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Worker's Compensation Basic Facts

Brief History of Wisconsin’s Worker’s Compensation and Explanation of some of its Special Funds
Wisconsin Population, WC Division Size and Budget
Wisconsin Workforce, Number of WC Policies, Net Direct Earned Premiums and Premium Rate
WC Claim and Indemnity Information
WC Claim Cost and Outcome Information
Special WC Funds Information

 

Wisconsin Population, WC Division Size and Budget

• In 2003 Wisconsin’s estimated population was 5,472,299, 20th out of 50 states and the District of Columbia.
• In 2004 Wisconsin’s Worker’s Compensation Division had a staff size of 109, 33rd out of 50 jurisdictions.
• Wisconsin’s Worker’s Compensation Division ranked 39th out of 50 jurisdictions based on the number of Wisconsin Worker’s Compensation Division employees per capita.
• In 2004 Wisconsin’s Worker’s Compensation Division budget was $12,742,500, 18th out of 49 jurisdictions.
• Wisconsin’s Worker’s Compensation Division ranked 29th out of 49 jurisdictions based on Worker’s Compensation Division budget dollars per capita.

With approximately one staff member for every 50,000 people in the state, the WC Division is an efficient organization doing more with less, and with a budget that works out to approximately $2.33 per person in the state. However, although it is commonly assumed that the WC Division is funded by taxpayer money, this is not the case. The WC Division is actually funded by assessments levied against insurance carriers and self-insured employers writing worker’s compensation policies in the state, it is not funded by taxpayer money.

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Wisconsin Workforce, Number of WC Policies, Net Direct Earned Premiums and Premium Rate

• In 2004 Wisconsin’s estimated workforce was 3,100,000, and an estimated 2,900,000 were covered by worker’s compensation insurance.
• In 2004 the number of active worker’s compensation policies was 119,014 and the number of linked employers and locations was 220,750.
• In 2004 there were 225 companies with a self-insurance order.
• In 2005, out of 46 non-monopolistic fund states (including the District of Columbia), at just over $1.5 billion Wisconsin ranked the 8th highest with respect to Net Direct Earned WC Premiums (i.e. premiums charged on policies prior to the application of any experience modification).
• In 2006, according to the 2006 Oregon Worker’s Compensation Premium Rate Ranking Summary, at an index rate of 2.1 Wisconsin had the 35th lowest premium rate out of 51 jurisdictions.

In 2004 93.5% of Wisconsin’s estimated workforce was covered by a worker’s compensation policy. This incredible achievement is due to an aggressive investigative effort by the staff of the WC Division’s Bureau of Insurance Programs to bring employers into compliance with the law. The relationship between net direct earned WC premiums and premium rate show that by comparison rates are low in Wisconsin, and yet Wisconsin has a thriving environment for insurance carriers writing worker’s compensation policies in the state. This is a win-win situation for employers and insurers.

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WC Claim and Indemnity Information

• In 2007, out of 52 jurisdictions Wisconsin ranked the 14th highest with respect to the maximum temporary and permanent total disability rates per week ($777).
• From January 1, 2000 to December 31, 2006 the Wisconsin Worker’s Compensation Division averaged 49,657 claims reported per year. On average, 9,208 of these are marked as denials, no lost time or non-compensable.
• From 2000 to the end of 2006 the average number of litigated worker’s compensation claims is 6,806.
• As of November 16, 2007 there are 736 open, non-litigated permanent total disability claims on the Wisconsin Worker’s Compensation database.
• In 2006 there were 91 work related fatalities in Wisconsin (fatalities, regardless of coverage, based upon information supplied by OSHA or the Worker's Compensation Division, using a wide variety of reports (death certificates, WC, Coroners/Medical Examiners, OSHA, etc.)).
• In 2004 the incurred worker’s compensation related indemnity was $230,106,957 and the incurred worker’s compensation related medical expenses were $471,741,502.

The number of claims reported to the Wisconsin Worker’s Compensation Division has actually gone down by an average of just over 2,700 per year, while the number of claims marked denials, no lost time or non-compensable has bounced up and down from year to year. The number of litigated worker’s compensation claims has gone up and down from year to year as well.

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WC Claim Cost and Outcome Information

• Medical costs per claim in Wisconsin, compared to 13 other states, are growing rapidly, driven by the rapidly rising prices for both hospital and non-hospital services.
• The average medical payment per claim in Wisconsin was 16% lower than the 13-state median.
• Utilization of medical services for worker’s compensation claims is Wisconsin was lower than the 13 states studied, and fewer claims involved specialty services. When such services were involved there were fewer visits per claim.
• A six state analysis of who obtains permanent partial disability noted that the percentage of claims with PPD was lowest in Wisconsin, at 29%.
• For 2002-2003, out of 45 non-monopolistic fund states Wisconsin ranked the 38th lowest with respect to the average cost of worker’s compensation claim. For Wisconsin the average cost was $6,874.
• The Wisconsin’s Worker’s Compensation system is designed to reduce litigiousness, and it does so because of the following four features of the Wisconsin Worker’s Compensation system: Active oversight by the state agency; Dispute resolution by final-offer adjudication; Mandatory minimum rating for surgery cases; Heavy reliance on the treating physician.

It is a common misconception that average worker’s compensation claim costs are high in Wisconsin compared to other states. This is perhaps driven by the fact that prices for medical services, which affect the medical costs of a claim, are undoubtedly very high in Wisconsin. However, the facts tell a different story. Despite the high prices of medical services in Wisconsin, factors such as the utilization of medical services, the utilization of specialty medical services and the number of visits involved, the percent of claims with permanent partial disability, etc., all combine to give Wisconsin an average claim cost that is in the lowest 15.5% bracket out of 45 non-monopolistic fund states. Not only is the average claim cost in Wisconsin quite low, but injured workers are very satisfied with their outcomes. In a study entitled Comparing Outcomes for Injured Workers in Seven Large States, Wisconsin scored the best on eight out of the nine metrics employed (Workers Compensation Research Institute, 2007 Annual Report, p. 24). Finally, in a forthcoming study, Comparing Outcomes for Injured Workers in Nine Large States, the worker’s compensation value proposition in Wisconsin is win-win for both workers and employers. That is, the system is one where “workers gain higher benefits or better medical care at lower cost to employers; or employers receive lower costs without any material adverse effect on workers’ outcomes.” (Workers Compensation Research Institute, 2007 Annual Report, p. 3).

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Special WC Funds Information

• As of November 1, 2007 there are 128 Uninsured Employers Fund (UEF) claims on the Wisconsin Worker’s Compensation database.
• In 2004 there was $1,361,738 in UEF benefits paid (WC Division Bureau of Insurance Programs).
• In 2004 the lapsed penalties assessed for the UEF was 2,440.
• In 2004 there was $3,650,071 in UEF collections.
• In 2004 there was $3,151,787 in Work Injury Supplemental Benefit Fund benefits.

Wisconsin has a number of active, healthy special funds related to worker’s compensation, funds which provide benefits for injured workers when they might otherwise not receive them.

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Information was obtained from the following sources:

Wisconsin Worker's Compensation Division; U.S. Department of Labor’s October, 2005 study “State Workers’ Compensation Administration Profiles Study”;  U.S. Chamber of Commerce’s 2007 Analysis of Workers’ Compensation Laws; Wisconsin Compensation Rating Bureau; Workers Compensation Research Institute reports; 2006 Annual Statistical Bulletin of the National Council on Compensation Insurance.