Commission on Health and Safety and Workers' Compensation
Information Bulletin

August 13, 1999 Christine Baker
(415) 703-4220

Commission Issues Report on Treating Physician Role in Workers' Compensation System

SAN FRANCISCO -- As requested by the Legislature, the California Commission on Health and Safety and Workers’ Compensation has issued a report on workers’ compensation cost and benefit changes since the 1993 legislative reforms.

This report was prepared in response to a joint request from Senator Hilda Solis and Assembly Member Jack Scott for background information on the impact of the reform legislation on workers’ compensation costs to employers and benefits to injured workers.

The 1993 reforms instituted several changes with significant impact on costs and benefits, including

Abolishment of the minimum rate law for workers’ compensation insurance premiums.

Temporary disability and permanent disability benefit level increases.

Medical cost containment, including managed care, Fee Schedule reform, restrictions on mental stress claims, and promotion of the role of the primary treating physician.

Vocational Rehabilitation benefits limited to $16,000.

The study report emphasizes that in a changing environment, it is difficult to isolate the impact of the reforms. Since the reforms were enacted, there are numerous other variables that also affect costs and benefits significantly, such as changes in the economy and wage rates. For example, from January 1993 to May 1999, the unemployment rate in California fell from 9.7% to 5.2%, while wages in manufacturing increased about 18%. A decline in workers’ compensation injuries and claims frequency has also been observed nationally.

Our summary of relevant analyses indicate that there have been significant changes in both costs and benefits since the implementation of the reforms:

Employer savings are estimated to be between $1.3 billion and $2.8 billion in 1998.

Increased benefits to injured workers in 1998 are estimated to be between -$26 million and $474 million.

The large range in both estimates illustrates the difficulty associated with this endeavor. The data are subject to multiple interpretations, and the assumptions behind the estimates may be considered by some to be controversial.

The Commission urges that any estimate of either employer savings or benefits to injured workers must be treated cautiously, including those cited in this report.

A copy of the report is available at no charge by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th Floor, San Francisco, California 94102, by calling (415) 703-4220, or by faxing a request to (415) 703-4234.

Commission publications are also available through the Internet at the California Department of Industrial Relations' home page at Information about the Commission may be accessed by choosing either ‘Occupational Safety & Health’ or ‘Workers’ Compensation’.

The Commission is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.