Once more I head out on a limb to prognosticate on the events and trends that will shape 2022.
The soft market will continue. Carriers are still over-reserved, rates are still too high (see the opioid hangover), capital is still flowing into workers comp (gotta love that looooong tail), and employment growth may continue to be modest (low wage workers have discovered that working at crappy jobs isn't always a have-to, especially when child care is unavailable and unaffordable). On the other side, wage growth will likely continue (thus partially mitigating the above drivers) as more employers finally figure out that people aren't interested in crappy jobs for crappy wages. Caveat – towards the end of 2022 we may well see a bit of tightening as construction, infrastructure, green energy and other initiatives start up and get operational.
TPAs will add more business, mostly from carriers. As work comp continues to shrink, insurers will ramp up efforts to shed assets and expenses to reduce their cost structure. By outsourcing claims, carriers are trading the high fixed costs of a claims infrastructure for the variable cost of a per-claim admin fee. The smarter carriers will negotiate hard so they don't get screwed by medical management and other non-fixed fees…but many carriers aren't that smart.
Insurers will reduce staff, particularly in claims. Well, of course. see #2 above. However, TPAs will look to add claims staff, so experienced, well-trained claims folks will be highly sought-after.
IF total medical costs go up – and I doubt they will – the increase will be marginal. Yeah, I know there's lots of press and punditry about work comp medical costs aka “severity” increasing – and most of it is flat out wrong. I've read far too many investment banker slide decks, “research” reports and surveys of work comp executives that talk about rising medical costs – almost all are not based on data or solid research.
That said, facility and therapy costs will go up. Mostly because a) medicare is increasing reimbursement for therapy which trickles down to work comp fee schedules, and b) some healthcare systems and for-profit entities (looking at you, HCA, especially in Florida) have figured out how to bust open the work comp piggy bank.
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