Financial and Economic Impact of Worker\'s Compensation

Financial and Economic Impact of Worker's Compensation Regulations And Compliance

The program and concept of Workers' Compensation might appear to be a product of a civilized society and the modern era, but nothing could be further from the truth. In fact, Workers' Compensation has essentially been around for as long as people have been completing task for payment of some form of another, because people have always been getting hurt in some way, on the job. "The history of compensation for bodily injury begins shortly after the advent of written history itself1. The Nippur Tablet No. 3191 from ancient Sumeria in the Fertile Crescent outlines the law of Ur-Nammu, king of the city-state of Ur. It dates to approximately 2050 B.C.2. The law of Ur provided monetary compensation for specific injury to workers' body parts, including fractures. The code of Hammurabi from 1750 B.C. provided a similar set of rewards for specific injuries and their implied permanent impairments. Ancient Greek, Roman, Arab, and Chinese law provided sets of compensation schedules, with precise payments for the loss of a body part. For example, under ancient Arab law, loss of a joint of the thumb was worth one-half the value of a finger. The loss of a penis was compensated by the amount of length lost, and the value an ear was based on its surface area. All the early compensation schemes consisted of "schedules" such as this; specific injuries determined specific rewards" (Guyton, 1999). This compensation schema demonstrates the notion that is present today that not all injuries are as serious as others and that different injuries deserve different forms of payment.

Of course, one could make a strong case for the fact that this system was coarser than the one in place today (though some disgruntled workers might argue the opposite) as the value of a body part seems largely connected to its size. Today the concepts of "quality of life" and "pain and suffering" have been introduced and compensation can be immediately linked to these two issues. For example, the notion of a man being compensated for the loss of part of his penis based on the length of this organ that is lost is a completely ludicrous notion to a modern audience. The contemporary mentality is that once a man's penis is damaged or deformed in any sort of way, the appropriate compensation thus begins.

However, despite the fact that the notion of compensation for bodily injuries is as old as work itself, it didn't really leave an imprint upon modern society until the industrial revolution. Even though the industrial revolution was a crucial and exciting time for America and one which created an enormous push for modernity and progress, there was a price to pay for the rapidity of expansion. It was indeed the machine age, and human beings were the ones creating and operating these machines. At the same time, there was a certain give and take push and pull and margin of error and mistakes that had to occur. "As economic and industrial activities flourished, the number of work injuries also grew. The increasing use of machinery, new concepts of producing goods, and the pressure of increased demand for products resulted in more injury problems without solutions for employers and employees. For the most part, workers who were injured on the job had no recourse other than to sue their employers at common law, an expensive and time-consuming process. The court system was crowded, causing long delays. Compensation for injuries was usually insufficient and uncertain. The employee sometimes was forced to bear the expense of injury himself or had to throw himself on the mercy of welfare" (aascif.org). This demonstrates the very real consequences of not having a proper system in place for workers to seek financial help within, for their injuries. Without a formal system of workers' compensation the very real consequences were things like clogged court systems, overuse of the welfare system, and generally large amounts of wounded employees who had nowhere else to turn and no way to support their families. This demonstrates how even though this emerging machine age was providing a definitive benefit to society; it was also damaging a large chunk of the workers contributing to a participating in this crucial time.

Eventually, "Laws were enacted to provide workers injured on the job with prompt, equitable, and guaranteed benefits. Injured workers received medical care and disability income irrespective of fault. Employers, in turn, were protected from potentially catastrophic loss by a stated amount of specific benefits for the injuries suffered by the employee. The worker was prohibited from filing suit while the employer was obligated to pay the mandated benefits" (asscif.org). This clearly demonstrates how such a program protected both the company and the worker. The company benefited from knowing that they wouldn't be sued and forseeably put out of business indefinitely, and the employee benefited from knowing that he would be taken care of, if anything should happen to him on the job. Aside from signaling a higher level of humanity for workers and employers, giving both of them peace of mind, the modern emergence of workers' compensation meant that work was regulated in such a way that it wouldn't wreak havoc on the court system or on the welfare system.

Analysis of the Field

Workers' compensation is a vital component related to employment and safety, but at the same time, it's a program that doesn't simply exist because people want it to: it needs to have a strong financial backing and needs to be fiscally supported. Finding ways to make workers' compensation more affordable for employers is pivotal as the overall success and longevity of the program depends on it. One of the major issues present in worker's compensation today is as a result of increasing prescription drug costs. "Alex Swedlow, Vice-President of Research for the California Workers' Compensation Research Institute, reported on CWCI project which reviewed workers' compensation pharmaceutical costs. Through analysis of detailed claim specific medical data, CWCI uncovered some very specific causes for the growth in pharmaceutical costs. One interesting result was the rise in physicians dispensing drugs within their own clinics; this practice allows physicians to circumvent pharmacy fee schedule restrictions through clever repackaging techniques" (iaiabc.org, 2010). This highlights an issue that's neither the fault of the employee or the employer; rather it demonstrates a fault of one of the parties: involved doctors.

Doctors, it appears, are taking the opportunity to raise prices, simply by virtue of the fact that they can. While this increases profits for them, it means that certain workers' comp benefits are becoming pricier, and with that, less affordable. However, part of the increased prescription costs is just by virtue of the fact that the drugs prescribed are pricier by nature. "Although a physician-dispensing is certainly contributing to the rise of drug costs, the most significant increase can be attributed to the shocking growth in opioid prescription use. The use of Schedule II drugs, which have restrictive applications for the relief of serious chronic pain, is being prescribed for a variety of claims that historically did not require such drugs. Swedlow's research showed prescription patterns in California in which a tiny fraction of physicians were generating a very large share of the opioid prescriptions" (iaiabc.org, 2010). Opioids are extremely powerful drugs which are expensive by nature. However, this isn't the only reason that their usage is driving up the system costs all over the nation: opioids have an extreme and indelible impact on the lives of workers. "Workers on opioids are often highly dependent, face delays in return to work, and may suffer other physical or psychological challenges due to addiction" (iaibc.org, 2010).

This issue with workers' compensation and the rate of prescription of opioids is completely out of control. It has been calculated that between 55-86% of all Workers comp claimants are on opioids of some sort as a means of soothing chronic pain (Morgan, 2012). However, the problem with this fact is that it's generally an effective long-term drug when it comes to conditions like cancer treatments (Morgan, 2012). In fact, there's hard evidence which points to the prevalence of opioids doing more harm than good; the Center for Disease Control cites how deaths related to the usage of painkillers has increased at least 300% in the last 13 years, more than the deaths connected to cocaine or heroin usage combined (Morgan, 2012). In fact, the incorrect usage or abuse-related addiction to painkillers was accountable for half a million trips to the ER in 2009, a number which had doubled in just half a decade (Morgan, 2012). If these numbers demonstrate anything, they showcase the vital need of a better means of regulation for opioid use and workers. It's a heavy-handed approach which demonstrates poor health care techniques and shoddy judgment on behalf of medical professionals. It's so problematic as opioids are far too potent, powerful and addictive forms of substance to give individuals dealing with chronic pain. It's the equivalent of giving a child a semi-automatic weapon to protect himself with, when a guard dog would be more appropriate. "The recent shift in prescribing patterns to more patients consuming opioid medications is more prevalent today than ever before. Opioid medications are now being prescribed at higher dosages in pure form and are routinely making their way into the hands of injured workers without the proper controls, regardless of health risks.

Escalating problems such as overdose, addiction, and even death have reached epidemic proportions, according to the Centers for Disease Control (CDC), and are now commonly reported in association with workers' compensation claims… 'To our knowledge, this is the first scientifically validated study to demonstrate that long-acting opioids, even if taken just once, leads to catastrophic claim cost,' Tower said" (prnewswire.com, 2012). The problem lies fundamentally with the way that the medical community is communicated with. There needs to be strict and lucid dialogue between workers compensation leaders and leaders of the medical community in order to adequately convey the devastating impacts that the overzealous usage of opioids is having on workers. However, if professional greed gets in the way of doctors behaving in a manner which benefits their patients, then it's likely that there will need to be state or national government regulation of this trend. It's the lack of regulation, monitoring and control which is making this issue as a detrimental and catastrophic as it is, when in reality, it doesn't have to be this way. The best way to ensure that workers don't become addicted to prescription painkillers is to not give them highly addictive prescription painkillers. It's comparable to how the exposure to violence can incite children to act violently. To prevent this violent behavior one needs to prevent contact with the source which incites the violence. In many respects prevention truly is exceedingly simple, though in this case it absolutely does revolve around adequate regulations: "Ultimately, our research indicates the need to monitor or intervene on claims treated with long-acting opioids for nonmalignant chronic pain," Patrick Walsh, vice president and chief claims officer for Accident Fund Holdings, said. "Our goal is to protect our injured workers from addiction or not being able to return to work" (prnewswire.com, 2012). One of the revelatory aspects of this quote is that it demonstrates the rather short-sighted aspect of the program as a whole. Too many of aspects of the program focus on just treating the injury rather than preventing addiction or thinking about the overall health and wellness of the injured worker as a whole.

Another issue that needs to be closely examined in the arena of workers compensation is the emergence of new occupation diseases. For example, just as the industrial age created new injuries and diseases for workers, the new technology of today is doing the same thing. One simply cannot embrace the advent and emergence of new technologies without acknowledging how those new technologies are going to impact the health of those who work with them day in and day out. The new occupational diseases that are on the scene are "…including black lung, siliceous, and hearing loss. One area to track closely is the potential health impacts of nanotechnology to injured workers. The use of nanoparticles in the industrial process is growing, resulting in more and more workers exposed to these materials. The very small nature and unusual characteristics of nanotechnology could lead to an outbreak of occupational disease claims in the next 10 or more years. While there is very little medical evidence exposure limits or the risk of injury to humans, it is an area of particular risk that should be monitored" (iaiabc.org, 2012). The most pertinent issue with occupation diseases is that they can largely be prevented, if adequate measures are taken. Occupational disease represent a failure of employers to take the proper measures to protect their employees, often placing them in unsafe work environments and causing them to bear the biological burden of these hazardous or toxic environments.

Black lung (aka, miner's asthma, silicosis, coal worker's pneumoconiosis) is a common example of this destructive phenomenon (umwa.org). Upon current calculations, it is believed that around 1500 former coal miners die annually a painful death in out of the way rural communities, away from the press and all forms of publicity -- thus, this is a disease which is largely unknown about, another tragedy which aggravates the disease and essentially allows it to flourish (umwa.org).

Back in 2011, there was some federal intrusion on to this issue in order to improve circumstances for employees. For example, The National Institute for Occupational Safety and Health gave miners free screenings to be tested for black lung disease via the month of March. This was done so that screening could assist in intervening before the disease became fatal or life threatening but also as a means for providing workers with proper and official documentation that they had in fact contracted an occupational disease (Eley, 2011). Screening is absolutely crucial as for a gradual condition like black lung; the disease sets in slowly as a result of all the years of breathing in dust filled air from mines successively inhaled for a period of years.

These pertinent issues demonstrate how the field of workers compensation is still under-going progress and needed development. For example, while there are agencies in place for workers to go to for their needs, there's still a ways to go in the field. Largely based on the issues discussed here, it appears that there is a tremendous amount of compensation that employers could engage in to better protect their workers but do not. It's likely that for the rest of the 21st century, a greater focus will be on the power of prevention.

Research Topic

My research topic was alluded to earlier as it attempts to examine the absolute best ways to deal with the opioid addictions and related issues when it comes to the over-prescribing of opioids for WC injuries. My research question attempts to look at the scope and scale of the problem, the factors which exacerbate the problem and all potential solutions for it. The numbers and related statistics can assist in showcasing the scope of the problem. Employers and insurers will spend $1.4 billion on narcotics this year, the majority of those narcotics being things like OxyContin, Percoset, Actiq, and Fentanyl (Paduda, 2012). This simple, straightforward statistic demonstrates the scope and debilitating issue of opioids and Workers' Comp injuries: the drugs being prescribed are notoriously addictive. They're so addictive they're sold (and bought) by drug dealers on the street. Doctor's and the medical community at large need tougher regulations in place to curb this aggravated problem. The full level of aggravation of the problem comes to light when one considers how opioids were at first developed and approved by the FDA as a solution to cancer pain (Paduda, 2012). This fact alone demonstrates their rampant misuse and how the reality is; they're probably not suitable for worker's compensation injuries.

Comparable to the fact that workers' compensation has existed in some form or another for as long as organized work has existed, Opioids have been in use by man for an extremely long time. "Opioids have been used for thousands of years for the treatment of acute and chronic pain. Around 3400 B.C., the opium poppy was cultivated in lower Mesopotamia by Sumerians who referred to it as Hul Gil, the 'joy plant.' The Sumerians passed along the plant and its euphoric effects to the Assyrians and Babylonians who in turn would pass their knowledge onto the Egyptians. Ancient Egyptian papyrus records mention opium as a treatment for pain (1), and in 1170, the first book of western surgery described using sponges soaked in opium held over the patient's nose for surgical procedures (2). Their use in America has waxed and waned based on multiple and disparate factors including availability, the introduction of new methods of administration, regulatory efforts, and physician and societal attitudes" (Benyamin et al., 2008). As the statistics have demonstrated, at this time American use of opioids is on an upswing. Part of this has to do simply with the big business of pharmaceuticals: the drug companies are aware that if they make opioids, Americans will buy them. This is a simple way to make a high degree of profit, as opioids are extremely potent and extremely addictive.

Furthermore, there's a very American mentality at work with opioids, which is the tendency in American culture to think that bigger equals better and to provide what is seen as the "simplest" solution to a given problem. For example, it's far too typical of an American mentality to provide such a massive pain pill for chronic pain suffered by those in workers' comp. It's akin to driving an SUV three blocks when one could've just walked or ridden a bicycle. There's an extreme sense of excess and needlessness which is obviously characterized in the fact that a pain medication which was designed for cancer patients is being prescribed in excess to the general public. Furthermore the overuse of opioids is reflective of the American mentality to find a "one size fits all" solution to complex problems. Many of these pain problems that workers are suffering from would no doubt be solved by a cocktail of more balanced pain pills no doubt in conjunction with alternative therapies such as acupuncture and hypnosis. However, it's again a very western mentality to think that there could be one "magic pill" which would wipe out all of the pain problems of an entire nation. This is exactly the problem, as the rate at which opioids are being prescribed makes it appear as though the professional medical community thinks of them as some sort of magic pill when the reality indicates that these pills are anything but. In fact, opioids create more problems than they solve.

Aside from creating addicted, dependent workers, the overreliance on opioids creates an extremely costly scenario for all employers involved -- as already stated. "As a chronic pain management involves a complex interaction between somatic, visceral and neuropathic pain with multiple psychosocial comorbid factors, physicians use multiple treatment approaches to manage chronic pain, including: medications, physical therapy, exercise, massage, psychological interventions, injections, neural blockades, implantable devices, surgery, and other alternative approaches. One of the primary treatments today is the use of opiate analgesics in the management of chronic pain.

Increasingly, we are seeing that chronic opioid therapy in non-cancer patients has created numerous problems. Some of the problems associated with chronic opiate therapy include: lack of evidence of the effectiveness of chronic opiate therapy, increased tolerance of opiates and resultant increased pain sensitivity, complex hormonal effects, as well as depression and suppression of the immune system" (workcompwire, 2010). Depending so heavily on opioids creates a scenario that does more harm than good; furthermore, when one takes in to consideration the sheer numbers of people who are taking these opioids, the numbers are staggering. It's almost as if the medical community is intent on creating an entire population of people who are dependent on these very powerful, very debilitating, and very controlling drugs.

But the core of the problem remains one of supply and demand: the drug companies continue to produce opioids in massive quantities and Americans continue to purchase them. In 1997 the Center for Disease Control (citing the National Vital Statistics System) asserted that pharmaceutical companies were making 96mg of opioids per individual in 1997 (Hickey, 2012). Just 10 years later the drug companies were making 698mg per individual: "This is enough for every American to take 5 mg of Vicodin every 4 hours for 3 weeks, resulting in an astonishing 627% increase in manufacturing. The reality is that people are dying from opioid overuse and overdose…. A 2011 update to the Workers' Compensation Prescription Drug Study, reported by the National Council on Compensation Insurance (NCCI), says that drugs were 2% of total medical costs in 1990, and there was minimal use of opioids. By 2000, however, pharmacy increased to 10% of medical costs, with growing use of opioids. By 2011, the pharmacy spend has increased to 19% of total medical costs -- and we are seeing exploding use of opioids within workers' comp" (Hickey, 2012). Opioids are such powerful addictive drugs, it's extremely difficult to not foster addictions, and addictions to opioids can be both psychological and physical. The reality is so many workers who are on some form of medical plan via workers' comp, abuse opioids, generating a range of problematic side effects. It gets to the point where workers are taking a range of pills -- sometimes 20 to 40 a day -- not just of opioids but other pills to help manage the difficult side effects of these medications. Part of the reason why individuals end up taking so many pills per day is that workers build up a tolerance to the opioids, leading to increased dose requirements. "There are 2 types of tolerance: innate (which is genetically determined and would be present from the initial dose of the opioid) and acquired (pharmacokinetic, pharmacodynamic, and learned) (29). Pharmacokinetic tolerance results from changes in the metabolism of a drug after repeated administration, such as the induction of an enzyme by the administration of the drug itself (as seen with initiation of methadone treatment). Pharmacodynamic tolerance is represented by the classic decreased effectiveness of an opioid over time, related to up-regulation of receptors"(Benyamin et al., 2008). Regardless of the type of tolerance that is developed, the results are still the same: dependence and addiction develop, as do an increased usage of the opioids and a greater range of side effects, as well as a greater need for drugs to deal with those side effects.