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Worker's Compensation Basic Facts

Brief History

Read a brief history of Wisconsin's Worker's Compensation, why it was adopted and an explanation of some of its special funds.

• Remarks of President John F. Kennedy on the 50th Anniversary of First Workmen's Compensation Act  (.wmv 4:22, text transcript)
• 100 Reflections: Moving Workers' Compensation Forward

Wisconsin Population, WC Division Size and Budget

• As of July 1, 2008 Wisconsin's estimated population was 5,627,610, 20th out of 50 states plus the District of Columbia and Puerto Rico.
• In 2008 Wisconsin's Worker's Compensation Division had a staff size of 104.
• In 2008 Wisconsin's Worker's Compensation Division budget was $14,100,000.

With approximately one staff member for every 54,000 people in the state, and a budget that works out to approximately $2.50 per person in the state, the WC Division is an efficient organization doing more with less. HOWEVER, although it is commonly assumed that the WC Division is funded by taxpayer money, this IS NOT THE CASE. The WC Division is 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.

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

• In July 2008 Wisconsin's estimated workforce was 3,123,336, and an estimated 2,935,938 were covered by worker's compensation insurance.
• In 2009 the number of active worker's compensation policies was 118,931 and the number of linked employers and locations was 227,766.
• In 2008 there were 224 companies with a self-insurance order.
• In 2008, out of 46 non-monopolistic fund states (including the District of Columbia), at just over $1.5 billion Wisconsin ranked the 8^th highest with respect to Net Direct Earned WC Premiums (i.e. premiums charged on policies prior to the application of any experience modification).
• In 2008, according to the 2008 Oregon Worker's Compensation Premium Rate Ranking Summary, at an index rate of 2.1 Wisconsin had the 34^th lowest premium rate out of 51 jurisdictions.

In 2008 94% 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.

WC Claim and Indemnity Information

• In 2008, out of 51 jurisdictions Wisconsin ranked the 18th highest with respect to the maximum temporary total disability rates per week ($805).
• In 2008 out of 51 jurisdictions Wisconsin ranked the 13th highest with respect to the maximum permanent total disability rates per week ($805).
• From January 1st, 2002 to December 31st, 2008 the Wisconsin Worker's Compensation Division averaged 44,535 claims reported per year. On average, 8,678 of these are marked as denials, no lost time or non-compensable.
• From 2002 to the end of 2008 the average number of litigated worker's compensation claims is 6,506.
• As of August 5th, 2010 there were 723 open, non-litigated permanent total disability claims on the Wisconsin Worker's Compensation database.
• In 2008 there were 77 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 2007 the incurred worker's compensation related indemnity was $261,188,678 and the incurred worker's compensation related medical expenses were $562,083,723.

The number of claims reported to the Wisconsin Worker's Compensation Division has actually gone down by an average of just over 2,100 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.

WC Claim Cost and Outcome Information

• Medical costs per claim in Wisconsin, in a study comparing 15 states, are growing faster than the other states studied. These costs are driven by the rapidly rising prices paid to non-hospital providers and the higher payment per service for hospital outpatient services. There has been, however, a slow down in this rate of growth. For claims with more than seven days of lost time the medical cost rate of growth was 11% for 2005/2006 and 2006/2007. For claims in 2007/2008 the rate of growth was only 7%. This slow down is a result of changes in utilization rates.
• The average medical payment in Wisconsin for claims with more than seven days lost time and one year maturity is above the 15 state median, yet it is at the median for claims with three years of maturity.
• Nonhospital utilization of medical services for worker's compensation claims is Wisconsin is historically lower than the 15 states studied. This is because injured workers are treated with fewer visits per claim, and fewer claims involve physical medicine and specialty services
• An analysis of 11 non-wage-loss states revealed that the percentage of claims with permanent partial disability (PPD) was the third lowest in Wisconsin, at 36%. The median was 44%.
• Out of 45 non-monopolistic fund states (not including the District of Columbia) Wisconsin's 2010 ranking--for the policy period 1/2006 to 12/2006--is the 41^st lowest with respect to the average cost of worker's compensation claim. For Wisconsin the average cost was $7,576.
• The Wisconsin's Worker's Compensation system is designed to reduce litigiousness, and it does so because of the following four features: 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 rates of medical services, specialty medical services, 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 the 5th lowest 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 an 11 state study entitled Comparing Outcomes for Injured Workers in Michigan, Wisconsin scored the best on eight out of the nine metrics employed (Workers Compensation Research Institute, 2010 Annual Report, p. 27). Among 10 states examined for a 2010 study it was found that "return to work and worker satisfaction with care in Wisconsin were the highest of the states studied" (Workers Compensation Research Institute 2010 study How Have Worker Outcomes and Medical Costs Changed in Wisconsin? p. 3).

Special WC Funds Information

• As of August 1st, 2010 there are 109 open Uninsured Employers Fund (UEF) claims on the Wisconsin Worker's Compensation database.
• In 2008 there was $3,861,209 in UEF benefits paid.
• In 2008 the lapsed penalties assessed for the UEF was 1,995.
• In 2008 there was $3,189,581 in UEF collections.
• For State Fiscal Year 2008 there was $4,993,420 in Work Injury Supplemental Benefit Fund benefits paid.

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: Internet search; US Census Bureau; WI WC Division's Insurance, Legal and Claims Management Bureaus; DWD's Office of Economic Advisors; Wisconsin Compensation Rating Bureau; IAIABC's 2008 Inventory of WC Laws; various Workers Compensation Research Institute reports; 2010 Annual Statistical Bulletin of the National Council on Compensation Insurance.