New figures from the California Office of Self-Insurance Plans (OSIP) indicate that for the third year in a row, rising claim severity (average loss per claim), spurred by continued growth in medical costs, drove up workers’ compensation costs for cities, counties and other public agencies in the state last year.
OSIP’s initial summary of public self-insured data for fiscal year 2008/2009 offers the first look at the number of claims, total loss payments and total incurred (paid losses plus reserves for future payments) for the year ending June 30, 2009. The figures are compiled annually by the state from workers’ compensation reports submitted by hundreds of public self-insured entities other than the state itself — including cities and counties, local fire, school, transit, utility and special districts and joint powers authorities. The latest summary shows these employers provided workers’ compensation coverage to nearly 2.1 million California public workers whose wages and salaries totaled $98.6 billion during the 08/09 fiscal year.
Even though the number of covered employees in the latest summary was up 8% from the total noted in the FY 07/08 initial report, the number of reported claims edged down 1.9% to 126,029. Yet, despite fewer claims, public self-insureds’ paid losses at first report rose to $311 million, which was up $11.6 million (3.9%) from the comparable figure for FY07/08, and up $51 million (19.6%) from the post-reform low of $260 million in FY 05/06. A review of first report average paid losses broken out by benefit type shows most of the increase in public self-insured loss payments over the past three years was fueled by growth in medical losses, which have climbed 19.8% from the post-reform low of $1,073 to $1,285 last year, putting them back above the pre-reform level, while the average indemnity paid per claim rose 6.4% from $1,112 to $1,183.
Incurred results for public self-insured employers tell a similar story. Comparing initial report data from the last six years shows California public self-insured’s incurred losses at first report rose from a post-reform low of $852 million ($369.4 million indemnity + $483.5 million medical) in FY 05/06 to $1.01 billion ($393.7 million indemnity + $619.8 million medical) in FY 08/09 – up 18.9% in three years. The increase in total incurred losses since the post-reform low reflects a slight increase in the number of claims reported at the first valuation combined with higher average incurred per claim – primarily on the medical side. In the past three years, average incurred medical per public self-insured claim is up 21%, from $4,065 to $4,918, while average incurred indemnity has fluctuated less than $100 per claim over the last four years, coming in at $3,124 per claim for FY 08-09, up less than 0.6% from the $3,106 level reported for FY 05-06.
CWCI has prepared a detailed report on OSIP’s latest public self-insured data that tracks changes in the volume of California public self-insured claims, and in the total and average paid and incurred amounts for these claims. The report, with initial data on FY 08-09 claims reported to OSIP and more developed data (2nd, 3rd, 4th, and 5th reports) for the most recent six years available, is n the Research section of the CWCI website. OSIP also compiles private self-insured claims data, but it is reported on a calendar year basis, so updated figures from California’s private self-insurers will be released this summer.