of 3.5 percent of the benefits paid in 2010.

Medical payments to providers increased by 4.5 percent, to $29.9 billion, and cash benefits to injured workers increased 2.6 percent to $30.3 billion. The amount of covered workers rose in 2011 by 1.1 percent, to 125.8 million, and aggregate wages of covered workers increased by 3.9 percent.

The share of benefits paid for medical care, as opposed to cash benefits for wage losses, exceeded 50 percent in 33 states. New York bucked that trend, with 35.9 percent

Marjorie Baldwin, chair of the academy”™s Workers”™ Compensation Data Panel, said that when benefits and costs are measured relative to total covered wages, though, then benefits remained unchanged.

“Workers”™ compensation often grows with the growth in employment and earnings,” Baldwin, who is also a professor of economics at Arizona State University”™s W.P. Carey School of Business, said.

Workers collecting the benefits experienced no change relative to $100 of covered wages. Benefits stayed flat at $1 per $100 of covered wages. Medical payments remained unchanged at 49 cents per $100 of covered wages, while cash benefits decreased from 51 cents to 50 cents per $100 of covered wages.

The total amount of benefits paid to injured workers increased in 29 jurisdictions, including New York state, which saw an increase of 10.7 percent. Only Virginia and Iowa had the larger percentage increases in paid benefits, with 12.5 percent and 12.2 percent, respectively.

Workers”™ compensation covered an estimated 125.8 million workers across the country, an increase of 1.1 percent. Aggregate wages of covered workers rose 3.9 percent.

The amount of covered workers in New York increased 1.4 percent from 8.19 million in 2010 to 8.30 million in 2011, still lower than 2008”™s high-water mark of 8.46 million. Covered wages rose 3.9 percent from 2010-2011, to more than $512 billion.

Workers”™ compensation, launched in 1911, was the first social insurance program in the U.S.