Dr. Richard Victor, PhD, senior fellow at the Sedgwick Institute is set to release a book about what the future of the workers' compensation industry will look like – Scenarios for the 2030s: Threats and Opportunities for Workers' Compensation Systems.
Dr. Victor previously served as president and CEO of WCRI, the research organization he founded in 1983. Louisiana Comp Blog spoke with Dr. Victor to get the scoop on his book and what workers' comp professionals should prepare for as the industry evolves.
The interview below has been lightly edited for length and clarity.
Comp Blog: Tell me about your background and the founding of WCRI, and what led you to the Sedgwick Institute.
Dr. Victor: In 1983, I founded the Workers' Compensation Research Institute in Cambridge as an independent think tank on workers' compensation public policy issues. At the time there was very little research on workers' compensation, huge gaps. And at the same time, legislators and regulators were making decisions all the time about what a good workers' comp system looked like. The goal was to help improve and anchor public policy decisions in objective empirical research. After about thirty years there, I retired. Sedgwick's CEO David North, who I knew from a task force that Mrs. Clinton put together during health care reform in the 90s, asked me one evening what I wanted to do in retirement. I said I had a book I wanted to write and he said they would be willing to support that. That's how I got connected to the Sedgwick Institute.
Comp Blog: What was the inspiration behind the book? Was it a specific event or something you've been thinking over as your career progressed?
Dr. Victor: It wasn't a specific event. As I was contemplating retirement and thinking about what I could contribute that was different, it occurred to me that most organizations and public programs tend to suffer from inertia. Especially successful programs, tend to do going forward what has made them successful in the past. In doing so,
they risk being complacent and ignoring strategic threats and opportunities. The more I thought about the specifics, the threats were coming from outside of workers' comp.
One realistic scenario is a tripling of costs to employers with no real increase in benefits to workers, and that would be terribly destabilizing to the system.
Comp Blog: A portion of your book discusses the possible degradation of the “grand bargain.” Can you elaborate on that?
Dr. Victor: The scenarios here are grounded in pretty substantial empirical evidence about what's currently happening and how businesses and injured workers are likely to respond to those forces as they unfold over the next decade.
I extrapolated some things that are currently going on and then used evidence from a variety of studies about how businesses and healthcare providers and injured workers respond to the incentives that are being created. That's where the tripling came from and the kinds of things that I focused on are the emerging labor shortages and how that increases the number of claims that are made and lengthens the duration of disability, and how that's a cost driver. How restricted immigration policies and rhetoric make those labor shortages worse and magnify the impact on workers' compensation costs. Growing trends for injured workers with soft tissue injuries to shift cases from their commercial insurers or Medicaid to workers' comp. And also for healthcare providers when they begin to treat injured workers with soft tissue injuries. Their incentives will continue to grow to call a back injury work-related.
Comp Blog: Which of those scenarios do you think will have the most immediate impact?
Dr. Victor: I think the labor market shortages and the case shifting are the major elements of the most realistic scenarios.
Comp Blog: What do you think the landscape for professionals working for workers' comp carriers will look like in the 2030s? Will we have the same need for services and TPAs?
Dr. Victor: I think there are some countervailing forces. The insurers and TPAs will be facing the same kinds of labor shortages, maybe even more, that other industries are. At the same time, employers will be trying to automate as much as they can. However, the claims process under these scenarios gets more complicated and more difficult to automate because of the case shifting and the nature of the cases that are brought when there are labor shortages.
Comp Blog: Where can interested people get the book?
Dr. Victor: The book is free. My view and David North's view is that this is being done as a service to the workers' comp industry. The book should be released in early September, and there will be a link on the Sedgwick Institute website where people can download it.
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