Kaiser Permanente will conduct a pilot in San Diego County to test the concept of 24-hour coverage, under which employees receive coverage for work-related and non-occupational health care from the same provider.
California is one of only two states to launch a pilot project in this area. Earlier this year, Oregon began a limited pilot. While the federal government continues to debate ways to control health care costs and expand coverage, California's 24-hour coverage pilot project offers further evidence that states are the laboratories where workable health care reforms will be identified and tested.
President Clinton's health reform task force explored integrating general health insurance, workers' compensation coverage, and the medical component of auto insurance into a system of 24-hour coverage. The proposal submitted to Congress, however, called only for a study of 24-hour coverage, and possible inclusion of the idea later. In essence, exploration of the innovative concept of 24-hour coverage has been left to the states.
Kaiser Permanente's pilot project initially covers employees of five employers in San Diego County. Participants are two large public employers-San Diego County and the San Diego Community College District-and three private businesses. For workers' compensation coverage, two of the employers are insured with the State Compensation Insurance Fund and the other three are self-insured. Additionally, three of the employers operate under collective bargaining agreements and have strong union support for participation in this pilot.
California's 24-hour coverage pilot project was created by Assembly Bill 3757, which Governor Pete Wilson signed in 1992. This legislation allowed the creation of three-year pilot projects in four counties. DWC designated San Diego, Los Angeles, Santa Clara, and Sacramento counties as sites for the pilot.
Though current law does not require employers to provide general health coverage to employees, every employer must carry workers' compensation insurance or qualify as self-insured to cover any medical treatment and benefits for employees with work-related injuries or illnesses.
The term 24-hour coverage is a combination of general health coverage and workers' compensation coverage. In 24-hour coverage, all of an employee's health needs- whether work-related or non-occupational-are covered by a single health care provider. Thus, coverage exists around the clock.
The 24-hour coverage pilot offers advantages for employers and employees. By contracting with an exclusive provider of health care, savings are achieved by reducing administrative duplication. Participating employers insured by a workers' compensation carrier are eligible for reduction in their workers' compensation premiums. In addition, employer control over an injured worker's medical treatment is extended to up to one year from the current 30 days.
Employees choosing to enroll will benefit from the convenience and continuity of care that results from the same doctor or health care provider serving all of their health care needs.
Employers participating in the 24-hour coverage pilot are expected to experience a reduction in their health care costs. The exact amount, however, cannot be estimated. Indeed, an objective of the pilot projects is to quantify savings and potential benefits of this type of medical coverage.
Savings will likely result in two areas: administrative costs and reduced litigation. Administrative aspects of general health insurance and workers' compensation coverage are duplicative, and 24-hour coverage eliminates these duplications. Another major cost driver in workers' compensation has been the litigation as to whether an injury or illness is work-related-and whether the workers' compensation carrier or the general health insurer is liable for medical treatment. With one health care provider covering both areas, 24-hour coverage may prevent costly litigation.
DWC continues to review proposals for 24-hour coverage pilots in the four counties. At the end of the three-year pilot, the Administrative Director's report will review employer costs and savings and aspects of medical treatment-such as whether and how injured workers returned to work, and their degree of satisfaction with this innovative type of health care coverage.